Building a New Home? Why Use a REALTOR?

New home communities are more popular than ever, featuring open floor-plans, special pricing and incentives that make it easy to buy one with little or no money down. New home transactions typically seem a lot easier, too. If a buyer chose to, they could almost go from start to finish on a new home transaction without contacting anyone except the on-site sales person. But, if you are tempted by those new subdivisions at all, it is wise to consider using a real estate agent to represent you in the transaction. Why? Read on, and make an informed decision:
Use a REALTOR Who Has New Home Sales Experience - Many people think that they can save money on new construction by not using a REALTOR or that the services of a REALTOR aren’t needed if you're buying a new home. This couldn't be further from the truth! Most builders have already factored the cost of ‘marketing’ into the home, and this usually includes paying the services of a REALTOR. A real estate professional can walk you through the transaction and make sure that you're protected every step of the way. If your builder’s loan product sounds competitive and attractive, your REALTOR will know who to contact for a second opinion. And best of all, a REALTOR with a lot of builder transactions under their belt will have established relationships with area home builders. The builder doesn't want to ruin a good rapport with an agent, especially one who can potentially bring more buyers to them in the future.
Don't Sign ANYTHING Until - You get it all in writing! You're not simply picking out a house; you're picking out where you'll spend the holidays next year, where your parents will come visit you, and where you might raise your children. The on-site sales people are trained to play on this emotion and push you to write a contract right away so that "no one else can get your house." Take all the time you need to understand what you're signing, and don’t sign anything until you have it all down on paper. Just remember - it doesn’t matter what might be said, because everything will be done as it is written in the contract.
Order a professional home inspection - Many who sign a contract to build a new home (or purchase a spec or model home) won't bother to invest in a home inspection. Most new homes come with a one year "bumper-to-bumper" warranty that covers almost everything and many buyers feel that any and all construction flaws can be discovered within this time frame. The problem with this mindset is that many problems won't surface until after those first 12 months. Unfortunately, no matter how much experience and success a builder brings to the table, it's still next to impossible for a single construction supervisor to monitor and correct all mistakes made by the subcontractors they have hired. Usually, a home inspector will return to your site during the various stages of construction for one set price.
Don't Automatically Agree to Use Their Lender - Many production builders (builders who can develop whole communities on their own) are now large corporations, many of them traded publicly. They have also realized that there is much more money to be made than simply selling you a new home - they'll also try to sell you a loan. Builders may offer HUGE incentives to get you into your new home, sometimes up to 15% of the value of the home, with one HUGE stipulation -- that you use their lender. There are many problems that can arise when you pigeon-hole yourself to one lender, namely agreeing to higher rates and higher closing costs without checking with other lenders. The on-site sales associate will typically tell you that their hands are tied, and that you have to use their lender to get the incentives. I can tell you from experience that this is seldom the case. Remember, the builder's job - first and foremost - is to sell homes. If you refuse to sign on the dotted line unless this stipulation is removed, you will be successful - most of the time. There are rare occasions when a builder will lose sight of the fact that they build and sell homes - and will absolutely insist that you use their in-house lender. In these circumstances, stop and take time to do your homework. If it is still a good deal - by all means, sign the papers! Just remember that no house is worth taking a bad loan and paying THOUSANDS more for that home in the long run.
Research the Builder - Most builders are good builders. They take simple steps to protect their neighborhoods. Research your builder, or ask your REALTOR if your builder takes the following steps to make sure that your neighborhood won't instantly go down in value: a) Limiting the number of investor purchases (This ensures the neighborhood doesn't turn into a "rental" neighborhood & allows the "pride of ownership" to shine through); and b) Continuing to build equal or greater value homes in the same and surrounding neighborhoods. Builders who avoid doing this create a "vacuum" in home prices and the result is instantaneous devaluation in area new home prices.
Choose Your Appraiser - Even if you are paying cash for your new home, ordering an appraisal is a wise investment. Include in your contract the stipulation that the sale is contingent upon the property appraising for at least the purchase price on your contract. An appraisal will give you an in-depth knowledge of the market area and how your particular home stands in the present evaluation of that market. A lender will usually require a professional appraisal of the property before they will loan the money to you. Plus, most appraisers charge about the same of money for the service - so why not choose your own? Ask around until you are confident with your choice of appraiser and tell your lender whose services you wish to pay for.
Research City Plans - New neighborhoods are typically on the outskirts of town - the land is readily available and less expensive, which means that you can buy a bigger house for the same amount of money. In these outskirt communities, it's very important to know what the city has in store in the way of roads, zoning, public transportation, parks, and schools. These factors will dictate whether your new neighborhood will become the next "big thing."

There are many benefits to purchasing a new home - that's why they're so popular! Just as in making any large investment, it is important to use qualified professionals to protect your interests. This will ensure that you'll not only love your new home, but you'll feel comfortable knowing that you're a winner in the transaction, as well.

If you have questions about moving, building, selecting your first home or moving up to your next home, contact DAVID BRENTON’S TEAM.

When you are serious about moving… put our TEAM to work for you!