What is the need if the sales representative in the builder’s sales office can write up the offer for me? That’s a legitimate question and an easy one to answer. There are obvious reasons and then not-so-obvious ones.
1. The sales representative works for the seller and is not required to be licensed Realtor®. If this is not reason enough to seek the help of a true professional, then I don’t know what is! Sales representatives are employed by the builder and, as such, are required to protect the interest of the seller. While most representatives I have met are honest, they are also not bound by the Realtor® Code of Ethics. They don’t need to disclose their fiduciary responsibility to the builder nor do they have to disclose that you are free to get representation. What is the benefit to the builder if you go unrepresented? PLENTY! You don’t know what you don’t know!
2. Negotiating for a better sales price. Most buyers think they are good negotiators and many are. But it’s much more than just negotiating price that matters. Understanding the intricacies of a sales contract is infinitely more important because nothing can be overlooked. Terms of the sale are equally important to protect you and your earnest money deposit. Knowledge of the market to include new homes sales and resale homes is key. A Realtor® can help protect you every step of the way. From appraisal and inspection contingencies, to financing terms, and everything in between, a Realtor® will see you through.
3. Scheduling inspections. Yes, the county or city must inspect the property throughout various stages of construction – excavation, foundation, pre-drywall, final, etc. However, it’s important to know you have the right to a private inspection done by a private home inspector who represents your best interests.
4. Settlement and Lender Selection. Most builders have a business affiliation with a particular lender and title company. This is standard industry practice. The builder will offer you incentives to use them, too. Have you noticed the following language in a lot of advertising? “Builder will contribute up to $5,000 towards closing with the use of preferred lender and settlement company.” I’m sure you have! Or sometimes the builder will offer you a choice of closing cost credits and/or perhaps options upgrades – your choice! What you don’t realize is that while the rate may be competitive, there is almost always a cost to get this loan (POINTS) that isn’t necessarily competitive. Also, they probably won’t be able to guarantee the rate for you outside of 90 days of closing (to be determined by the builder). Of course, you would want to shop the rate and know that you could get a better rate and terms if given the option.
5. It costs the buyer NOTHING to engage a Buyer Agent representative in most cases! Buyer/Agent agreements are required by law in Virginia as of 2012. These agreements, if written properly, will tell you (the buyer) exactly what you can expect from the agent – how long they will work for you, what they will do for you, how and how much they will be compensated, and where and in what circumstances they will represent you. You may negotiate the terms of any buyer agent agreement but it’s imperative that you understand buyer agents are almost always compensated by the listing broker – NOT the buyer! There are some instances where a buyer may compensate the agent (for sale by owner, for example), but the most common form of compensation is with a co-broker compensation agreement stipulated in each corresponding MLS.
6. Remember to have a buyer agent representing you BEFORE you enter that sales office. Most builders require the agent to make contact with the builder prior to buyers entering their sales office. When you are out and about on a Saturday or Sunday afternoon and see the giant OPEN HOUSE signs pointing to the model home, give your agent a call and let them know you are contemplating dropping in at the sales office so your agent can contact the representative first. Disclose to the sales representative that you are represented by an agent and sign in with that agent’s contact information. You are not obligated to give your name or phone number but you are obligated (ethically, anyway) to let them know you have someone watching your back!
Because Choosing the Right Realtor DOES Matter!
Irene Morales Ward, Realtor®
New Homes Construction in Stafford, VA