New Homes FAQ

Why have representation?

“If I’m buying a new house directly from the builder, why do I need a Realtor?” Denise Pias at RE/MAX Alliance Group says an unrepresented buyer can be at a real disadvantage by not utilizing the services of an experienced real estate professional. “As a Realtor, many people assume that we’re just trying to salvage a commission by recommending a buyer retain representation for a purchase from a builder, and many buyers don’t realize that our service is free of charge to a home-buyer. All too often buyers think that since they can find the builder themselves, drive right to them, get into the models without lockboxes, sign on the dotted line on the pre-printed documents placed in front of them that they don’t need a Realtor’s service. And there is a misconception that they will get a better deal on the purchase by not having the Realtor accompany them… This is simply not the case…”

“As a matter of fact, poor or inadequately made decisions can place a buyer in the position of costing them thousands of dollars when they are selling that home in the future.”

When representing a new home buyer, our job is to ensure our client’s best interest is protected, educate and help them through the transaction with the least degree of hassle and frustration, and to get the buyer the most value for the least money. I’ve heard many say they don’t need an agent before a transaction, but I’ve never had a represented buyer say to me at the conclusion that they were sorry they had me at their side representing them. The least important part of our job is driving the buyers around to look at houses (although it is important and can be fun); our real value comes later in negotiating and working through the process on behalf of our client and getting them safely to the closing table.

On-Site Representation.

The builder representative at the model home that greets prospective buyers may appear as a real estate agent there to help the buyer. However, it’s important to understand that builder rep is a salesperson for the builder; and as such represents the builder’s best interest. I love the analogy I heard recently that when a buyer deals directly with that rep (saving the builder the buyer’s agent commission) it’s like the buyer paying for the builder to not represent them.

The builder representative at the model home that greets prospective buyers may appear as a real estate agent there to help the buyer. However, it’s important to understand that builder rep is a salesperson for the builder; and as such represents the builder’s best interest. I love the analogy I heard recently that when a buyer deals directly with that rep (saving the builder the buyer’s agent commission) it’s like the buyer paying for the builder to not represent them.

“Real estate agents and Realtors are licensed professionals bound by law and professional ethics to protect their clients, while builder reps have the fiduciary to the seller/builder.”

Negotiation.

Sure, Buyer negotiations can be effective, as long as the buyer knows what incentives are typical and customary, how to compare alternative financing, who pays for what (title costs, appraisals, inspections, additional warranties, surveys, closing costs, etc.), what upgrades cost and how to apply builder concessions, and many other issues. Realtors make it look easy by asking questions that the buyer doesn’t know to ask.

Inspections.

But it’s a brand new home, what could be wrong?, Right? Wrong! As a buyer’s agent, I strongly encourage clients to get at least one home inspection during the building process. Builders are only as good as their subcontractors and the builder’s awareness of a potential situation. Mother nature can also play havoc in construction. During the building process, there are things that can occur which can harm your home unbeknownst to you until it comes time for you to sell, when that prospective buyer most likely conducts a professional home inspection. Buyers often think that the new home warranty will take care of any and all future problems that may arise. That is simply not the case; the builder typically covers a one year ‘bumper to bumper’ on the house with some offering home warranty plans for a specific timeframe beyond that. Keep in mind, these will only cover items that you become aware of and don’t cover the loss of energy savings by increased costs due to improper installations or defects until detected.
Here are a few real world examples that have been uncovered during new construction inspections:
-roof trusses delivered and installed broken without repairing,
-excessive rain on delivered wood which caused mold growth on framework. We were able to get the builder to treat the wood before sheet rocking it up.
-Ductwork not attached in the attic to certain rooms, which would cost you heaps in cooling your attic until it was recognized that there was inadequate cooling in a specific area of the home.
-Missing insulation in 30% of the homes attic as the improper amount was delivered and the workers failed to inform the superintendent; again would cause increased utility bills.
-Entire sections of roof tiles not installed properly or not attached securely. This could lead to water damage in your new home and/or missing and displaced roof tiles in a storm.

Buyer Agent Cost.

That commission comes from somewhere right? Nobody charges the buyer the commission; the seller pays it. Whether or not the buyer utilizes a professional to be on their side, the savings does not go into the buyers pockets. Reputable New Home Builders absorb this cost as part of their expense base. There are occasional builders that skew prices to compensate, but this is considered to be both unfair and unethical. In fact today, many builders are paying bonuses and incentives to agents above the standard commission structure. As Realtors we are very often sought after components of the real estate transaction.

Green with Envy

Buying Green.According to NAHB (National Association of Home Builders) 88% of buyers cite Energy efficiency as one of their Top Influencers in a Home Purchase Decision; second to only a safe community at 90%. 10% of buyers under 34, according to NAR (National Association of Realtors) choose a new build over resale for this purpose only. It’s no secret that along with technology, home builders are getting better and better at building homes with more energy efficiency. And 84% of these buyers are willing to pay a premium (2-3% more) for these features in a home in hopes to recoup those costs with energy savings in the future.
With Arizona’s temperatures topping 100 degrees for a good 4 months out of the year, energy costs are a viable consideration for many home buyers. Most valley homebuilders offer key green features as standard building practice like Low E windows, Energy Star appliances, high seer HVAC Units, Gas heat, and increased insulation, etc. While some go a step further offering such features as: radiant barrier, foam insulation, solar paneling, tankless water heaters, and more.
We recognize the importance of having an overall understanding of green building to represent our buyers fully; and have specialized training and certifications in these areas.

The Sequence.

This can become a bit tricky. If you are considering purchasing a new build, most builders require that you shop accompanied by your Realtor on your first visit into a community. I understand that many buyers believe they are just window shopping and not necessarily ready to purchase, but if you are feeling the interest in seeing what is out there, please let us know ahead of time. We will be able to narrow down the builders to the plan and community that works for you in your preferred price point. If you wish to take it alone initially, We can let the builder know you will be showing up taking a peek at their community to keep us in the loop. It is strongly recommended that you do not do the paperwork or contract without your agent being present to review and advise.