Why Should A Realtor Represent Buyers OF New Construction?
Sunday, January 27, 2013
Why is it so critical to use a Realtor to represent you as a Buyer’s Agent on the purchase of new construction?
The National Association of Realtors (NAR) has indicated that new construction increased in 2012 and will only continue to increase in 2013. So as a buyer, what is the process and how are you represented in the purchase of new construction?
In the state of Pennsylvania, the Consumer Notice clearly defines agency which includes the definition of a buyer’s agent,
a seller’s agent, a dual agent and a transactional licensee. In the case of new construction, the builder is represented by a seller’s agent. They only represent the builder and do not represent the buyer as clearly defined in the Consumer Notice. My recommendation is that anyone who is considering buying or even looking at new construction strongly consider employing the services of a buyer’s agent, who is typically “free” to buyers! You should do this prior to your first visit to a any new construction site and your Realtor® should also accompany you.
What are the benefits of buyer representation? My name is Frank Dolski and I am an Associate Broker/Realtor with Coldwell Banker Hearthside Realtors located in Bucks County, PA. I represent buyers in areas such as Buckingham, Doylestown, New Hope, Newtown, Furlong, Jamison, and many areas in Bucks and Montgomery counties. There are many reasons why I encourage buyer representation on new construction and I will site a few reasons to do so:
A buyer’s agent will represent you from start to finish in every aspect of the transaction. That means from the signing of the agreement of sale to settlement. They will help you to negotiate the best possible
price for the property including options, lot premiums, and overall price.
I review all contract verbiage to insure that there is no “hidden verbiage” and insure where applicable that some be added where warranted. Keep in mind most new construction contracts are written by attorneys who represent the builder and these contracts are therefore heavily weighted in favor of the builder.
A Buyer's Agent with assist in evaluating alternatives to a particular new construction development (may include showing other homes, visiting other new construction sites, gathering info on other options). Also included is evaluating the selection of building lots, especially for future resale value. Some options can be deferred
until after construction and some are critical which may not able to be done at a later time. All this helps the buyer make an informed and confident decision.
As a buyer’s agent, I also recommend that at a minimum, a pre-drywall home inspection is down to insure that there are no obvious defects which could not be seen after the drywall goes up. I also
recommend a final inspection as any new home purchase is a huge investment.
Assist the buyer in attaining financing and a review of the financing paperwork, settlement charges on the HUD1 settlement sheet. I also help the buyer to select a title company with various options.
A buyers agent can assist the in directing you to the appropriate Township to look at plans regarding easement restrictions and future development surrounding the area. This is critical because you may want to put in an in-ground pool on a lot that will be restricted by the township or you may own wooded areas where you may never be able to thin out the trees to expand your yard. Builders are required to disclose plot plans, easements and other disclosures but it is always best to have a Realtor represent you to review all of these documents as you are executing the contract or better yet, prior to execution.
Attend a pre-settlement walk-through to help determine a punch list and the give a second opinion for any obvious defects.
My objective as a buyer’s agent for new construction or resale is to help the buyers make informed decisions during every step of the process. Again, I strongly encourage all buyers to consider using a Realtor® to represent them when purchasing a newly constructed home. Most if not all builders rely on Realtors to help to sell their inventory. It is our responsibility as a "Buyers Agent" to get you the best possible deal and represent you every step of the way!
Frank Dolski MBA, ABR, e-PRO
Certified Relocation Specialist
Previews Luxury Home Specialist
Coldwell Banker Hearthside Realtors
2012 Coldwell Banker International President’s Elite Award
2010-2011 Coldwell Banker International President’s Circle Award
Jim McCarthy said...Great article, Frank. It is so important for buyers to know that the New Construction Sales Agent is working for the Builder and has the Builders best interest and profit foremost in mind. It's their job and responsibility!
01/28/13 11:51 AM
Guy McPhail CPA, CFP said...Great information. All buyers need to have representation on their side and a buyers agent does that. The seller picks up the cost so this is a must for every buyer!
01/30/13 10:34 AM
Kim & Phil Picciotti, REALTOR, ABR, SFR, e-Pro said...Frank, love that you put this information out there for buyer's of new construction. In the same way a buyer would seek out a reputable Buyer's Agent for a resale home, they should most definitely use one for new construction as well. Many buyer's of new construction don't realize that a Buyer's Agent can negotiate with the builder on their behalf to get them the best deal or options they want, and this representation is, in most normal circumstances, is FREE!! It will always work to your advantage to use a REALTOR in every one of your real estate transactions to make sure your best interests are protected.
01/31/13 4:34 PM
Dan Golden said...Very informative, Frank. I don't think that most buyers of new construction realize that the agents handling the transaction work for the builder and are looking out for the builder's best interests, not the best interests of the buyers. It's always best to have someone on your side. Also, great suggestion on the inspection before they put up the drywall.
02/18/13 11:21 AM
Carl Cappelli said...Frank - very informative artcile. Imperative buyer's know who is on their side when purchasing new construction.
02/20/13 4:51 PM
Fraank Dolski said...Thanks Carl & Dan for your comments!
03/01/13 10:56 AM
Afif said...The Absent Game Involving me and my husband we've owned adionidtal MP3 gamers through the years than I can count, together with Sansas, iRivers, iPods (traditional & touch), the Ibiza Rhapsody, etc. But, the last few years I've settled down to one line of gamers .
04/27/13 12:50 AM