Top 10 Reasons to Use a Realtor when Building a
New House
- Who is Representing You? The builder represents themselves and their contracts are filled with fine print signing many of your rights away disguised as arbitration. Realtors are licensed Real Estate agents and the builder’s representatives are not licensed. Their contracts detail that you are not relying on anything that you’ve been told; everything must be in writing. You know that vacant lot next door? The one the builder said is for a future elementary school? It’s actually going to be a commercial building. Your Realtor relies on nothing the builder states or promises and is on top of his/her research. The builder said your child will go to the local elementary school, but the school district is actually busing kids to a school much further away due to maximum capacity of the local school. Your Realtor has already discovered this through research. Trust, but verify.
- Leverage and
Negotiation. If you’re a buyer and you
attempt to work with a builder you represent one deal. All you have to
offer the builder is ‘one deal’. But if you’re represented by a Realtor
you’re likely to get a better deal. Most builders’ homes are sold by
Realtors and they are a great source for buyers. Builders do all they can
to entice Realtors to bring them buyers. As a buyer you’re ‘one fish’ to
the builder. A Realtor, however is a fisherman and is a valuable resource
for the builder. A builder will do all they can to work with the Realtor’s
clients because they want more of the Realtor’s business.
- Experience
Counts! Realtors have represented many buyers and have negotiated with
builders. They are aware of their contracts and can point out any red
flags upfront. They’ll assist you with mandatory target dates in the
contract (pre-approval through lender, etc.) and will guide you through
every step of the process. Realtors can help you on upgrades you might
consider. If you upgrade the carpeting, then you could be paying more than
double the actual costs because of the mark-ups. Realtors can help you to
focus on the structural features which are harder to install later; walls,
closets, cabinets, etc. Realtors can help you with a good lot selection;
quiet and less traveled street location, orientation of the house to
assist with efficiency, etc. A good Realtor will offer assistance from
beginning to end.
- A Middle Person. Issues will arise.
I’ve had builders miss important features such as cabinet location,
misplace a door, forget about coach lights, install the wrong fixtures,
etc. A Realtor knows the hierarchy of a builder’s corporation and can get
items resolved. Many times a builder will be too far into the process and
try to bully you into accepting the issue. Having a Realtor as a middle
person helps. Sometimes a Realtor can resolve it with a simple email or
phone call. Sometimes they have to ‘bulldog’ the matter and get resolve. A
Realtor is always working for you.
- Builder Tie-ins. Builders are notorious for making discounts and perks
conditional on you using their lender and/or title company. A good Realtor
will minimize the tie-ins or give you ‘outs’ if the lender isn’t
competitive.
- The Red-Line
Meeting. You’ve made all your selections for the house. You’ve picked out the
lot and you’ve chosen which side the garage will face. It’s time to meet
with the builder and verify all options selected, determine where every
outlet will be located, inspect the blueprints and verify what you’re
building. A good Realtor is an extra set of experienced ‘eyes’ which will
ensure you’ve not missed a detail and will assist with your last chance to
include vital selections to the house. Is the house zoned properly with
the HVAC to maximize efficiency? Did they include that second sink in the
upstairs bathroom? Is the back porch stubbed with a gas line for the grill?
Is there insulation between the media room and game room? So many details
and this is the most important meeting with the builder.
- Walk-Through
Meetings. It’s critical a Realtor is with you at the first meeting, the slab
pour, the framed pre-sheetrock meeting, and the final walk-through. This
experienced set of ‘eyes’ has been through many homes and can assist you
with features you might miss. The best advice you can receive is to hire a
licensed inspector to ensure all components of the house are installed
correctly. You don’t want to rely on a city inspector because they
sometimes are lax when completing an inspection. You want someone on your
side at all times.
- Assisting with
Financing Options. Unless you’re paying cash you’ll need assistance
with all of your lender choices. Comparing fee worksheets between different
lenders can be like reading computer code. It’s imperative you breakdown
each fee worksheet and make it an apples-to-apples comparison. One lender
might be charging one point and a higher document preparation fee while
another might not be charging any points, but has a higher interest rate.
You might be considering a 30-year note with an 80% LTV or an 80-10-10.
There are so many options available to you and a good and experienced
Realtor can lend critical guidance.
- Closing. You started this
process over six to eight months ago and it’s finally here. Did the
builder complete the final walk-through items you pointed out? Is all the
paperwork at the title company and is it correct? Your Realtor will help
you celebrate the day by attending your closing and having already
reviewed your paperwork to ensure there are no surprises. They’ll assist
you with getting the keys and help welcome you into your new house.
- Post-Closing. A good Realtor
continues their relationship post-closing. They’ll remind you to file for
your homestead (Texas, Florida, & other homestead states), assist you
with tax assessment appeals, and if a warranty issue arises and the
builder is reluctant to resolve the Realtor has the ultimate leverage on
your behalf. Remember, he/she is a source of business for the builder.
You should never work with a builder without a Realtor by your side. A
buyer might purchase five to ten homes over a lifetime but a Realtor might deal
with twenty to thirty+ homes per year. Having that type of experience by your
side is invaluable.
James DeLaGarza
Real Estate Broker
B.B.A., Real Estate Finance, Texas Tech University
972-390-2000
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