We get this question all the time from potential new home buyers. Do you really need one? No. Would retaining an agent to represent you in the transaction be a good idea? Yes, it would.
Some people believe they can get a better “deal” on a new home by working directly with the new home sales staff.
Most of the builders we know will not lower the price of the home simply because you don’t have an agent. Agent commissions are usually paid from a different fund that is not related to the sale of the home. Further, real estate professionals often know about unadvertised discounts and close-out pricing on new homes.
More importantly, there are many pitfalls in the buying process that are not related to pricing! Real Estate Professionals have the experience and knowledge to negotiate and guide you through the new home buying process.
Looking for a great deal on a new home?
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Source: Do I Really Need a Real Estate Agent for a New Home Purchase? << The Branch Team
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
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95% of our real estate sales are list, sell. The more players in the mix, too many lawyers, agents and banks without of state processing centers can kill a deal from a property parking meter that runs out of quarters and dies because of the process, not the property itself.
Tom, I agree completely. I keep abreast of new construction, and have a feel for discounts different builders are offering. Like you, I frequently get calls and emails from builders letting me know of unadvertised specials they have. Buyers often leave money on the table because they don't think they need a Realtor when purchasing a new home.
Tom, It's basically the same here. The major builders don't give a discount because the buyer is unrepresented, it's all built into their overhead. So if a buyer is ALREADY paying for an agent, why not have one working for them?
If I were representing any seller, I would be happy if the buyer were not represented. If were to divorce my wife, I would be happy if she chose to not engage an attorney to represent her. If I were an insurance company, likewise I would be happy if a claimant chose to forego professional representation.
Government has made things simpler and easier when changing the tax code and it almost always costs us money. Having only one agent involved in a transaction, the agent representing the other side, will make the transaction go much more smoothly. It's so much easier for a professional to take advantage of an amateur on behalf of his/her client.
Tom, like you said, the builders won't give them a discount because they're not working with a real estate professional. And if they do, it'll probably be made up in upcosts that they really don't need or even know that they have added in. Having a real estate pro on your side is definitely the best way to go!
Gosh, haven't seen a parking meter in ages!
I've worked on both sides of this fence. In my experience, the custom builders are a little different from the production builders. A strong willed and ethical custom builder will deliver a well-built home, on-time and on-budget for a fee that does not include soaking up unpaid commission. IMO cost plus with open books is the best way to go.
In our area, the production builders keep the delivery price the same whether or not they pay out buyer agent comp.
In either case, a buyer agent had better be very experienced or they will hinder the process (maybe your next post, Tom, what can or should a BA do in representing a client in new construction?).
We don't have much new construction here, but on the handful of deals I have brokered, I can't imagine not having an agent working and advocating for the buyer.
I agree Tom. In Huntsville, the on site agents typically make the same whether a Buyer's agent is involved or not. After 15 years in the business, I still wonder WHY a buyer would not want their own representation....especially when it doesn't cost them a cent!
Comment #1, Andrew: Huh?
Buying new construction could be very risky if you don't know the builder. Using a real estate agent that knows the market and the pitfalls is worth the commission. In our area, the builders build in the commission anyway.
I've worked with a number of buyers on new construction deals and have 7 properties under construction now. Buyers are more savvy now and seem to understand the builder isn't going to cut them a better deal without representation.
People can self-medicate too, but are you better off using a trained medical professional to help you with your illness? Real estate is not medicine, but bad results are no fun in either venue.
As a lender, I hate working on transactions that do not include a realtor. The buyer needs someone to protect their interests. Not only will a realtor help negotiate a much better price, but they look after the buyer's interests. How often does a builder recommend a property inspection? My daughter bought a new home several years ago and did not get a home inspection. In the following years, she had to go back to the builder to fix a number of things that came up: a gas fireplace that was plumbed incorrectly, roofing leaks from an improperly installed roof, and learning that part of the problem she had keeping the house cool in summer was that there was no insulation above the front entry to the house. A building inspector probably would have advised her also that the heat pump installed was too small for the size of the home.