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Should I Hire An Agent When Purchasing A New Construction Home?


Should I Hire An Agent When Purchasing A New Construction Home?

Many people may think they don’t need to hire an agent when purchasing a new construction home but it will be as complex as a resale real estate transaction, if not more so. Some items you’ll need to navigate is the fine print of builder-friendly contracts, resisting the temptation of fancy upgrades, and trust that everything is new and you won’t have any issues (at least for the first year). Not to mention you’re paying a premium for buying new: on average, a buyer is paying 30% more than the average price of a resale home.


These are all areas where a knowledgeable buyer’s agent with new-build experience as well as builder connections can be invaluable. One of the biggest misconceptions is that by not hiring an agent you are saving money on commissions. I most cases, the seller is responsible to pay the buyer’s agent commission and in this case it would be the builder. So hiring a trusted agent who has your best interest at hand is a no brainer right?


An agent will focus on these main things when you’re working with a builder:


Advocate for your best interests

- The builder’s real estate agent can be a good resource in the new construction process, but don’t forget they’re representing the builder in the sale. Seller’s agents in new homes work hard to maintain relationships with the builders, and at the end of the day, they will prioritize the builder’s interests over yours.

- A seller’s agent doesn’t want the buyer to have a bad experience, but their fiduciary duty lies with the builder. Because of the structure of commission, the seller’s agent is legally obligated to serve their client’s best interests.

- A buyer’s agent will help you think through things like your budget and the cost of each upgrade. Or, if the builder asks for a delay in construction, a buyer’s agent will push back and try to keep the builder on schedule. Their first priority is your happiness.

Help to understand the fine print of new-construction paperwork

- Your agent will comb over the contract and bring up any issues to the builder and seller’s agent. Your agent will also know the right time to bring in an attorney, as well as when to let things slide and save money on legal representation.

- Without an agent or attorney representation, you could inadvertently agree to some terrible terms:

-- Are they using shoddy building materials without your knowledge

Construction delays with no end in sight

-- Waiving your right to legal recourse in the event of a dispute

Help to separate reality from “model-home” fantasy

When you get to hand-select so many elements of your home, you’ll be tempted to go overboard. In some instances, the highest profit margin for builders is in the upgrades — don’t count on them to suggest faux marble countertops over the real thing.


These are few examples of upgrades don’t bring enormous value to your home, but they’ll yield high profits for your builders:


Lighting - The lighting upgrades builders offer are typically generic, and you can easily replace lighting on your own, or for a lower cost with an electrician.


Crown Molding - This design choice is an expensive upgrade, but doesn’t cost much for builders to install. On the back end, this elaborate molding won’t add to the value of your home.


Knobs & Pulls - You’ll save money in the long run if you upgrade these on your own post-construction. Builders don’t always have an extensive inventory of options, and it’s something you can change easily on your own.


Consider the property after closing escrow and you have your keys in hand. Additional costs like landscaping, window treatments, and appliances will come into play.

- If there is an HOA involved they will usually require and rear yard landscaping to be completed within the first year of owning the home.

- In addition, most new homes are not outfitted with window treatments which will be an added expense after closing. This can also be a negotiating term your agent can speak with the builder in order to get the deal done.

- Appliances packages aren’t cheap but they are even more expensive when purchasing from the builder. It can also be a negotiating point for your agent to work with the builder.

Help to think long-term about resale


You’ll be the first person to ever own this house. But if you make it completely 100% yours, outfitted to all of your eclectic personal tastes or the latest fads, you could face challenges down the line if you ever go to resell.


An agent can help advise you on decisions like whether bold backsplash tiling will last or if you’d be better off with classic white subway tile. Also consider even though you don’t take bath and opt for a shower only you decide to build the new house without one. Trouble is… that makes a house tough to market down the line. People with kids (or those who enjoy a great bubble bath) will be disappointed.


Assistance finding the best financing for you

Some builders work with preferred lenders or have their own lending companies. This can make financing a new build easy, but won’t always result in the best deal for you. An experienced new-construction agent helps you weigh the benefits and drawbacks of your lender and loan options, which may include:

- Banks or credit unions in the area that offer good terms for new construction

- Is the preferred lender giving incentives to use their product


Communication between you and builder

Staying in constant contact with your builder can be a full-time job. Recently there was a military family relocating to the Las Vegas valley. They chose between three different models of a new builds and selected a very nice townhome. It needed to be completed by a certain time as one of the military members was coming to Las Vegas while the other was going overseas for a year. They were on a time crunch! The agent would visit the build site, take photos in their absence, video call to do walkthroughs but within a month the construction site was delayed and it would add three weeks for their home to be completed.


The agent remembered the “close second” home that was already completed from the same builder and was able to negotiate cancelling escrow on the first home and opening on the second home without losing earnest money. This allowed the buyers to move right into the home as the military sent them without any delay.


References and referrals

In this age of electronics and technology, referrals and reviews are at your fingertips. Reach out to a friend or family or do a quick internet search on the agent to see what kind of business they do in the local area.


So who foots the bill? Why you need to work with an agent from the beginning?

If you’re considering working with an agent on your new build, don’t delay the decision. The further you get into the home shopping process, the more challenging it becomes to bring in an agent. In fact, if you’ve already registered with a community, it might be too late.


Some builders are very agent friendly, and some are absolutely not. If you go into new construction and register without your agent, it may be difficult to have them come in later.

Some agreements with new builders won’t include an agent’s fee for the buyer. That means if you’ve already signed with a builder and want to bring in an agent, you could up paying the agent’s fee directly.


Don’t be afraid to ask questions and interview your agent:

- How often do you work in new construction?

- Do you have a relationship with any local builders?

- What value do you bring to this transaction?

There are many, many agents out there and new construction is a different world compared to resale. Taking the time to find the right agent that fits your needs can make the whole process smoother. At Vegas Strong Real Estate Group we are dedicated to helping you find the right home, and yes that means helping you to find the right new construction home too!

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