New Homes in Loudoun County, Virginia, Buyer REBATE

Lenn - it sure does make a difference having an agent who knows what to look for and what to ask that new home builder.  Thank you for helping your buyers make the right decision for them, not the right decision for their agent!

I wouldn't do it otherwise, not because I am an agent. But I could see how a useful, resourceful, experienced new-built agent would make a world of a difference. Let's start with expectation as an example!

Penny.  Buying a new home is really quite complicated and the builder hold most of the chips.  TOTOH, we can help the buyer and builder have a wonderful building experience by using our experience to explain the process along the way. 

I am an advocate for folks to have an informed buyers agent involved AND a home inspector as well. Do not just walk into a model center and buy without having knowledgable professionals on your team.  I know you agree as you had a great post on home inspections with new construction recently. We have represented many with new construction here and it is amazing what we have had to step in and handle along the way. The builder's representative in the model center is just that, a representative of the builder!

If I was buying a new home I would at least want someone that had some background in New Construction. It is easy to get taken advantage of when buying a new place.

Lenn.....we prefer to have an agent accompany the buyer, and when that doesn't happen, we always disclose that we represent the builder and they have the option of finding a buyers agent....quite often when there is a buyers agent, the buyer is introduced to the property with the agent and then is on their own!!!!  the buyers agent disappears during the most important part of the transaction...so, IT'S NOT JUST A BUYERS AGENT WHO IS NEEDED BUT ONE WHO CARES ABOUT THE BUYER'S INTERESTS.

Loreena.  If a buyers agent does nothing more than inform a buyer about their rights under the new construction contract, they are worth their pay.

Dick and Dixie.  HA!  I advocate the use of an experienced buyers agent AND an experienced new home inspector.   My recommended new home inspector is an architect and an engineer. 

Bill.  Many buyer think they've been "taken advantage of" because no one explained the new home contract to them.  Also, far too many believe that builders will negotiate terms and conditions in a new home contract as sellers would with resales.  Not so around here.

Barbara.  You are so right.  In fact, many builders will gladly pay an agent/broker fee simply for the introduction of the buyer.  Then the buyer is on their own and when things go wrong, they have no experienced agent to help them.  Sadly, most new home buyers believe that they'll get a "better deal" if they don't have an agent.  Not so with most builders around here.

Of course the builder (I am one) would prefer no buyers agent, then he controls the buyer.  But buyers should get someone to help with the construction, most do think they are going to get a better deal, but in the end, there are usually problems that could have been seen coming if there was an agent.

Dale.  Indeed.  As a buyer's agent, I have a wonderful relationship with builders in my area.  Builders do what they do.  Buyer's don't always understand.  By explaining the process along the way, buyers are more comfortable and it's a much more positive experience.

Lenn-  I completely agree that when buying a new construction, not only does a buyer need an agent representing their interests, they need an agent knowledgeable about new construction.  I would also think that the builder would be happy to have that agent involved, because then the buyer and builder are both on the same page as to the expectations, and the builder has a someone to help field client questions throughout the construction process.  Happy clients mean builder referrals.

Jen.  Most builders understand that.  Many just want the introduction and then have the agent bow out and wait for their commission check.  Sadly, many agents sell new homes with no knowledge of the processes.

I don't understand the statement about "builder referrals". 

Oh Lenn - How VERY true.  I was working with a brother/sister buying together.  When the brother went to a builder without me - I was of course cut out of the equation.  The sister called me several times during the transaction asking me what to do.  It seems the builder didn't make them read the fine print.  It was a nightmare for them - all could have been avoided had I been there to hold their hand and get the builder to modify some of their "fine print".

James.  Few builders will modify that fine print, but with a competent agent, the buyers are prepared and can then make informed decisions.

we don't have a great deal of new-construction in our area... but when we do it's often "coveted".  The nice thing about being the buyer's agent who represents a client on that new-construction buy (other than being able to dream about that commission for a good 6-months or so), is that somewhere down the line, when your client decides to move... you may be able to list that "new construction" home, and have a great listing.

be the tortoise, not the hare.  (BE the tortoise!!  visualize yourself as the tortoise, and you WILL be the tortoise).

Hi Lenn!  I'm one of the 'odd' agents who LOVES selling new construction--I thoroughly enjoy the process and I make it a stress-free on for my buyers.  Many agents don't understand all the new home sales entails, thus causing undue stress to their buyers.

I will say, however, when I send local buyers information on a new development, oftentimes they will head out to check out the development on the weekend or after work one day without me.  They always let the staff know that I am representing them.  I ask my buyers to give me a call when they're ready to go see the properties but, if they're just 'driving by', some just can't resist the temptation to go in and engage in conversation with the agents on duty!

