Lots of buyers, while well meaning, don't realize that they can hire a buyer's agent to represent them on a new home purchase from a builder. Buying new homes from a builder is really no different than buying a resale home. You're better off hiring a buyer's agent. For example, tonight I negotiated a transaction for a buyer in Natomas. She bought a brand new condo. Her next-door neighbor paid $237,000 for his condo, and it closed escrow 10 days ago.
My buyer bought the model -- which meant she got all the artwork and furnishings in the home, including a brand new gas BBQ grill -- for $22,000 less. You can bet her neighbor didn't get furnishings nor designer paint and window coverings. This buyer received $40,000 in upgrades, plus the furnishings. She paid $215,000, although the builder's asking price was much higher.
This was a brand new 3-bedroom, 3-bath, almost 1400 square-foot model condo in Natomas. The "home consultant" told me that since she lowered the prices two days ago and offered a co-op, all of a sudden agents are appearing with qualified buyers. Doesn't amaze me. She also told me our offer would not be accepted, but it was!
This builder has sold 20 homes out of 24. The time is right to buy right now! Buyers, don't go it alone with out an experienced agent. The builder pays the commission. Why would you do it any other way?
(Tip: You can almost always get the furnishing with the model, btw, especially if it's a close-out sale.)
Photo: Elizabeth Weintraub
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
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Hi Elizabeth. I loved this so much I hit the reblog button. Let me know if that's okay! I've had people walk in and give their names to the salespeople and then be stuck without representation. That can be scary...
Elizabeth, this is a great post, with great advice/information for buyers of new construction.
I get many phone calls from buyers, after they've been to see the builder, even though I told them not to go alone. Here, the closing costs for buying brand new construction, can be HUGE (the builder has 'hidden' fees that aren't always disclosed, or capped, in their builder's offer (100 pages of paperwork that most buyers don't go through). When my clients use me to negotiate with the builder, I always ask the builder to cap those costs (usually saving the buyers thousands of dollars); I negotiate a better price for them; I negotiate granite counter tops; better finishes, etc., without having the price go up.
We have to get the message out there to buyers, that they do not save money by going alone.
Builders will do what's best for builders, not for buyers.
Get a professional realtor (like Elizabeth) to represent you. :)
Elizabeth
You are on fire! Buyer agency is the way to go. I recently switched gears and am putting emphasis on working with some buyers more.
It is solidified when they know you are in their corner.
You are truly the sales piranha, and you can almost feel the teeth in each of those transactions.
Those buyers are lucky to have you looking out for them!
Well, back to my research.
Sincerely
Tom Braatz
Elizabeth, great advice. I have done that before as well. The one problem is when builders won't pay a coop agent's commission. In that case, do you still work something out with the builder to get compensated? I've asked a couple of builders about 6 months ago and they refused to pay a coop. The buyers would have to go directly to them and the builders won't pay a referral fee either.
Elizabeth great advice. I always think that everyone should be represented by their own agent.
Hi Elizabeth,
Loved your post. Now, that is what I call "The Gospel Truth". Preach Sista!
Pamela
Hi Natalie: Oh, my, thanks for the thumbs up.
Hi Sylvie: And to think I read every one of those 100 pages. Oy. You're not kidding, the builder's paperwork can be a nightmare. They also slip in the same clause that many REO lenders do about a per diem of $250 in the event escrow doesn't close on schedule, so we worked out a compromise on that as well.
Hi Tom: Usually I run about 50/50 between representing sellers versus buyers, but this year it's more like 80% of my transactions are buyers. This is absolutely the Year of the Buyer in Sacramento.
Hi Jim: If the builders refuse to pay a co-op, they aren't too serious about selling. However, in those cases, the fee is in the buyer broker agreement anyway, so we add it to the sales price, which is still much less than the sales price the builder offers.
Hi Fred: Buyers deserve representation, I agree, but some don't understand how the business works.
Hi Pamela: I know these smaller transactions pay much less compensation, but they can be more personally rewarding to work on than the bigger ones, don't you agree?
Elizabeth, I think that's interesting that with builders sitting on some finished inventory, they wouldn't co-op. All of our new construction listings are MLS listed. (well, the vast majority of them anyway, probably 99.99%). Sounds like your buyer got a great deal. My dream would be to buy a model home, already furnished and decorated. That would be fun!
Elizabeth: Having a buyers agent when negotiating with a builder is so critical. It's not like negotiating with a homeowner. These are professional salespeople. They are there to whack you on the head and get as much from you as they can, and give back as little as possible.
Hi Colleen: I know, it's amazing, she can just pack her up things and move right in. One of the guest bedrooms is simply darling. The bottom half of a wall is painted in complimentary colors of 12 x 12 squares.
Hi Chris: We discussed strategy before the buyer submitted the offer. It seemed to me that the builder would never let a model go unless he needed the money, because it's much easier to sell the unfinished condos if a buyer can view a finished model. Plus, he had only 5 left to sell. Close-out deals are often the very best.
Hi Elizabeth, do you put loan contingency to remain in place until loan is funded as an addendum to the purchase contract with the builder? One buyer from an agent in the office could not get the financing and there was no such addendum written. It turns out that buyer may lose their earnest deposit of $10,000 since their agreed upon time to close escrow had passed. If an addendum had been written, I believe the buyer may not have to lose it.
Hi Jim: Loan contingencies that remain in place until the loan is funded are rare. If I see that box checked on an offer that I receive for a seller, we ask the buyer to remove it in 17 days. It makes you think the buyer isn't qualified. As for this particular sale, the buyer is well qualified, and it is subject to appraisal with the buyer removing her loan contingencies within 14 days.