Homebuyer Advice: Should You Hire an Agent for New Construction?

new construction

Buying a brand new home can be an exhilarating experience. Sometimes builders will let you be involved in the construction process, making tweaks to the design or layout that meet your family’s needs. Almost always, you’ll be able to have a say in the finishes—like the cabinetry, lighting and paint schemes. New construction gives homebuyers the opportunity to add their personal touches before they even move in!

But it’s easy for homebuyers to get so wrapped up in imagining the newly built home of their dreams that they overlook important details. The most common mistake? Using the builder’s real estate agent instead of hiring your own.

Here’s what typically happens: you hear about a new apartment or housing community and the renderings look beautiful. You want to learn more about the homes that are being built, so you take a stroll into the on-site sales office. The sales agent knows the ins-and-outs of the development and is able to answer all of your questions. If and when you’re ready to buy one of the properties, the sales agent kindly offers to arrange all of the paperwork on your behalf.

In fact, if you buy through their office, she’ll be able to offer you a number of “discounts,” like a lower price or closing cost assistance. She’ll even put you in touch with the seller’s lender, who – if you use them – might be able to lock in a mortgage for you at a lower rate with fewer fees.

Lower costs and a streamlined closing process – seems like a no brainer, right? Wrong! Buyers of new construction should always use their own real estate agent. Here’s why:

First and foremost, you should know that the builder’s sales rep is paid to represent the builders’ interest—not yours. It doesn’t matter how nice they are or how accommodating they seem to be, the sales rep has a fiduciary responsibility to the seller and the seller only.

Sales reps are often incentivized to sell a certain number of homes in a certain number of time, and as a result, might use dodgy of high-pressure tactics to convince you to sign a contract. In the heat of the moment, especially when you’re excited about the prospect of one of these beautiful new homes, you might be tempted to do so. But remember, the sales rep is working on behalf of the builders’ interests—not yours.

Hiring your own agent usually doesn’t cost a thing. It is standard practice in real estate for both the buyer’s and seller’s agents to be paid their commission by the seller. Your agent will be able to confirm whether or not that’s the case. In the unlikely event that the builder is unwilling to pay a commission to buyers’ agents (typically, equivalent to 2-3% of the property’s sale price), you can negotiate that fee be deducted from the sales price so you can pay your agent directly.

Having your own agent will ensure that your interests are protected. Again, the builder’s sales rep is looking out for the builder’s interests. You should have someone by your side, too. A buyer’s agent will be able to walk you through the entire home buying process, from touring properties and submitting an offer, to arranging for home inspections and setting up the closing.

Consider this scenario: Somewhere along the line, as construction was being completed, the finishes that were installed turn out not to be the finishes you picked out (and paid for!). The seller’s rep might brush these mistakes off, or try to justify them in one way or another. “The Viking appliances were back-ordered, so we installed Maytag instead. But don’t worry, the final look is the same, and this will help you get into your new home on time,” the sales rep says. If you are using the sales agent to represent you, you might be inclined to just take her word for it. But you shouldn’t! Your own agent will fight for an appropriate remedy, like finding a new supplier of the appliances you wanted or negotiating a credit be paid to you for the difference in cost and quality of appliances that were ultimately installed.

What about those “discounts” the sales rep offered you if you went through their office? Those aren’t really “discounts” after all. All of the “cost savings” they’ve offered you have been baked into the price elsewhere. The seller (and the lender they’ve recommend) will markup their fees for things like the origination and bank appraisal on the front end, just to offer you a “discount” on the back end. If you really want to get a good deal, you’re better off hiring your own real estate agent to negotiate on your behalf. And be sure to shop around for lenders. Even a small difference in points or interest rates can add up to thousands of dollars over the long-run.

As you set out on your home search, remember that not all agents are created equally. Yes, it’s important to have a buyer’s agent by your side. But if you’re buying a home that’s new construction, we recommend finding an agent that has experience with new construction. They’ll be able to give you advice on the builder’s workmanship, and point out whether any corners have been cut. They’ll be able to point out any “builders” fallacies about pricing and area information, taxes, etc. And they’ll know how to negotiate warranties and other buyer protections that are common when purchasing newly built homes.

Buying a home is one of the biggest investments of your life—now isn’t the time to put blind-faith in the builder’s rep (no matter how flashy the sales office, or how clever the sales pitch). If you’re buying new construction, protect yourself by hiring your own agent today.

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