Do You Need a Realtor When Buying a New Construction House?

You just returned from your first visit to the model home in a new development. It seems perfect for you and your family, and you think you can swing it with the sale of your existing home. The agent at the model home says you can purchase a new construction home without the help of a Realtor. Do you need a Realtor for new construction? The answer may surprise you.

At Felix, we think everyone should have access to the best information on buying new construction homes because the dream of becoming a homeowner is attainable. We will break down whether you need a Realtor for purchasing new construction homes. We will also walk you through how to pick the perfect Realtor.

What Is A Realtor?

A Realtor is a professional who assists in buying, selling, or renting a property. But often, the terms Realtor and real estate agent get used interchangeably. A Realtor has additional certifications, including a National Association of Realtors (NAR) Code of Ethics Course. This means the Realtor has taken an oath to act ethically, which includes putting the interests of the buyers and sellers above their own.

From there, Realtors can specialize in different areas. When a Realtor calls themselves a buyer’s agent, they represent homebuyers as they search for and eventually purchase a home. Buyer’s agents can even go one step further and get the Certified New Home Specialist designation. This indicates that the Realtor has gone further and learned the ins and outs of new home construction. These are true experts in the new home construction field. You will also encounter the builder’s sales agent in the new construction process. The builder’s agent is the real estate agent representing the home builder, who is also the seller – not you, the buyer.

Real estate agents get paid through commission from the seller. So if you’re buying new construction, the builder pays a commission to their sales agent and your personal buyer’s agent. A benefit of working with Felix as your buyer's agent is that we will reduce the commission we get from the builder so that you can save up to 1% off the sales price!

What Does A Realtor Do For A Client?

Realtors act as trusted advisers for their clients, and their specific tasks vary depending on whether you’re buying or selling. We’ll focus on the buying process here.

A Realtor typically helps buyers:

• Find homes for sale: The Realtor will take an inventory of your needs, and then they will do their best to find the best house for you. They may set you up with a listing feed or send you ‘coming soon’ homes that haven’t hit the market yet. If you’re moving to an area you are less familiar with, your real estate agent can help determine which neighborhood is ideal for your needs.
• Connect you to a lender: If you don’t yet have a mortgage lender, your Realtor will connect you with one so you can get preapproved. This helps you when you put offers on prospective homes as home sellers will not take you seriously without a preapproval letter from a reputable lender.
• Organize house tours: They coordinate visits for all prospective properties that fit your needs and schedule.
• Helps you make an offer on your future home: The buyer’s agent will use their experience and research on the area to help you come up with an attractive offer. They will likely perform a comparative market analysis (CMA) which will help determine what price you should offer.
• Negotiate terms and get your offer accepted: There is a lot that needs maneuvering at this step. Getting your offer accepted is one thing. Your Realtor will help coordinate, home inspections, repairs, and closing. They’ll be working with your lender and the title & escrow company to ensure a smooth closing process.
• Do the final walk-through: Having an experienced Realtor on your side right before closing is essential for ensuring everything is just right. There’s a lot to get done before a home purchase. They will connect you with a home inspector who is not associated with the seller or the seller’s agent for an independent assessment of the home.

If you’re buying a new construction home, the process is similar to purchasing a pre-owned home. But there are some differences that mean you will need the right Realtor for the job. A Realtor specializing in new construction will have experience navigating negotiations with the builder, choosing suitable finishes for resale, and doing your blue-tape walkthrough during construction. These additional steps mean that a more specialized Realtor is needed. Your agent can also assist in selling your current home (if you have one) and often will give you a discount if you use them for both steps. Clients who have sold their homes with Felix have saved $12,375 in fees on average thanks to our 1.5% commission!

What Are The Advantages Of Hiring A Realtor For New Construction?

You may be tempted to use the sales agent you meet at the new construction model home. Our advice – don’t do this. There are many pros to hiring an experienced Realtor for your new construction purchase.