Hi Lenn,

Buyers who go out on the weekend and stop into a builders office, to just LOOK at the models, and who sign the registration form, may be giving up Buyer Agency representation. That is  if they fall in love with the home and want to write a contract. Some Buyers  think, "I don't need a Realtor to buy a New Home!". Well, maybe not, however I used to work as a New Home Sales Manager for years and sold everything from first time buyer condominums to luxury single family homes on acreage, and I can tell you that I loved it when a Buyer had their own Realtor to help them. The process was far less stressful for the Buyer and the New Homes Sales Manager. Having that  experienced Realtor who knows all the phases of construction and what happens throughout the process is priceless. Best of all, Buyers need to understand this service does not cost them a dime..the builder pays your Realtor.  So why go it alone, when you can have an experienced Realtor who knows how to handle all the challenges, twists and turns of buying a new home. 

Around here there is so much new construction that it suits you to be familiar with the process.  I bought a new construction home myself in 2007-2008 (put the contract on right before I got my real estate license) and that was also quite a fabulous learning experience.  It's one thing to know it from the real estate, text book side but it's also a totally different thing to understand it from the customer, actually living through it side. 

Stacey-Ann.  Right you are.  This market is a mecca for builders.  It's about all I have any interest in selling. 

Paggy.  Agreed.  It's a benefit for a buyer to work with an experienced buyer's agent. 

Debe.  One of the problems is that the consumer doesn't understand that, for their agent to be paid, the agent must introduce the buyer to the builder.  I make sure all buyers understand that.  If they visit the builder without me and the builder doesn't want to pay me, then the buyer is on their own.  We get to know the builders who are agent friendly and the ones who are not.  I can deal with any of them but the buyers have to cooperate.

Alan.  We have an abundance of new construction here.  Further, new homes are the best buy in this area.  I have many buyers to whom I sold home in past years come back to me.  I refer them to a listing agent in my network since I'm not a listing agent.  It works just fine.

Absolutely on target, Lenn. Walking a buyer into a new home sales office is not the end of my duties. I discuss with my buyers up front, exactly how we will work should they choose to consider new construction. I explain how builder contracts are not standard and are always tilted toward the builder. I promise to make sure they understand exactly what they are signing up for and have no problem asking a builder to consider modifing a contract should it protect a particular interest of my clients. I insist to the builder's rep that I be kept in the loop and informed of deadlines and requests being made of my client. I LOVE representing new home buyers. It's a great opportunity to educate a buyer about the unseen parts of their home and a great opportunity to share my 30 years of experience seeing what works in a home and what doesn't, by being able to make suggestions for their consideration, large and small, to make their home as perfect as possible for them!

I have several new condos in the pipeline right now. People use my buyer's agent services to they aren't beholden to the builder on every issue.

Lenn,

Great point for consumers.  Buying new constructions requires a different skill set on behalf of the agent.

Lenn-  What I meant by builder referrals is that if the clients are happy with the process and finished product of working with a particular builder, that client will refer the builder to other people. 

After I had had a couple of new homes built for me, I understood the process in a different light than just having sold a lot of new homes. It brings home the fact that new homes are man made and have there own problems. It may sound ridiculous but I would recommend that Realtors have a home built for them to really get what you have to do to insure your clinet's best interest. If not, at least consult with a Realtor who has had a new home built for themselves.

Hello Lenn.  New construction in my market is not always 5-10 months.  We have available inventory that is done to the drywall stage.  The buyer can make all the interior selections and close in 45-60 days.  It's a nice option for those who want "new" but don't have time to build.

Lag time on new homes sales and short sales closings should simply be seen as future pay checks. I dont know about you, but I will need income in 6 months too. I am always feeding my pipeline with new leads, some are ready to go out hunting now, some wont be ready for a year. I will still cultivate the relationship with the buyer who is not yet ready, because my future is as important to me as the present.

I have done new home sales where the client is moving from out of town.  I have turned clients into raging fans with my camera.  About every 2 weeks, I would got and take about 25 pictures to e-mail to them.  They loved it.

Well I guess I can see both sides to the story .  There are those who with out specific new construction background can still do a good job as agent for the buyer. 

Patricia/Seacoast NH

It always pays to have representation on an deal you make and buying direct from builders can get you in too high.

Absolutely makes sense to use a buyer's agent since most builders use their own contracts, rather than the local sales agreements/contracts -- this is the same here too (in my neck of the woods.)  While we can't give legal advice, we can help buyers understand the builder's contracts. and oversee this, because they are different.

Well said.  There are many nuances to new construction - a Buyer's Agent experienced in selling new homes can offer their client excellent insight and prepare them for the whole process.  There are specialized new construction forms, a whole new set of rules, disclosures, etc. 

I love helping buyers with new construction - choosing the lot is the first step - location within the subdivision can have a huge impact on future value of their home.  Most of my buyers are from out of area, buying a second home or retirement home - they are not here to monitor the construction - I am and I do.

