Is a real estate agent needed when buying a new construction home? I’m looking to buy a condo/townhome with my fiancée, and we found the perfect one. It’s in a new...
three_a_day replied:
Sounds like you've gotten good feedback on whether or not you need an agent! If I can offer some unsolicited advice on new condo constructions, however, please please do some research on the developer before you buy! See if you can contact people who live in other buildings that were recently constructed by your developer, and find out whether or not they've had problems. Find out whether or not your state offers any consumer protection to buyers of new constructions (like a mandatory warranty period that the developer must abide by). Splurge for an engineer or inspector to look at the common elements of the building -- not just your individual unit.
My husband and I bought a new construction condo two years ago that we thought was basically our dream home. We were excited that it was a new construction because we thought, "Great! We're not going to have to worry about maintenance, roof replacement, etc." Within just 2 months, the roof, siding, and foundation were all leaking, badly, due to the developer cutting corners. The building is under a 2-year warranty for the developer to fix structural problems, but the developer kept sending out the same shitty contractors to do bad work, so now we're fighting them to do repairs on our terms. Lawyers are involved.
Our HOA has paid almost $10,000 over the last two years to lawyers, engineers, and inspectors. We've since spoken with owners in other condo buildings built by this company who have all had variations of the same problems we've had, and even heard from others who have had similar problems with new constructions built by different developers.
I hope you don't have these problems! But boy I wish someone had warned me that "new construction" doesn't necessarily mean "well built" before I bought my place... I've learned more than I wanted to over the last two years and just wanted to pass along my cautionary tale! Good luck!
ETA: I'll add that the agent representing the developer in this case was either incompetent or deep in the pocket of the developer; we found out after the fact that she outright lied to us and other buyers in our building. I believe some people in our building are trying to report her to the real estate board. This isn't to say that having an agent will protect you -- our agents were okay, but man, I wish they'd done some due diligence on the building -- but it may help protect your interests.
txmail replied:
When I purchased my first new build I used a realtor and I was really happy that I did. Not only id he help me navigate the financing portion of the whole buying process giving me options that the builder wouldn't (they wanted me to use their broker) but he also wen to every single meeting (I think there were about 9 phases for things like foundation, framing, plumbing, electrical). He also met our inspectors (do not trust the home builder inspectors, they work for the home builder and not you) out there to make sure any issues uncovered (lots) were conveyed to us in a way we could understand. I woudl also recommend you do all thre major inspections with your own own inspector. I forget exactly what they are but I think it was foundation inspection (they will go out and make sure it was to code, level etc), framing inspection and final inspection to make. My inspectors found so many things, mostly little that were easy but a few of the bigger ones were that a pad for the AC was not built to spec (at all, way off and also not level), 8 windows that were not installed with the flashing, 4 windows installed backwards, a out of spec main structural beam (it had a crack in it inches wide, that took a few weeks to fix because they had to de-construct allot of the house to replace it), non-grounded outlets, broken GFCI outlets etc and some problem with the roof that I didnt understand. All of thees issues were "approved" by the builder's inspectors and construction manager. If I didn't have such a good realtor I would have never known about them as my first instinct was that wow - they are doing all these inspections they must be really good. Yeah, nope. These mass builders dont give a shit about you. They hire the lowest bidders to put your matchstick home together enough that it will be approved by whatever county inspector it has to.
I would also say if your realtor is not willing to be out there for every meeting with the builder with or without you then fire them. Find someone willing to work for their commission check instead of calling in to check with the sales office on progress. Allot of people I know built houses and said they only went to the final inspection and their realtor only went to the sales office to sign paperwork and to closing.
dmvmtgguy replied:
Yes, a realtor can help you negotiate for things to be added to your home without increasing the price. Builders will almost never decrease price for fear of lower the comparables for future sales. They may give you $10,000 in closing costs help to avoid lowering the sales price by $10,000
AshingiiAshuaa replied:
You could retain an agent for around 2.5% - 3%, but I'd go with a real estate lawyer instead (not a lawyer who also does real estate, one who primarily practices real estate law). That should run you well under $1.5 k. You'll have the comfort of real legal representation while saving enough money to take a honeymoon in Tonga.
kunjvaan replied:
Get an agent, make the contractor pay the commission. They have a lot of insight, that you may not have.
samsam2019 replied:
No agent needed...ask for additional closing costs, free options OR even ask agent to refund you 90% of commission at closing as legal in most states- look up rebate agents. They get a sold unit afor their numbers, make a few bucks, and expand network when you sell
loldogex replied:
My coworker told me that he didn't bring his agent with him for a new construction and instead of giving the commission to the agent, instead, they gave him a discount on the home -- I believe it was a few thousand off.
digimind1234 replied:
Great to know. I would like to advise you to go through a home inspection before the owner handover the property to you. It is an added protection with a cost-efficient solution. I would recommend [Snagtick](https://snagtick.com/) application which would make your complete home inspection very easy.
MoonIsMadeOfCheese replied:
You do not NEED an agent in this scenario, but having one can definitely help and possibly save you money and hassle.
The builder’s rep you deal with represents the interests of the builder, not you. Although most builders don’t negotiate too much in price anymore, a good agent can usually help you get closing costs, upgrades, etc. They can also make sure that you pick options that are good for resale, act as an extra set of eyes during all your walkthoughs, and will make sure you get all the proper inspections to protect yourself.
