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I'm planning on building a home and I'm a first time would be home owner. Would like to get some thoughts on my situation.
I'm visiting the area (out of state) where I plan to build and I contacted the builder im interested in to see if I could set up an appt to see a few spec homes. In my conversation with the builder he suggested that I bypass using a real estate agent to save 6% or use that money toward upgrades.
I'm not sure about this. Should I have a realtor on my side for advocacy or to at least ensure the building process goes smoothly?
The builder is trusted in the area and has good reviews, however, I'm not certain leaving out a realtor is smart. Would appreciate any help or feedback. Thanks so much in advance.
Do you understand the contracting laws of this state? The real estate laws? Your recourse if there are problems? Do you even know the reputation of the builder?
Get a real estate agent who is familiar with the market. A builder can and will overcharge for each and every upgrade ($350 for one additional electric plug for example). You can end up so upside down it will take years of appreciation to get right-side up on value. Yes. You do end up paying for the agent through the final price, but a good agent can save you thousands as well as helping you avoid pitfalls.
True story time: one major builder in Texas started a new subdivision. Turned out it was on the site of an old WWII bomb training site...with unexploded ordinance. Even while old bombs were being found, the builder kept selling to unsuspecting buyers, while RE agents quickly became aware of it. Now those homeowners were, at last note, involved in a $42M lawsuit against the builder but their homes are worth a fraction of the sales price due to the stigma and threat of unexploded ordinance. However, good agents would have informed the potential buyers about the issue.
Wow, that's horrible. I appreciate your feedback, Restrain. I plan to keep my real estate agent on board. My brother used to be a contractor in the state I'm moving to and he was going to monitor the whole project. My gut tells me to have a realtor who could look out for my best interest.
Thanks so much again for the feedback. I appreciate it.
I'm not sure about this. Should I have a realtor on my side for advocacy or to at least ensure the building process goes smoothly?
It all comes down to why you are considering hiring a Realtor to build a home. They really are not construction experts. It would be more practical to hire someone that is.
I am a retired broker, who had properties built, and developed so I was a lot more knowledgeable than the normal Realtor, but I would not be the one you want to oversee the project. You have no way of knowing how knowledgeable your Realtor is about building. Get someone who is.
A good architect, or engineer which should be hired as cheap to oversee the whole project, would be an expert on building. A Realtor will not be able to give you the advice you really need. Agents are not licensed to give advice on building your home. They are advised, that they are not to give you advice they are not experienced in such as being a former building contractor, but to get outside advice.
Your brother in law, is the one that can look out for your best interest. He is an expert in that particular field. Realtors do not have his experience or knowledge unless they too are former contractors. As to the paperwork, get an attorney to look it over, and see if it is done correctly. That is what a Realtor would be doing. But the attorney will not cost very much compared to the Realtor, who can only do real estate contracts, and is not an expert on construction contracts, etc. A couple hundred dollars for an attorney, is a lot less than a 6% commission and you are much better protected.
An attorney, and your brother in law, are what you need, not a Realtor.
Are you building on a site you purchased or are you buying a house in a development (or something along those lines).
I don't see how a real estate agent can really help you that much. You might go see a couple of them and see if one of them has an opinion on the builder or location. They should have a good handle on who does good work in the area and who doesn't. But honestly thats about all they will be able to help you with and its certainly not worth 6%.
Loads of people build their own homes around here with not realtor involvement whatsoever. You need to find someone you trust in the area who is familiar with home construction. If you have doubts about the outfit you have selected then ask him for some references and go look at a few homes he has built and chat up the homeowners and see how their experience was.
I'm planning on building a home and I'm a first time would be home owner. Would like to get some thoughts on my situation.
I'm visiting the area (out of state) where I plan to build and I contacted the builder im interested in to see if I could set up an appt to see a few spec homes. In my conversation with the builder he suggested that I bypass using a real estate agent to save 6% or use that money toward upgrades.
I'm not sure about this. Should I have a realtor on my side for advocacy or to at least ensure the building process goes smoothly?
Oldtrader - thank you for the excellent advice and direction.
Justanokie - the builder has lots that he buys when they are reasonable and builds on those lots. He has a good reputation as building solid homes and following up with any issues that might arise post build, which from my research are minimal. Again, thanks much for the great feedback.
I'm curious where you're building that the Buyer's Agents earn 6% instead of 3%.
Whether you hire a good Realtor, or no Realtor at all, you should definitely have someone (or a group of people) that is your advocate working for you.
And while Builders may well take 6% (or whatever is reality) off/put towards upgrades, the real question is "have they been selling for less than asking price?"
You definitely need one! Especially since you are out of state. I have a client building here on the East Coast and they are in the West Coast. I visit the home once a week to take pictures and then upload them for them to see the progress. I've already caught two mistakes of things that had to be changed (plumbing started going in last week).
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