Do you need a Realtor when buying new construction?

Do you need a Realtor when buying new construction?

New construction buyers often ask, “Do I really need an agent to buy new construction?” While you can certainly opt to work directly with the builder or their sales rep, I strongly advise against doing so.

My name is Damien Baden. I’m a local residential Realtor® in Northeast Ohio and a new construction expert. I’d like to discuss why you should have an agent, specifically one who is a new construction expert, representing you when building your new home.

Not all buyer’s agents are experienced in new construction. Of the 9,000+ real estate agents in Northeast Ohio, most of them have limited knowledge or experience with new construction.

With your home likely being your biggest asset, shouldn’t your agent have specialized knowledge and experience to ensure you are making a wise investment with your new build? Absolutely!! After all, how is someone without extensive building experience going to properly advise you on building a new home?

As such, when building a new home, your agent should be one who’s completed countless new home builds with their clients and worked with numerous builders.

In fact, you should acquire an agent who is a new construction expert BEFORE you even contemplate buying new construction or visit any builder/model. Why? Typically, builders will not honor agent representation unless you write down your agent’s name upon your initial visit or have the agent accompany you. But why would builders do this? Because new home buyers without representation are more likely to spend more!

You should acquire an agent who is a new construction expert before you visit any builder/model or else the builder may not honor your agent’s representation.

I have personally helped over 400 buyers build their new home and have experience working with multiple builders. I have saved countless buyers from selecting the wrong builder or location and guided them toward the best possible investment with their new build.

Homebuilding is a highly emotional process that can be drawn out over several months or even a year+. Having someone experienced and knowledgeable will benefit you tremendously. Here’s a list of some reasons you should have representation by an agent specializing in new construction on your next home build.

7 reasons you want a Realtor experienced in new construction to represent you on your next new home build.

1. The homebuilder and their staff represent the builder, not you. 

A homebuilder and their sales staff have two main goals: to sell the most homes with the best margins possible. Understandably so, since they are in the business of making money.

The builder and their sales staff don’t have any fiduciary responsibility to look out for you.

In fact, there are several tactics they may employ to get you to overspend. For example, the builder may designate a remaining lot as a “premium homesite,” when in reality, it’s just one they couldn’t sell. Buyers may be duped into thinking they are getting something special and overpay for a basic or undesirable lot.

This next scenario was something that nearly happened to my clients, prior to acquiring my representation. When they reached out to me and I heard they were about to purchase a crappy lot (at the community entrance with main road frontage that backed to a five-lane highway), I immediately discouraged them and stopped them from paying a premium for what was one of the worst lots in the community. Aside from overpaying, the lot would have also been difficult to market come resale. They were obviously offended that the sales rep tried to deceive them into a bad investment and, not surprisingly, they wanted nothing more to do with that builder. Based on their needs, it wasn’t a builder I would have suggested in the first place (more on this in #3 below). In the end, I was glad to help them to find an alternative elsewhere and they are incredibly happy.

This is exactly why you want an agent who will not only protect your best interests, but one who can also properly advise you on new construction.

2. Your new construction expert will help you hire the right builder for your needs and wants. 

It’s easy to be mesmerized by a builder’s model. After all, that’s what model homes are intended for. However, aesthetics do not always equate to quality. Buyers can unknowingly hire the wrong builder and then be severely regretful, if not infuriated, with their new home.

Agents specializing in new construction have a keen eye and easily recognize the “lipstick on the pig,” meaning it looks nice but it’s subpar quality. A paneled interior door may look nice, but if the door isn’t solid core, it’s just lipstick.

Poor craftsmanship or design can result in annoyances like squeaky floors (improperly installed subfloor), the knocking sound of unsecured water pipes, inadequate sound insulation, insufficient lighting, or awkwardly placed light switches. It’s not until you are actually living in your home that these issues become apparent and eventually a source of irritation.

With an inside scoop on builders’ reputations and an eye for quality, I will encourage you to select a reputable builder who can deliver a home design you’ll love.

Overall, a new construction expert is best equipped to advise you and save you time searching for the type of builder (custom, semi-custom or production builder) that best suits your needs, timeframe, and budget. We’re already familiar with what most builders in the area offer, how much they will customize, their pricing, and building timeframe.

3. Your new construction expert can guide you to the right neighborhood, location, and lot.

An agent with extensive new construction experience can better recommend specific communities, lots, or parcels of land that are not only suitable, but also desirable for your new build.