Last year, an agent in my office did a study on solds in a certain new home subdivision.  Buyers who were represented by an agent paid an average of $6 to $7 per sq ft less than buyers who bought on their own - and that did not include the extra seller concessions like appliances and landscaping.

Lenn, it is a long time between going under contract on a new construction house and the Closing, and I do see that as a turn off for many Realtor, when it should not be.  To me Dana has the right attitude.  Just keep feeding that pipeline, because you are still going to need a pay check in six months.

Lenn:

I love helping buyers with new construction. Yes, it can be a long process but it is also a fascinating one that results in very happy buyer clients.

Working with new construction is different than dealing with resales.  There are nuances that an agent needs to know about from looking at builder specs and possible upgrades to an entirely different negotiating process.

All the builder's contracts that I've seen (I actually have a collection) require the buyer to sign away several of the rights they have when buying a house in the state of Colorado. I've never known an agent who represents the builder that pointed out that fact. Or any other facts either. It's just, "sign here, initial here, sign here". Buyers need an agent who will do their job and look out for their interests in new home transactions.

There are a few builders that do not co-op no matter what. I had clients that were interested in a Ryan Homes site in Howard County MD, and they said that they never co-op, and they never have.

I've done new home construction sales since Day one 25 years or so ago. It's rewarding and the delay in pay all becomes a flow after a while.

It does help to ask your agent what kind of experience they have in selling new homes.  Also, random question here, but why are there no windows on the side of the house???

Lenn.. of course your post makes sense and the end result is to have someone that is experienced and knowledgeable about the whole process adn services.  I do agree that some realtors think one source over the other is better for them.  But what kills me is what I just read from Trulia questions yesterday. A borrower sent out a question asking for advice and help in buying new construction, but that they didn't want a realtor.. LOL   Rut Row... sorry... I know this person asking this question is not educated in the process... but seriously, what is their thinking on this... wow.. In any how, good post.

I have years of experience selling new homes -- as the builder. As an agent, I don't like to simply register the client and walk away, because I know that the builder contracts are weighted to the builder and I like to be there when my client has questions.

When it is one of our builders I would rather the buyer come in with another agent, if not we let them know and sign off that we represent the builder and in no way represent them.

Hi Lenn. My twin sister lives in Newport News VA and when she bought her new home she used a buyer's agent. I'm glad she did. ~ Lana

Hi Lenn -- I used to live in Great Falls, VA and we bought a new home there and hired a very experienced new home inspector as part of the process before closing and it was amazing all the things he found, and the builder was considered a good builder.  The builder fixed everything on the list.  An agent is key to understanding the process and dynamics of new home sales. Great post!

Lenn, back in the late 80's I sat a tract of new homes for a while and learned so much from THAT side of the table.  It IS a different buying experience for these buyers, and they really need to be protected.  Those agents (of which I was one) are working for that builder for the most part.

Good post. Experienced agent equals less stree for everyone.

I would definitely be careful when using an agent to represent you in new home sales, especially here in Southern California.  I was recently helping a buyer who was considering a condo in a newly constructed development. I did not have a clue what I was doing, but I was diligent enough to get myself educated as soon as possible and learned a tremendous amount. Enought to know that the contract would need to be reviewed by an attorney.  However, once reviewed I was fully prepared and able to take over.  I would be scared to death as a buyer to even think of purchasing without being represented by someone on my side.

Lenn- And what better agent for a buyer to choose than Lenn Harley! ;) You know your contracts and you know how to represent your buyer. That is the key. 

From the desk of David Dee,

Lenn, great topic and it is vital to hire a buyer's agent. It costs the buyer nothing and they get the protection they needed throughout the process in regards to reviewing the contracts.

Great post! I recently lost a long term client to a builder who offered them a 0.5% rebate for not using me as a buyers agent (insulting huh?). I have sold new construction for years as well as built homes myself.... in fact my business partner sold these folks their last new home.

I actually encouraged them to go the school district they loved ,and request a boundary exception. They got it, walked into the model home, and said they didn't have an agent IF it meant a kick back to them.

The result? They are building a $500,000.00, 4000 square foot house surrounded by 1500 square foot ranches that sold for 240k! Easy to do the math there! I strongly urged them to reconsider the decision to do so based on the comps (because of course they were still calling me for free advice). I saw the foundation being poured the other day and couln't help but shake my head.... what are they thinking making a half million dollar decision by themselves for 0.5% advantage??? NOT smart.

The kicker? My husband was his boss at the time! You can't imagine how the next day at work went .... after I showed my husband how many listings I had shown them in the last 18 months. Ugly situation with an uncooperative builder that did not help the scenario... they just wanted to milk them out of as much money as possible.

Hello Lenn.  I've only sold a very few new construction homes in my fifteen years of the business.  I'm looking at all my practices now to see what else I might do to be profitable.  Thanks for this heads up.  I think I'll get up to speed and try some of that too.

Everything is negotiable, so it helps to have a buyer agent assist them.