Should I hire A Realtor When Buying New Construction?
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.
THE RESOUNDING ANSWER IS YES!!!!
Florida as well as 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 have agent registered with the builder before meeting or even browsing with builder or builder will NOT allow representation.
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. Many builders will give incentives to representatives to help them close the deals but encourage them strongly NOT to use them and even give bonuses to representatives when they don't use them.
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.
WE THE BURLACE TEAM ARE NEW CONSTRUCTION SPECIALISTS. We know all the new builders in town and have floor plans and know the benefits and drawbacks of each. Having worked as a New Home Builder's representative we know this process from the builders perspective and know the tricks of the trade.
To help increase the chances you hire a real estate agent who has experience with new construction, it’s important you know what questions to ask real estate agents.
Some of the questions to consider asking real estate agents when buying new construction include;
- Are you familiar with the new construction process?
- Do you have any lenders who specialize in new construction loans?
- Why do I need you to buy new construction?
- How many new construction homes have you sold in the past?
Negotiate On Buyers Behalf
Hiring A Real Estate Agent Can Help Prevent Getting Ripped Off When Buying New Construction
Buying new construction upgrades can get pretty expensive. Most builders will advertise their base price of their new homes and in most cases, this price is for the plain “basic” home sometimes without windows, lighting, landscaping etc....
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 and also which upgrades are worth the price and which you can do cheaper and with more options on your own.
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 navigate 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.
There are many Real estate contract contingencies that a real estate agent can suggest to a buyer when buying new construction. For example a contingency based on the sale of your current home, if your current home is for sale and you go under contract for a new home you can get a contingency based on your home selling before you purchase your new one.
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 overpriced 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.
There are different types of new construction loans an end loan where the builder gets financing and builds using their banks money and you purchase after project is complete and is ready to move in or a "new construction" loans where the lender will make periodic payments to the builder as progress is being made on the home. This requires the buyer to pay interest during the build for money as it is "drawn" from the account and inspection fees from the bank representative to prove the builder has completed the items the prior draw were for. 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 walls and structure 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 CO.
It’s important to understand that the above timeline for new construction can vary weather and delays at the building department/inspections are common. Normal construction time locally in Port St Lucie is quoted as 6-8 months ending up most often in the 7 month range.
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.
Final Thoughts
If you decide that you’d like to buy new construction, as you can see, there are lots of benefits to hiring a New Construction Specialist Real Estate Agent. It is 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.