I’ll ask you to consider things like the positioning of your home? Do you want your main living areas to receive sun throughout the day or just during the morning or evening? This will help narrow down specific lots that can accommodate your preferred directionality.

What about the foundation? Are you fine with a slab or do you want a basement? Certain areas are so flat that they only allow for slabs or a standard egress basement. If you want a basement with daylight windows or a full walkout, we’ll look for a sloping lot, which are anot always available in every neighborhood.

Understanding these types of things will ensure we are looking at communities/lots that allow for your preference.

I’ll also help to ensure your lot is aesthetically desirable. I’ll point out things like lots that will have utility boxes. A utility box in a front yard is an unwanted eyesore for some, yet most buyers don’t think to ask if one will be built on their lot. Again, this is what I’m trained to help you think about.

A big part of my job is to keep you on track and ensure we’re looking at locations that will fulfill your needs. When visiting builders, it’s easy to become bedazzled and forget your “must-haves.” Sometimes that means steering you away from things that won’t suit your needs.

Remember my client from earlier who was nearly swindled into that joke of a “premium” homesite? The community they were about to build in had an HOA that only allowed a 4-foot fence height. The ultimate reason they were looking to move was for their Great Danes, who needed more yard space requiring at least 6 feet of fencing. They’d completely forgotten to even ask if the community could accommodate their #1 need, as they were so beguiled by the thought of building.

Don’t think that this sort of thing can’t happen to you. Such “new build amnesia,” although usually on a smaller level, happens to unrepresented buyers more often than you’d think.

Had I been their agent from the beginning, we wouldn’t have looked at that community due to the HOA limitation. Thankfully, they found me before they were stuck in a contract building a home on a terrible lot that didn’t offer what they needed.

In addition to keeping you focused on your needs, one of the most important things I’ll help you consider when selecting a location is resale value. For example, if you are building a sprawling custom home, you won’t want to be surrounded by lower-priced cookie-cutter homes. This is not just for aesthetic reasons, but rather how it negatively affects your home’s value (i.e. home equity lines and ultimately resale). It’s all about the Benjamins baby!

4. Your new construction expert can provide advice on appropriate upgrades and structural changes. 

The allure of building a new home is customizing it to your tastes. Yet, selecting options and upgrades for your new home build can be overwhelming.

When there’s a budget, as is most often the case, I’ll help you select the options/upgrades that are best completed at the time of build, those that can wait, and those with the most impact on resale.

For me, selecting options and upgrades is my favorite part of building and my friends and neighbors often consult me when choosing colors for their homes. There’s a funny story about my wife and I selecting colors for our lower level. Within seconds, I selected a swatch from the deck. She was astonished that I’d made a selection so hastily and even objected to the color. I encouraged her to choose a color of her liking. Finally, after days of waffling over shades of beige, she was excited to show me what she’d decided… To her disbelief, it was the same color I’d chosen days before. Needless to say, she now trusts my color suggestions.

As a final note here, keep in mind that the degree of customization will depend on the builder. Most builders are “production builders” that have preset floor plans. You may be able to upgrade finishes and colors, but drastic changes to the floor plan are not normally permitted. If a production builder were to approve a structural change, the price can be double or triple the actual cost. At that point, a custom builder would be a better option.

5. A new construction expert can educate you on the paperwork and what to expect compared to buying a resale. 

The builder’s contract used when buying a new home is quite different than a standard resale (existing home) contract. It is written with an overwhelming amount of legal jargon to protect the builder, which can be difficult to understand, overwhelming and intimidating.

As your agent, I’m here to help you understand the contract to ensure there are no surprises. Here are just a few sections I like to review.

Earnest money is one such section. A builder is building a home to your specifications, which if your purchase fell through, may not necessarily be attractive to alternate buyers. Due to such risk, earnest money on a custom build is typically much more than a resale (amount varies by builder).

Another section I’ll review is that builder contracts are not contingent upon an appraisal. New home buyers cannot back out of a contract if the appraisal is low, unlike a resale, without losing earnest money. The builder is also not obligated to drop their price to match the appraisal. We will review what would happen in such a situation.

I also comb through options with my buyers so they know exactly what is and is not included. Unrepresented buyers often omit options they assume are included and then want to add them during the construction process. One such item is drywall and/or finishing of the drywall in garages. Unfinished drywall is quite unattractive and something I recommend when initially selecting options. Adding such options late in the building process will incur an additional fee above and beyond the original cost, which no buyer is happy about.

