Hi. I am Jennifer Yoingco of Texas Home Group. Last week we talked about FSBO properties and the role that we Realtors play in purchasing homes directly from the homeowners.

But what if you decide to purchase directly from a home builder? Will you still need a realtor? What are the things you need to know? How does it work?

Let us all find out the answer to these questions. So, stick around!

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Now, on to our topic.

Let us say that re-sale property you previously had your eyes on did not work out the way you want it. And looking around at other homes made you realize that it will be hard (and maybe expensive) to customize it to your liking. So, what are your other options? Should you go for a new construction home? Let me give you some points to consider before you head on that route.

1. Educate and evaluate yourself. Think of your lifestyle. Look for communities that will best fit your way of living. Are you a social butterfly who likes to party? Are you a fitness buff who goes to the gym or jog regularly? Are you a gourmand who loves fine dining? Are you a nature lover? A pet lover? A family person? Consider all this when deciding which community will best suit your needs. Consider the community’s location. How long will it take you to drive from home to your workplace? What is the school district’s reputation? What about the neighborhood’s character? Does it feel safe and welcoming? Make sure to choose a community that will compliment your personality and lifestyle.
2. The second thing you have to evaluate before you go about checking communities and finding home builders is your finances. This will help you figure out how much you can afford. At this point, it is best to seek the guidance of a financial advisor or a mortgage broker to see what your best options are as there several alternatives for a smaller deposit or bigger ones depending on your financial capability. You could also have yourself pre-qualified for a loan for you to see how much money you will be able to borrow.
3. Once you have decided on the location and your mortgage lender, it is time to find out who are the best and trusted builders in the area. And the best way to find that out is by hiring a realtor! Yes, you can go about not hiring one if your state law does not require you to, but think of the value we can give you in one of the biggest investments of your life. Don’t worry about the fee. Our commissions are usually paid by the home builders. Yes, you heard that right. Most builders rely on outside agents to bring in clients. They view commissions as part of their cost of doing business. They would not lower the price anyway even if you show up without any representation. So why hesitate to get represented by someone with your best interest in mind and who can help you find the best possible deals? Although the builder’s agents can be a good resource in the new home construction buying process, always bear in mind that their fiduciary duty will always lie on the builder’s side.

Now, when looking for a realtor, make sure to hire someone who deals with builders regularly. They would know how and what to negotiate for you. They would also know what is negotiable and what is not. For instance, builders will often refuse to drop their prices to maintain a certain value on the homes or communities they are building, but most of them are open for negotiations when it comes to upgrades. So, do not expect that they will agree to sell the house at the price you want, but you can request a different paint color, additional bulb socket, or an automatic garage door at a minimal cost to no additional cost at all.

A well-experienced realtor can also be your advisor or consultant. They can provide you tools to be knowledgeable. They can scrutinize and bring up vague terms and conditions to the builder’s attention for clarification. For example, a cost escalation clause is often included in most builder’s contract to protect them from price fluctuations in labor and materials. Many times this provision caught new homebuyers off guard. If you do not want to get stress out with surprises like this, your real estate agent can check it for you.

If you are buying brand new construction, they will be your advocate to make sure that you stay in line with your budget. Especially you will be overwhelmed with choosing the materials to put in your home, like the kind of tile, countertops, backsplash, paint color, and more. You can be assured that you are paying your money’s worth. They can help you see the features of a basic home and identify which are the upgrades. Because when you tour a model home, you will not get everything that you see. And most upgrades will cost you a fortune. It is also important to engage the services of a realtor who can advise you which upgrades can affect the value of the house at resale just in case you consider moving out in the future. The model home is to entice you in buying their inventory and homes that will be build or customized for you.

Your agent can also help you see the features of a basic home and identify which are the upgrades. Because when you tour a house model, you will not get everything that you see. And most upgrades will cost you a fortune. It is also important to engage the services of a realtor who can advise you which upgrades can affect the value of the house at resale just in case you consider moving out in the future.

4. Best of all, your realtor can help you find a builder you can trust. We can tell you which builder has a good reputation or which one has a shoddy workmanship. But of course, you can also do your own research. Check if the builder has previous or pending lawsuits. Make sure that they don’t have any complaints at the Better Business Bureau. Look for reviews online. Take advantage of today’s technology to learn more about your prospective builders. You can also talk to your future neighbors. Find out if they encountered any problems with the same builder. Check if they offer warranty programs. There are builders who offers bumper to bumper warranty in the first year or 2, structural warranty of 10 years or more. Also consider a builder who takes time in explaining the proper maintenance and care that your future home needs.
5. Just because the house is new does not mean it does not have any flaws, right? Make sure to have it inspected once completed and prior to closing the sale. Let your realtor help you find a certified home inspector that is not affiliated with the home builder. Your agent can also help you review the inspector’s report to identify corrections, repairs or replacements that can be raised to the builder. But do not expect that the sale will be contingent on a home inspection. Builders are just usually given time to fix the defects to finally close the sale.
6. Now, you are ready to close the sale. But what really happens at closing? As a buyer, you will be signing loan or mortgage documents, so make sure that you are represented by an agent who understands the process. You can also engage the services of an attorney if you want. They should ensure that you understand the terms and conditions of the loan, the exact mortgage amount and the closing costs (sometimes this is covered by the builder, it is better to ask beforehand).

Once, all the documents are signed and the necessary payments are done, the key to your new home will be handed to you either at the title company or the model home to where your sales counselor is located.

Buying a new home is a complicated process especially for first time home owners. But having someone who can guide you in every step of the way can help ease the stress of buying a home and will save you money and effort in the long run. In addition, even if the transaction is closed, you have an agent or friend on your side who can assist you with any questions that you need and who is connected with a huge network of professionals. Whereas a builder, it will be harder to reach when the closing is done. Take note, builder’s goal is to move all their inventory so make sure you do your research and /or hire an advocate.

Remember, if you plan to go straight to the builder, tell them you are working with a Realtor and would like her to be included in the contract. This will at least give the builder a heads-up that you would like a Realtor on your side to assist you.
If you have learned something today, hit the subscribe, notification bell and thumbs up button. If you have any questions for me in general, feel free to comment down below.
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Again, this is Jennifer Yoingco. You are my priority for anything real estate. Serving Houston, Tomball, Spring and the surrounding cities. I will see you in my next video. Bye.

Resources:

1. https://www.moving.com/tips/6-steps-to-buying-a-new-construction-home/
2. https://www.hgtv.com/lifestyle/real-estate/how-to-buy-in-new-construction
3. https://www.homelight.com/blog/buyer-do-i-need-a-realtor-to-buy-a-new-house/
4. https://www.inman.com/2015/04/10/save-big-on-new-construction-secrets-your-buyers-should-know/
5. https://sarasotasandy.com/buying-new-home-need-realtor/
6. https://www.naplesgolfguy.com/should-i-use-a-realtor-if-im-buying-new-construction/
7. https://www.thebalance.com/buying-new-home-construction-from-builders-1798334
8. https://www.northroprealty.com/new-home-purchase-process.php
9. https://theagencytexas.com/blog/2018/5/8/smart-tips-for-buying-a-new-construction-home