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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).
Right.
The OP doesn't need an agent who won't routinely visit and photo the construction process.
I would expect hundreds of photos posted on line for the client, particularly a client who is out of state.
Flickr is a great spot to put together a file for the buyers so they can see updates.
LOL. I say that, and my SD card crapped out last week and I lost a few hundred photos on two houses.
And, Bo mentioned something that has run through my mind since the original post in the thread.
Why is the builder citing a 6% savings? Does he really pay 6% to buyers' agents? That sort of inducement to use him would make me suspicious immediately.
We have low end builders who offer huge commissions to buyers' agents. I have seen as high as 7% and that is an immediate red flag to anyone. Quality of home and service should make that sort of inducement unnecessary.
If you are selling your home, I'd say bypass a realtor. But an out of state purchase with a builder? No way. Broker it 100%. Bypassing broker would save HIM 6%, not you.
When it comes down to it, real estate agents are sales people (and I don't mean that in a derogatory way). Like any good sales person, they are oriented toward extracting the maximum value from the buyer to the advantage of the seller (whether it be a combination of sales price, quick closure, or a myriad of other terms of the deal). They are oriented to close deals, not to stand in the way of deals by raising issues, etc. There are fundamental problems with using a sales person compensated on closing a deal at the highest sales price to protect you and be your advocate in a deal as a buyer. This is perverse and unnatural.
Why not just have a real estate lawyer represent you? The obligation to represent the buyer in the transaction then is 100% clear. Plus, you pay only for what you need and the lawyer's fees are not maximized with a higher sales price as a buyer's agent's fees are. As long as a buyer's agent's compensation and quota achievement is based on sales price, they cannot properly represent the buyer without a conflict of interest. One might be able to justify this by saying that the agent's reputation, blah blah is more important than a little more commission but it's still a conflict. Also, home builders sell a large volume of homes and often use agents so a local agent may not want to create tension with the home builder.
When it comes down to it, real estate agents are sales people (and I don't mean that in a derogatory way). Like any good sales person, they are oriented toward extracting the maximum value from the buyer to the advantage of the seller (whether it be a combination of sales price, quick closure, or a myriad of other terms of the deal). They are oriented to close deals, not to stand in the way of deals by raising issues, etc. There are fundamental problems with using a sales person compensated on closing a deal at the highest sales price to protect you and be your advocate in a deal as a buyer. This is perverse and unnatural.
Why not just have a real estate lawyer represent you? The obligation to represent the buyer in the transaction then is 100% clear. Plus, you pay only for what you need and the lawyer's fees are not maximized with a higher sales price as a buyer's agent's fees are. As long as a buyer's agent's compensation and quota achievement is based on sales price, they cannot properly represent the buyer without a conflict of interest. One might be able to justify this by saying that the agent's reputation, blah blah is more important than a little more commission but it's still a conflict. Also, home builders sell a large volume of homes and often use agents so a local agent may not want to create tension with the home builder.
"Conflict" is an academic theory.
"Behavior" is a documentable fact.
So, the attorney will visit the site routinely to observe that the standards and specifications are met, will refer an independent inspector and negotiate adjustments, and will meet the builder for walk throughs?
That is an uncommon level of service from an attorney that any good agent will offer.
Consumers should recognize theory, and operate on fact.
When it comes down to it, real estate agents are sales people (and I don't mean that in a derogatory way). Like any good sales person, they are oriented toward extracting the maximum value from the buyer to the advantage of the seller (whether it be a combination of sales price, quick closure, or a myriad of other terms of the deal). They are oriented to close deals, not to stand in the way of deals by raising issues, etc. There are fundamental problems with using a sales person compensated on closing a deal at the highest sales price to protect you and be your advocate in a deal as a buyer. This is perverse and unnatural.
Why not just have a real estate lawyer represent you?
In theory that sounds great but most agents are good people and represent their client properly. Most agents enjoy getting their client a deal they are happy with. The goal for most isn't a one and done. They want to sell that home for the buyer when it's time, they want referrals from happy clients.
