Do I Need an Agent When Buying into New Construction?
Many homebuyers, when visiting a newly constructed home, whether in a new community or not, figure that the seller will have a knowledgeable broker present to answer all questions and provide all the pertinent information. Some of these potential buyers therefore assume that bringing their own broker would be superfluous. This line of reasoning is, however, a serious mistake.
To begin with, having an experienced agent by your side is free, as the seller pays the commission to both brokers. Your broker will conduct research about the development, negotiate on your behalf and ask questions that an inexperienced, unaccompanied buyer will not think of. In this regard a broker can save you many thousands of dollars and reduce the level of uncertainty.
Further, it is very important to remember that the site agent represents the developer, and has his best interests at heart. In fact, they are contractually obligated to do so. They cannot negotiate against their client – their responsibility is to secure the developer the best deal. When a single broker represents the buyer and seller, it is known as “dual agency.” While a dual agent is obligated to represent both sides equally, it should be common sense to realize that this is nearly impossible, given that the developer employs the site agent. In reality, the site agent is aware that the seller is his client and the buyer is his customer. For example, a buyer wants to negotiate the lowest possible price, while the seller is seeking the highest possible price. How can an onsite agent do both fairly?
The “buyer agency agreement” assures the buyer that his realtor will represent the interests of the buyer alone. This means that you have an expert looking out for your best interests – at no cost.
But the importance of having a buyer’s agent doesn’t stop there. Your broker will offer advice concerning inspections, mortgages, construction issues, help you understand complex, specific clauses, etc. Additionally, your broker will help you negotiate terms, alert you to different financing options, work with title companies, discuss with you the cost of upgrades being offered by the seller and perhaps reduce your closing costs. Further, a good agent will make you aware of data and trends in the neighborhood where you are considering a home purchase – are there any red flags? On top of all of this, a good agent will be there for you to answer questions during the first year of occupancy, when unforeseen issues often emerge.
In sum, mistakes can cost the buyer dearly. And usually those costly blunders can be completely eliminated when using a skilled broker, working exclusively on your behalf.