• A Realtor will help you choose the right area or neighborhood based on your needs.
• An experienced Realtor will help you choose a reputable builder.
• A buyer’s agent will help you determine the best way to finance the purchase of your new home and introduce you to a preferred lender who can provide favorable interest rates.
• You need to work with a real estate agent who is looking out for your best interest. The sales agent for the builder is working in the builder’s best interest.
• The agent can do a comparative market analysis (CMA) to ensure you are not paying too much for the home.
• Your Realtor will review the builder’s purchase contract and the fine print. They can then explain the contract in easy-to-understand terms.
• An experienced real estate agent will negotiate the builder contracts to include incentives like closing costs, lot premiums, and an upfront price of the home.
• You need an agent to help negotiate with the builder on your behalf.
• Your New Home Specialist will help you choose the right builder upgrades, ensuring you consider resale value. They will help prioritize add-ons so your base price does not increase too much.
• Work with a Realtor who knows what questions to ask the builder to ensure they are not cutting any corners throughout the construction process.
• You may not be able to line up the sale and purchase of your new home perfectly. If the builder does not allow the “sale of home contingencies,” the agent can help recommend strategies to remove the contingency, such as reviewing bridge loan options.

How Is A Buyer’s Agent Compensated?

Similar to buying an existing home, you will not have to compensate your real estate agent directly. The buyer’s agent will be compensated by a commission offered by the builder from the home sale.

How To Ensure You Work With A Realtor Who Has Experience With New Construction?

Here are a few questions you should ask your prospective Realtor to gauge their experience with new construction. Ask the real estate agent:

• How many new construction transactions have they completed in the past twelve months?
• Which builders have they worked with in the past?
• Which areas were the new construction homes located in?
• Is the agent a Certified New Home Specialist?

How Long Does It Take For A New Construction Home To Be Completed?

If building a custom, semi-custom, or even a spec home, most will take at least 6-9 months from the time you sign the builder’s purchase contract. You can expect a real estate agent to work with you throughout the entire process: choosing a neighborhood, recommending a reputable builder, securing financing, and more.

What Are Some Of The Pros Of Buying New Construction?

There are numerous advantages to buying new construction. You may be first attracted to the process because you do not have to get into bidding wars with other buyers to purchase a home. It’s a relief not to go through that process in this real estate market.

You get control over how your house looks and feels. Depending on the level of custom house (custom, semi-custom, spec, etc.), you can build your dream home to your unique specifications. Even if you can only customize a few parts of the new house, you still get to choose things like the latest architectural styles, open floor plans, tall ceilings, stone countertops, and more.

You also won’t have to worry about big purchases and repairs like the roof, water heater, or HVAC. Those will all be brand new! Once you move in, you will be relieved that there will not be a massive punch list of repairs and updates because, after your blue tape and general inspection with the builder, you can feel assured that you are getting the closest thing to a perfect home. If there is something wrong, most new homes come with a home warranty (make sure your Realtor negotiates this!).

What Are The Cons Of Buying A New Construction Home?

There are two major disadvantages of buying a new construction home: cost and time.

Most new home buyers will pay more for a new construction home. You are typically paying a premium on the price-per-square-foot basis to live in a brand new home. Buyers will have little wiggle room to negotiate the purchase price on the new build. Get a Realtor to review the purchase contract because the real estate contract favors the builder.

Building a new construction home takes time, especially if you want to customize the elements of your home. Custom, semi-custom, and spec homes can take 6-9 months. So you may have to get creative as you sell your current house and plan for the future. Once you move into your new house, it can be inconvenient to deal with construction noise and construction traffic in the new housing development. But this is just a temporary inconvenience.

How Do You Find A Local Realtor Who Is Experienced With New Construction?

The best way to connect with a local Realtor experienced with new construction homes is to sign up on Felix. We’ll alert you whenever a new home that matches your criteria is being built. At Felix, we’ll learn a little about what you look for in a home. Then we will guide you throughout the entire process, from choosing the best area to picking a reputable builder and managing the sale.

About Felix Homes

Felix Homes is where five-star service meets low commissions! To date, we've saved our clients $1,610,738 in commission fees and have earned 120 five-star reviews on Google!

How are we able to offer five-star service AND lower commission fees? It's simple:

• We're an independently owned brokerage – not a franchise which allows us to keep more of the commission we earn.
• By offering a lower commission, more folks want to work with us which means we close more deals. By closing more deals, we can pass more savings along to our customers!

Still not convinced? Read all about our low-commission mission here.

If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.