SHOULD YOU USE A REALTOR WHEN BUYING A NEW CONSTRUCTION HOME IN HOUSTON?
The real question is, why wouldn’t you? It may seem like you wouldn’t need an agent to help, but having one from the start can help you in many ways.
GUIDANCE FROM BEGINNING TO END
One thing you need to consider before going at it yourself is that the builder agent or sales rep doesn’t represent you. They are employed by the builder and hold the builders best interest. Not yours. No matter how helpful they may seem, at the end of the day, they are there for the builder.
Also, you should note that the builders are the ones paying your real estate agent commissions. Not you.
Now, you might be thinking to yourself, “if I don’t have a Realtor, then I can get a better deal.” Well, that’s partly true and partly false.
Many builders hope to entice you as a buyer with a “deal” when you are not using an agent, because they believe that you as a buyer are naive. They will try to take advantage of you, because you may not know exactly how the whole process works and what is typical in the real estate world. Now, I’m not saying that all builders are this way, but there are some very shady home builders out there.
Also, if you are building from the ground up, the builders will try to sell you upgrades at the design center to compensate for the “deal” they gave you.
Among other things, your Realtor is there for guidance, to offer their knowledge of the industry and the real estate transaction in general, to help you make educated decisions, and to help you navigate the home buying process all the way to closing just like any normal sale.
If you are thinking about going the route of new construction for your new home, take a minute to visit the two blogs listed below that we have written for buyers like you.
Tips For Buying A New Construction Home
Avoid These Mistakes When Building A Home
Did you know that just because a builder is asking a certain price for an inventory home, that doesn’t mean you have to pay that price? Everything is negotiable in real estate. However, how negotiable it is all depends on market conditions.
You could make an offer to the builder with many different variables. Here are some different options below. You could…
- Make an offer that is lower than their asking price.
- Ask the builder to help cover your closing costs.
- Ask that appliances are included (typically your refrigerator, washer and dryer are not included).
- Ask for sod to be included in your back yard (did you know that most builders only put sod in the front yard and leave the back yard for you to do yourself?).
The list can go on and on. There are many different pieces to the transaction and so many different options that you have as a buyer, especially with new construction. That is why it is so important to have someone on your side who knows the ins and outs of how these builders work. These are the types of things that your Realtor knows about and can help you get the most bang for your buck without the builder taking advantage of you.
Here is where you need to make a decision. The builders have preferred lenders that they send buyers to. It’s up to you if you want to use the builders lender or your own lender.
See if they are offering incentives to use their lender vs. someone else you had in mind. If you can, try and compare the rates, terms, and any incentive the builder is giving you with the rates and terms from a different lender of your choice. Weigh those options and see which works best for you. Your agent should be able to help you with this as well.
If you don’t already have a set lender in mind you can start by visiting this blog for tips on finding a great lender or fill out an application with one of our preferred lenders who can help get you started.
OVERSEEING HOME INSPECTIONS
I want you to understand one thing very clearly; just because it’s a new house does NOT mean that it was built correctly or that it doesn’t have any problems.
A few months ago, there was a new construction house in the Houston area built by a well-known builder that had major framing issues. I mean really bad. We are talking huge gaps in the framing, framing not being secured properly, and etc. This was a $750,000 custom home. The builder didn’t want to make the repairs because of the massive costs, so the buyer backed out. It’s a good thing that the buyers were represented by a great agent, and they performed their own inspections rather than relying on the builders inspectors. The sad part is, the builders will sell it to someone else without them even knowing about the major framing issues. And they will likely never know until they start having issues later down the line.
Being in this business, we have come across many awful issues on brand new houses, and it is more common than you may think. Here are some quick summaries on a few real life scenarios that have happened with our clients.
- Bad framing, sealing and architecture causing water to leak into the house in several places, destroying drywall and flooring, creating electrical safety hazards, creating mold, and etc. It was awful.
- Serious black mold growing in closets from improper HVAC venting.
- Awful contractor work on finishing touches with doors not closing properly, poor craftsmanship on wood working, horrendous painting job, shower tile floors being destroyed, and more.
And that is just a few of our most recent examples. It really is hard to find builders that use great contractors and do quality work without ripping off buyers.
With that being said, it is so important to hire your own inspectors to go out after each phase has been completed to make sure everything is correct. You can not rely on the builders inspectors, because again, they work for the builder, not you. It is important to hire an agent who will be able to help you with setting up these inspections with reliable inspectors that they work with regularly, that can help with getting the builder to fix anything concerning that comes back on the inspection report, and that will help oversee the entire build from the ground up.
EXPERT GUIDANCE – SAVING MONEY
Remember when I mentioned the design center earlier? Well, don’t make the same mistakes I did when I bought a new construction house before I knew anything about real estate.
Do you ever see the signs on the road advertising the new community that says something like, “Starting at X Price?” That is to lure you into the subdivision. When you decide that you like the neighborhood, you will pick the floor plan, which will likely cost far more than the number you saw advertised. Next, they will send you off to the design center. Here is where you find out that your house is going to look nothing like the model home you toured, without paying a pretty penny on top of your purchase price.
Most times, the standard floor plan is very basic and includes none of the “upgrades” that you see in a model home. The model homes are always decked out with almost every single upgrade that they offer. So don’t get your hopes up.
You will find out that everything in the design center that you like is an upgrade that costs more. And everything is marked up like crazy. That tile you want? $15 a square foot. Or $1.75 if you buy it yourself. You get the picture…
My advice, spend as little money and time as possible at the design center. Most of the upgrades you are looking at will cost a fraction of the price if you hired a contractor to do it for you after closing. Potentially saving you thousands of dollars.
Also, as a side note, remember when I said that I purchased this new construction house before I knew anything about real estate? Well, we went to the design center and decided to pick several upgrades, which in turn increased our total sales price by about $25,000. Not only did this raise our price dramatically from what we first expected, but it also caused us to have to pay extra money out of our pocket. How do you ask? Once the house was finished and our lender sent out the appraiser, the appraisal came back lower than what our sales price was. Since we had added so many upgrades to make it the house we wanted, our house now “cost” more than any of the houses in the neighborhood were worth. Instead of backing out, because the house was already completely built and we were in love with it, we had to pay the difference out of our pocket. Another downfall to all the expensive upgrades that the builder tries to get you to add on.
Hiring a Realtor that has your back is invaluable. Buyer representation is free to you, so take advantage of having someone on your side. Someone you can trust. Don’t just hire any agent, do your research! Check out our video and blog we wrote about how to find the perfect real estate agent.
If you are thinking about going the route of new construction for your new home, take a minute to visit the two blogs listed below that we have written for buyers like you. You can also schedule an appointment with us if you decide that having your own representation is best for you.
Tips For Buying A New Construction Home
Avoid These Mistakes When Building A Home