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Health & Fitness

Buying a New Home From a Builder? Why You Need a Real Estate Agent

Find out how to make sure your wallet and best interests are protected.

Do you need a real estate agent to represent you when purchasing a new home from a builder? I think the better question to ask is, as a buyer, would you want your best interests represented by the very entity that is trying to make a profit on one of the biggest investments you’ll make in your life?

The reason most buyers will purchase a new home without an agent is because they think they will get a lower purchase price. They reason that if the builder doesn’t have to pay a commission to a real estate agent, the builder will pass that savings along to the buyer in the form of a lower price.

The flaw in this logic is that sellers will not sell their property for less than what other comparable properties have sold for around them. Why would they? Since 91% of homes that are sold in the United States are sold through a real estate agent, the reality is that the commission is already built in to the price of homes. Removing the agent does not lower the price for the buyer; it raises the net price for the seller, and it leaves the buyer without an advocate for their best interests.

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Clearly it makes sense for a buyer to be represented when they purchase a home, but does any savings a buyer might receive by not being represented outweigh the benefit of being represented?

Once my clients have a ratified contract—whether they are a buyer or a seller—I touch base with the loan officer and the settlement processor on a weekly basis to make sure all conditions and contingencies are met on a timely basis. When I work with a builder, I also touch base with the builder on a regular basis to stay on top of the delivery schedule.

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I had one buyer who decided to use a lender I wasn’t familiar with because they offered her a rate that no other lender could match. Right up to the day before settlement, everything was on track, and the preliminary HUD-1—the summary of the buyer’s and seller’s expenses and receipts in the transaction—was in order. As I was driving to settlement, the settlement processor called to warn me that the final loan figures had come in from the lender, and the buyer now owed $3600 more than what we were told the night before. The lender had slipped in thousands of dollars of garbage fees at the last minute. It seems the teaser rate had a catch. Having looked at many HUD-1’s, I knew the lender fees were way out of line. It took many phone calls, escalating from the loan processor up to the regional manager, but I was able to get the garbage fees removed for my client. Had my client not had an experienced real estate agent on her side, I’m not sure she would have been able to get the fees removed, let alone recognize that there were garbage fees being slipped in.

Another client was buying a new home through a well-known regional builder. My client also had a current home to sell so we worked closely with the builder to coordinate the timing of the sale of their home to coincide with the delivery date of the new home. The builder set up a final walk through date and settlement date; everything was on track. At the last minute, the builder informed my client that the house would not be finished in time, and the walk through and settlement had to be delayed. The ramifications of this for my client were huge. The buyers of their current home were taking possession and moving in on the settlement day. My clients had nowhere to live and nowhere to move their furniture to.

I faxed a letter to the President of the company building the new home, with copies to the RE/MAX Regional Director and my Broker. In the letter, I documented the regular phone calls I made to the builder, whom I talked to, what was shared each time about the scheduling, and I indicated that the builder needed to honor the commitment they made during those phone calls. The President evidently agreed with me because several hours later we received a phone call letting us know that the walk through and settlement would take place as originally scheduled.

In each of these cases, having an experienced real estate agent not only saved my clients money, it saved them a tremendous amount of anxiety and stress.

I blog about real estate and life in Northern Virginia at MargieMac.com.

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