Big reputable builders will always be happy to accommodate an agent too...they want realtors to continue bringing buyers to their properties, so they welcome their input. Having to pay a certain amount in real estate commissions are usually already planned for in the builder’s budget, so it will not affect your bottom line.
seektosolve replied:
Don’t be afraid to interviews agents and ask how they will assist you in a new home purchase. Ask about their experience. A good agent should be able to advocate for you and there are things that you can negotiate on a new build...upgrades. Landscaping can also be huge. An agent experience with new builds can always help point out things that need attention as the build progresses.
staples11 replied:
In my state as a buyer you don't need an agent for purchasing new construction, but you can always get one if you want (although, apparently in other states there are builders that stonewall a buyer's agent (also known as selling agent)).
Some states do not allow dual agency. In which case you either both need a brokerage representing you, or have no brokerages involved.
Since it's a new construction there is usually no room to negotiate on price. Builders are incredibly reluctant to accept a lower price because it affects all of their other units. However, if you truly believe and have evidence that the units cannot support that price as in, in this manner if you can try to negotiate for upgrades or credits.
It will of course have to appraise. If you use their lender it is very unlikely to not appraise because their lender will already know quite a bit about the building. You have to research, because sometimes their lender is better but sometimes you can find your own lender that has better terms.
You can and should have your own building inspector and attorney, anyway. That will cover your legal bases and your habitability/coding bases.
taguscove replied:
If you know the market and what you want, an agent is less valuable. Go with your gut. I've used a trusted attorney that was also licensed as a real estate agent with a per hour fee. The contract can be written with the seller reducing the sale price by 2.5-3 percent, or paid to your attorney and forwarded to you.
blacktide777 replied:
Real estate agents represent buyers for FREE! There is no reason not to hire one as you will not receive a discount for not using one.
Shwingbatta replied:
No, an agent is not necessary as you are buying a product from a legitimate business. The builders rep should be qualified enough to help you through the process.
taguscove replied:
If you know the market and what you want, an agent is less valuable. Go with your gut. I've used a trusted attorney that was also licensed as a real estate agent with a per hour fee. The contract can be written with the seller reducing the sale price by 2.5-3 percent, or paid to your attorney and forwarded to you.
jmd_forest replied:
Of course not ... agents are even more useless than usual in this situation.
taguscove replied:
If you know the market and what you want, an agent is less valuable. Go with your gut. I've used a trusted attorney that was also licensed as a real estate agent with a per hour fee. The contract can be written with the seller reducing the sale price by 2.5-3 percent, or paid to your attorney and forwarded to you.
jmd_forest replied:
Of course not ... agents are even more useless than usual in this situation.
Momof2pups replied:
It’s just added protection and it doesn’t cost you anything.
dynodad replied:
They aren’t needed but they will represent you as they would in a normal purchase. The builder is the seller in this situation so it’s just nice to have an agent.
demogorgongrapher replied:
Howdy! Something to add to all the good information in this thread. If you know you want to buy a home in a particular new development, and will be a relatively "low maintenance" buyer, you should retain an agent who is willing to split their commission with you. You can put that money towards closing costs or the down payment. An agent may be more likely to agree to this if they're not having to show you around the city for days, weeks, or months or if you have been a generally difficult buyer. Good luck!
Captcha_Imagination replied:
Builders take advantage of buyers even more than selling realtors. They will slip in stuff into the contracts or deceive you with when to sign, take deposits etc.....There is a builder in my area that has people sign something along the lines of a promise to buy.....and then he jacks up the price by 50 K + 6 months later and many people are in too deep into the transaction so they pay it. They never signed an actual contract of sale.
A realtor or real estate lawyer would help you prevent these types of shenanigans (i'm sure there are several variations to these types of tricks and you don't know them all) but the realtor gets paid by the builder and he won't care that much because it's an expected business expense for him.
awalktojericho replied:
In the process of buying new construction with an agent. She has negotiated upgrades and extras (outlets and countertop choices) that so far would have cost us around 35K. And reassured us along the way. New construction won't give you anything you don't ask for, and a real estate agent won't cost you any extra-- it's in the sauce already, and if you don't use one it won't be any cheaper for you,just extra $$ for them. Use one.
trialbytrailer replied:
It's probably been addressed in the comments already, but an agent usually doesn't cost the buyer a dime, so you might as well have one. Oh, and always get an inspection from an independent source when the new build is substantially complete. You will not believe what an inspector can find.
Truffles2019 replied:
It looks like you've decided to get an agent, which is a good idea, but I wanted to share my experience as well.
In my city (Toronto, Canada), there are "developers charges" levied by the city on a developer who is building a condo. These fees might be a straight cash payment to the city to cover the building of a local park, or community centre, or it might be a large public art piece commissioned by the developer. These fees are ultimately passed down to the buyer of a condo unit and rolled into the closing costs.
My agent was able to negotiate a cap of $9000 on these developer charges, saving me $15,000. Yes, these fees came to $24,000 all told.
Condo developers will find any way to pass costs onto the end user (A $250 'cheque cashing fee' for example. I had to pay them to take my money and deposit it in their bank account!) and trying to go into this transaction in good faith with them would be a mistake.