We all likely know someone who lost money in the purchase of a new home. Over the years, I have heard of deposits that were kept and no home built, even though the buyer was willing to purchase, water problems hidden by a builder, failure of the builder to fix problems, poor community designs, bad locations, choosing the worst lot int he job, etc. I hear these horror stories LONG after I can do anything about them. So, I ask the question ‘Who represents you in a new construction transaction? ‘
Your representation can be straightforward if you have a buyer agent accompanying you, or murky when, you walk in to a model home, alone. If you walk in alone, in PA, you’re simply assigned the builder’s agent- a person that represents the BUILDER. On the other hand, a good buyer agent, familiar with new construction and the resale of a home (your home is only new once), can add value in the process in a number of ways. They should walk you through the process with insight, market knowledge, and advise with an eye toward resale- whenever that would occur. Advise you on required amenities for resale of that style of home and options that will cost a lot more to add later.
The builder’s agent, (the randomly assigned agent identified earlier), works for the builder and is considered their representative or agent. This person is not likely to be familiar with the resale of a ‘used’ home and acts somewhat like a cheerleader and definitely as an order taker. They ask what you want and give you a price for your order. Its not likely they will talk you out of pricey upgrades that won’t be valued upon re-sale.
When I work on a new construction purchase, as an agent for buyer, I want to navigate the process as an advocate for the Buyer, to always add value for my client. This includes talking through the layout of the community to select a lot, discuss the impact of options, upgrades, selections and to help set priorities. Some things may be completed later for less while other are important to address from the start or they will cost much, much more later. Everything you pay the builder to complete is part of your tax base, on which you pay, FOREVER.
Some specific examples of what I mean by these general comments:
I had a buyer wanting to finish the basement, but couldn’t manage the builder’s additional cost in their planned loan. Looking for options, we had the builder ‘rough in’ basement plumbing for a bath, but leave the finishing project for the homeowner. The builder’s additional cost was minimal and meant that plumbing was already in place in the floor for the future finishing project that could include a bath. This will save the expense of cutting the concrete floor to install a drain line when the bathroom is needed.
A buyer of a rancher style, one floor, home requested the main floor laundry be moved to the basement- a familiar re-sale floor plan. We weighed the options of what the next buyer would want and had a second laundry (again, just the cost of a ‘rough in’ ) added to the basement for their immediate use, while retaining the main living floor access to a washer and dryer for the next buyer.
As for ‘ Who represents you in a new construction transaction?’, unfortunately, for many consumers, it’s either the builder or no one. The builder’s agent may even ask if you if you want ketchup with that order. As a seasoned, full time real estate professional and Buyer’s Agent, I say neither of these are real representation.