We’ll also review HOA fees, closing costs, and property taxes and how they work with new construction so you understand the fees you will be paying. A lot of times, there are capital contributions with newly established HOAs. Also, home builders will tend to push more title fees onto a buyer in northeast Ohio versus when you’re buying a resale, which are split between the buyer and seller.

A new construction buyer’s agent will be instrumental in deciphering the details of the contract to set expectations, which in turn, reduce any surprises.

6. A new construction expert can negotiate the best deal on your behalf.

Some agents will tell you that there’s no negotiating with new home construction. Those agents are mistaken.

Building a new home with minimal upgrades is really the only time you won’t have room for negotiation. Otherwise, there are always a few negotiable areas with upgrades.

Mortgage and title are two more areas where negotiations are available, but only if you know where and how.

I always negotiate for my home building clients, and I even guarantee my ability to negotiate new construction.

If you’re interested in hearing about my negotiation guarantee or how I can represent your best interests during your next home build, feel free to call or text (440) 628-1321 or contact me here.

7. A new construction expert will represent and advise you through the entire building process.

Last but not least, you have somebody representing you throughout the entire building process.

For starters, I accompany my home-building clients on many appointments, whether it be selecting colors, framing, pre-drywall, or doing the final punch at the end. There are a mountain of items reviewed during these appointments and after a while, buyers tend to glass-over and stop asking for clarification. I’m there to provide additional explanation and ensure you understand everything, making those meetings much less overwhelming.

With a wealth of building knowledge, I’m able to directly answer most any new construction question you may have. Whereas, a typical buyer’s agent would need to reach out to the builder or construction manager for answers.

Having extensive on-site construction experience, I notice issues most buyers or typical agents wouldn’t. These include details like checking for proper caulking, sanded doors, and ensuring the options you’d selected are actually there. You’d be surprised how often options are incorrect (like the wrong windows) or missed entirely. With my documentation strategy, we ensure your options are correct and the final punch list is completed.

Not only do you want someone equipped to look out for such things, you want someone on your side who represents you. Remember, the builder and their staff will be out to protect their interest, not yours. Unrepresented buyers can often feel hopeless or even bullied by the builder/construction manager in these situations because builder contracts are written very one-sidedly.

I have no qualms about addressing issues on behalf of my clients and am glad to “go to bat” to get things resolved for you. Not only is it my responsibility to do so, but I am skilled in the resolution of such issues. Because I am an expert in construction, I know what is right and won’t be snowed over by indifference or excuses from the builder. My clients have peace of mind knowing they are represented by someone with the fiduciary responsibility to take care of them and make sure that things are right.

Closing on your new home is a lot less stressful when you know what to expect. Reviewing the closing timeline in advance with my clients helps reduce the stress that often accompanies the closing process. While there are many parties that play a role in the closing process (the builder, mortgage company, title company, city inspections and certificate of occupancy), I’m there with you every step of the way.

Another area I like to discuss with my clients is what to expect after you move into your home. For instance, we’ll discuss that you may notice wall cracks several months after you move in. Naturally, you may be alarmed when you find a crack in your home, but it’s usually nothing to worry about. Cracks are most often related to shrinkage. Many of the materials used to build a home (mortar, plaster and concrete) contain moisture and can shrink as they dry out or with temperature changes. A straight crack of 2mm or less (the edge of a dollar coin) not accompanied by sticking windows or doors is not usually a cause for concern. The builder’s warranty will stipulate when the builder will walk through your home to inspect for such post-build issues.

To recap, the 7 reasons it’s important to have a new construction expert, not just a buyer’s agent, representing you during new construction…

  1. Whereas the salesperson or builder represents the homebuilder, an agent has a fiduciary responsibility to look out for your best interest.
  2. They’ll save you time, helping to guide you to the right type of builder to satisfy your needs, and also one you’ll be happy with.
  3. You’ll be more likely to select the neighborhood, location, and lot to best suit your needs.
  4. You will be better advised on the options and structural features that make sense based not only on your budget and needs, but your home’s value come resale.
  5. A better understanding of the building process and contracts so there aren’t surprises, unnecessary costs, or increased frustration.
  6. New construction experts will push to ensure you will get the best deal and even know of negotiation points most buyers don’t.
  7. Last but not least, you will have exceptional representation throughout the building process and even after the home is closed.

It would be my pleasure as a new construction expert to proficiently represent you as your buyer’s agent. I look forward to talking to you, and I hope you found 7 reasons why you need a new construction expert before you build your new construction home helpful.

If you’re interested in learning more about how I can represent your best interests during your next home build, call or text (440) 628-1321 or contact me here.

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