Based on the keyword searches that some visitors have used prior to visiting this blog, there are a few readers that are questioning whether they need to use a Realtor® when they are planning to buy a home from a builder.
Given today’s market and the issues in the mortgage world, it is even MORE IMPORTANT to use a Realtor® now! I’m not just saying that because I am a Realtor®, but because real estate agents can help you make good decisions – if you listen to us.
Three to four years ago, when builders began offering 100% financing with 3-5 year ARM’s, agents knew that there would be problems in the future if rates rose by the time those ARM’s became due. Many of us told our buyers to not plan on selling prior to 7-10 years because the prices wouldn’t have appreciated enough to be able to afford to pay the closing costs if they took out a 100% mortgage. We told them that their mortgage amount was higher than the value of the home because the builder added the cost of their financing to the price of the home.
Guess what? Buyers didn’t listen to us because they had stars in their eyes for that new home and only considered what their monthly payment would be.
You only have to watch TV or read the newspaper to know what has happened to many of those buyers nationwide. The Fed raised interest rates to curb inflation. The speculators who bought and flipped when prices were rising, pulled out as the interest rates rose. Their pull-out lowered the demand for the inventory of homes that were for sale. Excess inventory resulted in sellers needing to lower their price to attract the fewer buyers that were/are available. It is a typical Econ 101 supply-demand theory in action.
The builders are now suffering and are offering special discounts or incentives. They have reduced the quantity of specs they build. So it CAN be a good time to buy … but you need to buy SMART! Here’s how a real estate agent can help you do that:
- The sales rep that sits in the model home is an employee of the builder. While they are nice people, they are working for the benefit of the builder – not the buyer. Using a Realtor® means you have someone representing YOU.
- Your real estate agent will run comps for you regarding area prices of homes that have recently sold. The agent will know whether prices for homes in your buying area are holding steady, rising or declining. They also may know whether short-sales, sheriff auctions, or foreclosures are apt to decrease prices further in the development you choose. This information will let you know what price you should offer to pay for the home.
- Agents know what upgrades are important to buyers when you eventually plan to sell. Spend your money on items that can’t be changed later – like a full basement, fireplace or the woodwork. Save some money initially on items that you can change later as you live in the home like faucets, door hardware, or lighting.
- Your agent will push you to have a home inspection prior to your punch-out meeting with the supervisor. By all means DO THIS! (read this post for reasons why)
- Builders are notorious for missing due dates – their contracts are written to protect them if they do. Your agent will track the due dates and “try” to keep the builder on-track. The agent will also make sure you meet YOUR due dates.
- Your agent can help you sell your current home if need be, and will know what needs to be done to get your home in contract by the time the new-build reaches the cut-off stage of dry-wall.
And last of all, it doesn’t cost you any money – or said another way – the builder will charge you the same price whether you use a Realtor® or not. That fee is just a marketing expense. In fact, the sales rep may receive a bonus if you DON’T use a real estate agent. So you might as well get that FREE representation!
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