A New Home for a New Year!
So it’s a beautiful sunny Arizona winter afternoon and you and the family are driving around the valley when, on a whim or as a recreation, you decide to stop and “Just Look” at the new model homes. There are a multitude of signs directing you to the models and a giant American flag further beckoning you the parking lot. Sound familiar?
How about this scenario? Your friends have just purchased a new home and in their excitement they invite you to go with them to see their new purchase. It’s just human nature!
In each of these scenarios, you have just effectively given up your ability to be represented by a professional real estate agent (us) for free in most cases without even realizing it. The friendly salesman that works in the model homes works exclusively for the builder. This is an important fact to keep in mind. The little sign that says that your real estate agent must accompany you on your first visit to the models seems innocuous but it should trigger the old “buyer beware” response from you.
There are several good reasons to take you real estate agent with you on the first visit to the models.
The salesman represents the builder exclusively! What exactly does this mean? It means that the salesman has no responsibility to look out for your best interest. They do not have to try and find you the best financing available. They do not have assess the resale potential of the corner lot on a busy street that you have selected. They do not have to review the appraisal on the property to ensure that the comparable sales are commensurate with the surrounding area. They probably will not advise you on the fact that you are excessively upgrading your home and it will be the most expensive, upgraded home in the neighborhood and therefore not likely to sell for much more than the other less upgraded homes.
They do have some obligation to treat you fairly and disclose all material facts relative to the purchase of the home. In general, they do treat buyers fairly and equitably but not to the detriment of their client, the builder.
Let me try to dispel some of the myths associated with the purchase of a new home and utilizing the services of a real estate agent.
1. I can get a better deal if I don’t take my real estate agent. The agent at the sales office likely makes the same amount whether you bring a realtor or not. The cost of paying an outside real estate agent is already factored into the sales price of the home and to date, having sold over 300 new builds, I have not witnessed a builder offer a different price with an agent or without. If the builder starts discounting the price on an individual home or because the buyer’s did not bring an agent, it would adversely affect subsequent sales appraisals in a negative manner.
2. The incentive to use the builder’s lender always works out better than waiving the incentive and utilizing an outside lender. While this is usually true, wouldn't you like to know for sure. Many times when a builders lender gives you say $7500 in incentives, the rates and fees are elevated enough to offset all or most of that incentive. When you get a rate of a half percent higher than I am seeing with my other transactions, then that should be cause for concern. One of the biggest disadvantages of buying that shiny new home is that you cannot lock in your interest rate until the home is almost ready.
3. I am uncomfortable dragging my real estate agent to all of the new builds when I am probably just looking! We would much rather spend the time with you to help you make a good decision even if your are just looking. This is what we do for a living! Visiting these models is often a place where we can save you some time by guiding you to the models that best fit your needs and bypassing the ones that don’t fit your needs. Many of the new builders will also let us register you electronically. Once we have you registered, you can visit the models as often as you want without us along.
4. We only need our real estate agent for the home that we have to sell! If we represent you on the new purchase, we can often assist you with a discounted rate on the sale of your home thereby actually saving you money on the overall group of transactions. Best of all, it simply doesn't cost you any money to have us represent you on the new build.
5. My agent can’t save me any money on the new build so why take them? It is true that most of the builders will not negotiate on the purchase of a home with or without an outside real estate agent. Where we can save you money is helping you decide which upgrades return the most for your money and which upgrades can be done cheaper after closing by an outside contractor. We can also help you independently determine the re-sale value of both the home you are purchasing and the upgrades that you are contemplating.
Take us with you BEFORE you visit the new build for the first time!