One of the first decisions that must be made in the home buying process is whether to buy an existing home or build a new home. If you decide that you would like to explore the new construction route, the next decision that needs to be made is whether or not you want a real estate agent.
Depending on the rules and regulations of your state, you may or may not need a real estate agent when buying new construction. The majority of states allow a buyer to choose if they want to use a real estate agent or if they do not want to use a real estate agent when buying new construction.
In most situations, there are way more reasons why you should hire a real estate agent when buying new construction rather than attempting it without a real estate agent. It’s very important to know that when buying new construction and if you decide to hire a real estate agent that you are registered with the builder representative before meeting with them.
Below are some of the most important reasons to hire a real estate agent when buying new construction. Read on to find out why using a real estate agent can save you time, money, and frustration when buying new construction!
Provide Representation Because It Is Important
When buying new construction many buyers believe it’s a good idea to not have a real estate agent and to use the builder representative. The thought process behind this real estate myth is that it can save them money which is absolutely false.
What a buyer is doing by working with the builders representative is working with someone who is not representing them but instead is representing the builder. The builders representative is working in the best interest of the builder, not a buyer. Having representation is critical whether buying new construction or an existing home.
It’s important that when hiring a real estate agent to represent you in the purchase of a new construction home that you know ask the right questions. Having an experienced buyers agent is important when buying an existing home but having a real estate agent who has experience with new construction is critical.
Negotiate On Buyers Behalf
Buying new construction can get pretty expensive and in a hurry. Most builders will advertise their base price of their new homes and in most cases, this price is for the basic “plain Jane” home.
One of the benefits to buying new construction is the ability to make it your own. With the customization of a home comes an increase in the price. Another reason to hire a real estate agent when buying new construction is their ability to negotiate on your behalf.
Most builders will have a list of prices for upgrades and changes to their floor plans. A real estate agent who has experience with new construction can help negotiate the prices of these upgrades and changes to floor plans.
Contract Contingencies & Inspections
There are tons of reasons why having a home inspection is important when buying an existing home, but it’s also very important to have a home inspection when buying new construction. Many buyers who are purchasing new construction believe that since the home is brand new that they don’t need an inspection.
Another reason to hire a real estate agent when buying new construction is the reality that they know what inspections to recommend to a buyer. For example, if a new build has a septic system it would be advantageous and recommended to make the contract contingent on a septic inspection. The last thing that a buyer wants to have happen when buying a new home is they move into the home and there is a serious issue with the plumbing because of a faulty septic system.
This is only one example of a real estate contract contingency that a real estate agent can suggest to a buyer when buying new construction. It’s highly recommended to perform various inspections on new construction before the closing occurs.
Make Recommendations On Improvements & Upgrades
Generally a buyer is given an allotment for things such as lighting fixtures, carpet choices, cabinetry, counter tops and other home features. Real estate professionals know what home features today’s buyers are looking for in a home. One of the worst things that a buyer can do when building a home is spend lots of money on upgrades and improvements that may hurt the value of the home when the time comes to sell the home.
Hiring a real estate agent when buying new construction can help reduce the chance that a buyer spends money on a silly upgrade or improvement. An experienced real estate agent can help a buyer understand the cost of an upgrade versus the potential return on investment.
Most buyers don’t think about the long term effect that home improvement projects can have on value of a home. While the majority of buyers aren’t thinking about already selling their home when buying it, a real estate agent can help a buyer stay aware of the effect an upgrade can have on the resale value.
Recommend A Quality Lender & Financing Options
Another great reason to use a real estate agent when buying new construction is their ability to recommend a quality lender. The financing for new build homes is much different than getting a mortgage for an existing home.
Financing for new construction is not offered by all lenders. It’s recommended that you try and utilize a local lender when buying a new build. A real estate agent who has experience with new construction will be able to give a couple recommendations to lenders who offer new construction loans.
One of the major differences of new construction loans is that the lender will make periodic payments to the builder as progress is being made on the home. These are sometimes referred to as “draws.” A buyer will make payments to the lender while the home is being built and upon completion the buyer will get a new mortgage. The buyers new mortgage will payoff the construction loan and becomes the financing the buyer will have for the life of their loan.
Keep The Transaction & Build On Schedule
Buying new construction is a pretty complex process. There are many moving parts and it can be easy for the transaction and/or build to get off track.
Another excellent reason to hire a real estate agent when buying new construction is the ability an experienced agent will have to keep the transaction and/or build on track. There are many reasons why real estate closings are delayed with existing homes and with new builds there are even more.
Depending on factors such as the size of a home, weather, and the builder, new homes can take a few months to a year to build.
Generally speaking you should expect a new home to be built in 12-14 weeks. Below is an idea of what happens during the 12-14 week time frame.
Week 1 – Site Preparation – During the first week the area where the new home is being built is prepared for the build phase. This includes the clearing of the lot, excavation, and leveling of the lot.
Week 2-5 – Foundation – During this 4 week process the bones of the new home are built. This means the footers are installed, followed by the foundation, and last but not least the homes frame is built.
Week 6-8 – Mechanics & Interior – During the next 3 weeks the homes mechanics are put in place. This generally means the homes HVAC is installed, electrical wiring is run, and the homes plumbing is put in place. Once this is completed, the homes insulation and drywall is installed.
Week 9-11 – Flooring & Paint – Over the next 3 weeks, the homes flooring, doors, and cabinetry are installed. At this time the interior of the home is painted as well.
Week 12-14 – Fixtures, Appliances, Landscaping – The final 3 weeks is when the homes light fixtures, faucets, appliances, and landscaping is installed.
Week 14 – Final Walk Through – Once the home is completed, the buyer will do a final walk through in addition to the municipalities inspector with the builder prior to issuing the certificate of occupancy, also known as a C of O.
It’s important to understand that the above timeline for new construction can vary. As you can see there are many moving parts and stages of new construction. It’s a good idea to have an experience real estate agent when buying a new home so that everything stays on track for a smooth transaction and closing.
If you decide that you’d like to buy new construction, as you can see, there are lots of benefits to hiring an experience real estate agent. It’s strong recommended that you do not attempt it without representation. Having a professional working on your behalf can go a long way and save you lots of time, money, and additional stress.