Question for the Forum Realtors (for sale, real estate, HOA fees)

[HIFL]

Hello,

We will be arriving in the area in less than 3 weeks.

We hope to purchase in less than 6 months and are interested in exploring new construction. My question is would it be more beneficial for us to work with a realtor when searching for and purchasing new construction?

I believe it would as the same issues would apply whether purchasing new construction or an existing home. Of course we would like to get the best deals and incentives from the builder and a realtor would have much knowledge about the builder, community, home values, etc.

Do realtors assist buyers strictly with new construction? Also would it be a worthwhile venture for the realtor. Do Florida builders offer a typical 3% courtesy to brokers?

Thank you for your responses in advance.

[TamRE]

Are you looking to purchase a lot in a non deed restricted area and then build a home or are you looking to select a community that has new construction and select a model within that community? Most builders will work with Realtors. Quite a few give Realtors 5% commission and some 3%. If you select a Realtor to work with, the builder usually requires the Realtor to accompany the buyer to the builders sales office.

[HIFL]

Yes TamRE, we would be looking to select a community with on-going new construction and choose to purchase from the builder's available models.

We were planning to visit these communities by ourselves to get a feel for what we would prefer.

So if we choose to visit the communities without a realtor and then return to the community we selected with a realtor, would the builder have a problem with that?

[StepHome941]

I think that the value we as Realtors offer you is just like with resale homes, listen to your wants and needs and then show you a variety of homes in different communities that might work for you. There are plenty of new construction communities in the area and offering different amenities....amenities that you wind up paying for even if you don't make use of them. For example, do you want to live in a golf community? Do you want a place with an active clubhouse, offering a fitness center, pool, etc? Or do you prefer a quiet community with few or no amenities, and lower HOA fees as a result? Also, be aware that some of the new communities have "CDD" (Community Development District) fees which gives the HOA quasi-governmental authority to add to your property taxes to pay for the bonds the developer issued to build infrastructure in the community. The builder pays a commission so using a Realtor doesn't cost you anything.

[bbronston]

Some people believe that they can negotiate a better deal with a builder if they don't use an agent. I can't say if that is true or not because I obviously can't know what goes on in every single negotiation. In my experience, there are a few aspects of the transaction in which an agent can help. First, we generally know the sales people and the programs currently being offered and, even if we are not completely updated, we've been thru the process, we know what to ask for, and the salespeople don't generally play games with us. Does that mean you'll get a better deal? Well, maybe, but it's hard to say for sure. We also assist buyers by helping them decide on locations and lot selection, making observations that they never would have noticed or considered, offering ideas and suggestions that help make the final product better, and following up on various aspects of the contract to assure (as much as possible) that the whole thing goes smoothly. However, I've learned plenty from other clients who knew things I never knew so, again, maybe using an agent will help you but not necessarily. I think it is fair to say, in most cases, that you will not pay more by using an agent and you will benefit from that agent's expereince as long as they actively participate in the process with you.

If you do use an agent but want to visit models on your own, just tell the sales person that you are working with an agent and let them know who the agent is, expecially if they ask you to register. I've had salespeople call me to tell me that a customer came in and mentioned they were working with me.

[Sunshine Rules]

For some buyers, purchasing a new construction home directly through the builder without using a buyer’s agent is fine.

In our area, most builders are willing to pay compensation to a buyer's agent if you are working with one. However, you as a buyer will not automatically save 3% on the price of the home by not using your own buyer's agent.

There are some things to keep in mind when looking at new construction:

The sales reps at the model homes are working for the builder, not you. Their main goal is to maximize the builder's profits, and sometimes they will attempt to upsale you to more home or features than you originally planned to purchase. A buyer’s agent will listen to you on your needs and requirements, then help match you to the builder/community that best suits you. Realtors spend many hours studying the local market and homes for sale. They can bring you additional information about a particular community that may not be provided by the on site builder’s representative. For example, last weekend I was hosting an open house at a property in a community that still has new construction going on. A couple stopped in at the open house that had also just visited the builder model homes. We started to talk about HOA fees, property taxes, etc and I brought up the CDD fees for the community -- much to that couple's surprise. The builder's sales rep never bothered to mention that as a homeowner in that community the couple would be paying about $1100 a year in CDD fees. Ouch.

Sometimes a buyer's agent can point out ways to save you money on your home purchase. That’s because an experienced buyer’s agent has knowledge of the local builders and know what costs can be negotiated, if the builder is offering special incentives, and what upgrades you can add in at no or little additional cost to the buyer. For example, did you know that builders are more likely to offer an incentive at the end of the month? Or that you can probably negotiate a better price if you buy an already finished “spec” home? An experienced agent can potentially save you thousands in negotiations.

When it comes time to sign the contract, the builder contracts often run 40, 50 pages or more. It is important you have someone there to help you go through the terms such as builder timelines, change orders, inspections, draw schedules, punch lists and lien waivers, and suggest names of local real estate attorneys to review the builder’s contract with you if you desire legal advice. Don’t automatically assume that a builder’s contract is fair to you when it comes to specific terms and requirements.

A buyer’s agent may be able to find you an almost new, gently used resale home in that new construction neighborhood at a lower price. Since builders often do so in phases, you may actually be able to purchase a resale home at a better price. You’ll also be less likely to have on-going construction surrounding your almost new home.

Another thought to keep in mind - the home of your dreams might actually be in another community that you’ve never heard of….yet. A buyer’s agent that is knowledgeable on area new construction may direct you towards a different community that better fits your needs.

As for visiting the models without your agent while you're window shopping, I agree with bbronston about letting the sales reps know who you are working with. Most will respect that you have buyer representation.