Do you need a real estate agent when buying a new construction?

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Buying a house without a realtor — even a new construction home — isn't the best idea. It's easy to see the appeal of purchasing a newly built home, or the land on which to build a new home appealing to many. In one key area, however, it leaves homebuyers confused. If you’re wondering whether you need a real estate agent when buying a new construction home, the answer is generally yes. Forgoing an agent means you won't have anyone looking out for your interests as a buyer, and you won't get a discount on a new build either.

Keep reading to have a better understanding of why you should get your own representation, and why you shouldn't rely on the home builder's agent.

Your realtor's role in new construction homes

When shopping for a new build, it’s extremely helpful to hire your own real estate agent. New construction homes seem straightforward: The house is being built, and you can buy it. You may wonder what the purpose of an agent or realtor is in this scenario, or even think about using the real estate agent who works for the home builder when you need help — but you shouldn't.

As it turns out, there is a lot that a real estate agent can do for you when you build a new home. 

1) They'll advocate for you (the buyer)

Your real estate agent is there to advocate in your best interest. While a builder's agent would be more than happy to help you do the paperwork on a home purchase, they ultimately work for the builder. Their fiduciary responsibilities to the builder and the builder is the one signing their paychecks. With that in mind, they're going to have the builder's best interest in mind.

When you hire a real estate agent to help you through the transaction, you know that you will also have someone advocating for you during the transaction. You'll have someone there to make sure that you get what you need out of the deal.

2) They can assist with negotiations

A buyer's agent — the real estate agent representing your interests as the buyer — can also help you with contract negotiations. When you use the builder's standard contract, the vast majority of the clauses included are going to be worded to the builder's benefit.

When you're buy a new construction home, a great real estate agent can negotiate with the builder on your behalf and make sure that your money is also protected by the contract. Plus, if there are any issues during the transaction, they can help you should any problems crop up.

Learn more about whether you need a realtor to buy a house.

3) They help you find the right builder

Not all builders are the same. Every builder has their style, both in terms of construction aesthetics and communication during the new construction process. To make sure you’re satisfied, you’ll need to find a builder whose style and work preferences match your own.

It can be hard to know where to start when trying to find a builder. Experienced agents can help you through the selection process. They will likely be able to suggest available builders, and they should also be able to help you come up with good questions to ask when you interview potential candidates.

4) They'll remind you about resale value

When you're building a new home, it can be all too easy to get caught up in creating your perfect dream home. When viewed separately, each upgrade may not seem to cost very much. Yet when added together, it’s easy to over-improve your property.

With that in mind, a good real estate agent can help keep you on track by reminding you of your new home's potential resale value. Since they know the area and the appreciation that has taken place over the last few years, they can give you a good idea of whether or not you are on track to get your money out of your investment. Remember that a house is also an investment, not just a place to live. 

Do realtors get commission on a new construction?

As the buyer, you should not have to pay anything to use a real estate agent, including for a new build. In a real estate transaction, the seller is responsible for paying the agents commission, which usually amounts to 6% of the purchase price. With new constructions, the builder is the one who will foot the bill and pay the real estate fees. Most builders view paying a buyer's agent fee as a cost of doing business.

This is important to keep in mind: The builder, in nearly all cases, will not give you a discount for buying a home without an agent. That’s because the fee to an agent comes from a marketing budget, rather than the construction budget, to prevent the commission from impacting their gross margin for home production.

With that in mind, there’s no reason not to use a real estate agent. From your perspective, it won't be any cheaper if you forgo one, which makes choosing someone who can advocate for you a no-brainer.

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Can I use the builder’s agent for a new construction?

The builder’s agent is the person hired by the builder to sell any available homes and to negotiate each contract in their favor. When you're buying new construction, the builder takes the place of the seller in the transaction, and the builder's agent takes the place of the listing agent

From a buyer's perspective, the builder's agent can be helpful when it comes to discussing important factors like the construction process, the floorplan, and availability of any particular amenities or upgrades. In general, these sales agents are knowledgeable about what their builder can offer each buyer and how the process works with that particular company. (Find out what questions you should ask a home builder.)

However, they are the builder’s agent, and not yours, so it makes sense for you to have your own realtor by your side to navigate the homebuying process. (If you're looking for new construction homes, our team of experienced local agents at Orchard can help.)

Should I tell the home builder I have an agent?

Too many buyers worry about finding the appropriate time to tell the builder that they are working with a real estate agent. This doesn’t need to be a well-kept secret. The earlier that you are upfront about the fact that you are working with an agent, the better for all parties involved.

The sooner the builder's agent knows that you have representation, the sooner they will work them into the transaction. For example, they will know to negotiate with your agent, rather than you, giving you the advantage of having someone with real estate knowledge and expertise on your side.

If I still have to sell my home, should I use the same agent?

If you have to sell your home before you can afford your new build, it makes sense to use the same real estate agent (dual agent). Doing so makes it easier for you since you won't have to go searching for new representation, and the agent will also have a better idea of your preferences and what you're looking for in a new home.

People who are selling and buying a home, including a new construction, can benefit from using Orchard's Move First service. We can guarantee your home sale, so you can buy the new build without any contingencies holding you back and align your moving schedules.

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