The second question Mike already addressed. There are many things an agent will do that an attorney won't or isn't familiar with.
What the people that recommend Realtors to overlook the building, are not taking into consideration that they are not experts in home construction. Unless they have been in the construction trades, they do not have the knowledge or training to do so. In fact, they are setting themselves up to be sued, if anything goes wrong with the home if they do not have the training to supervise the building. And they could lose their license over it, giving advise they are not qualified to give. The can take pretty pictures, etc., but they are not qualified to oversee construction. This is said, by someone that spent many years in the real estate business, had numerous homes built, and developed land. I as others that did the same, hired experts to do the different aspects of development and construction. I was not and neither is any other Realtor that has not been active in the construction trades, qualified to oversee construction of a home for a client.
And the Realtor is not qualified to write the contract to construct the home, and advise a client on such contracts. That is where an attorney is needed. In most states, giving advice on a contract to construct a home by a Realtor is considered practicing law and that is not allowed to be done by a Realtor.
What the people that recommend Realtors to overlook the building, are not taking into consideration that they are not experts in home construction. Unless they have been in the construction trades, they do not have the knowledge or training to do so. In fact, they are setting themselves up to be sued, if anything goes wrong with the home if they do not have the training to supervise the building. And they could lose their license over it, giving advise they are not qualified to give. The can take pretty pictures, etc., but they are not qualified to oversee construction. This is said, by someone that spent many years in the real estate business, had numerous homes built, and developed land. I as others that did the same, hired experts to do the different aspects of development and construction. I was not and neither is any other Realtor that has not been active in the construction trades, qualified to oversee construction of a home for a client.
And the Realtor is not qualified to write the contract to construct the home, and advise a client on such contracts. That is where an attorney is needed. In most states, giving advice on a contract to construct a home by a Realtor is considered practicing law and that is not allowed to be done by a Realtor.
This is a very conservative outlook.
There are many things an agent can do to support an absentee buyer that are nowhere near practicing law, and that fall outside common attorney services.
Are you sure you interpreted the builder rep's advice properly -- that having no realtor will get you 6% off the pricing? Never heard that before. Typically, the builder has a separate budget for the RE commissions. Thus, if you don't have an agent, you don't get any better pricing (separate budget); if you do have an agent, the price won't change on its own.
That said, we're on another build and we've never used an agent on our prior builds. You'll want to do 3P phase inspections anyway, so the inspector can help ensure things are done the right way. Additionally, your family member w specific industry experience is more valuable than some agent. This time around, we are in a state where agent rebates are allowed, so we just went w the one offering the highest amount of cashback.
Redfin is also a good option if you want an agent that's more hands on and still give you $ back.
With all of that, I'm just suggesting that (a) you find out what the builder really is offering for no agent and (b) if the "incentive" to not use one is significant, I'd proceed w/o an agent and rely on the 3P inspector you select and your family member.
There are, as you can see, plusses and minuses as to whether to engage a real estate agent, or not.
I personally think after a lawyer and your family rep who understands the building process it might be sufficient.
I will advise you to get a SOLID contract with the builder. If it goes in the house, or has anything to do with the lot and/or the build, get it in the contract. If the document is less than fifty pages you are likely getting short changed in terms of contractual agreement. Everything from permits, to waste disposal, to porta potties, to insurance to access (yours and your family member) to electricity and water usage (who pays?) to every nail, screw, building material, insulation, house wrap, shingles, appliances, fixtures...you name it--if it goes in the house, it must be in the contract in SPECIFIC as to dimension/manufacturer/specifications....including smoking in the house and disposal/burning of construction waste! The document must also include cost overruns, change orders and conflict resolution. If you are financing, DO NOT RELY on the twit who comes out from the bank to gauge progress so they can release funds. They don't know concrete from cement from OSB!
Be vigilant. You'll be fine. Be firm with the builder right from the start. Expect that there will be challenges. Be FAIR....
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