If I buy directly from a builder without a real estate agent, will the builder give me a better price?
Maybe in a particular negotiated deal, but don't assume that eliminating your agent means the builder will simply give you the money they might otherwise have paid toward buyer-agent compensation. Builder policies and incentives vary, and there can be a lot more value to having representation than buyers realize.
There's a Misunderstanding About How Agents Get Paid on New Construction
One of the biggest misunderstandings I hear from buyers is:
“If I don't use an agent, won't the builder save the commission and give that money to me?”
That's not necessarily how it works.
Builders establish their own policies regarding real estate agent compensation. Some builders offer compensation to a buyer's broker as part of their cost of selling and marketing homes. Compensation is negotiable and can vary by builder, community and even promotion.
In my experience, builders generally want to protect the pricing structure of their communities. Reducing the sales price of one home can potentially affect comparable sales and buyer expectations for other homes in the neighborhood.
So don't walk into a new construction community assuming that eliminating your agent automatically puts that money in your pocket.
Ask what incentives are actually available—with and without representation—and compare the complete deal.
Call Your Agent Before You Visit the Model Home
This is extremely important.
If you're thinking about buying new construction, call your real estate agent before you visit the builder.
Don't wait until after you've toured the model.
Don't assume you can register yourself online and add your agent later.
Builder policies vary, but some require your agent to be registered from the very beginning.
For example, some major builders currently require the buyer to identify the agent on the first interaction or first visit, and some require the agent to accompany the buyer during that initial visit.
If those requirements aren't followed, the builder may refuse to compensate your agent.
That's why I tell my buyers:
Call me before you walk through the door.
Who Does the Builder's Sales Representative Work For?
The person sitting in the builder's sales office can be extremely knowledgeable and helpful.
But remember who they're there to represent.
They work for the builder.
There's nothing wrong with that. That's their job.
Your real estate agent, depending on the brokerage relationship you've established, is there to help you through the transaction and look after your interests.
Those are two different roles.
When I'm working with someone buying new construction, I'm not there to fight with the builder. I want a good relationship with the builder.
But I also want my buyer to understand exactly what they're agreeing to.
Builder Contracts Can Be Different
Another reason I like buyers to have representation is the contract.
New construction contracts are often builder-specific contracts, and the terms may be very different from what a buyer expects from purchasing a resale home.
One area I pay particular attention to is the deposit or binder money.
What happens to your deposit if you decide not to purchase the home?
What happens if financing falls through?
What happens if construction is delayed?
What happens if you change your mind?
What happens to money you've paid toward upgrades?
Don't assume your rights to cancel and recover your deposit are the same as they would be in another real estate transaction.
Read the contract and understand the consequences before signing it.
Can an Agent Get You a Better Deal?
Sometimes.
That doesn't necessarily mean I'm going to walk into the builder's office and get them to knock thousands of dollars off the base price.
There are other parts of a new construction transaction that may be negotiable or worth discussing.
Maybe it's the homesite.
Maybe there's a lot premium.
Maybe it's closing costs.
Maybe there are available builder incentives.
Maybe it's an upgrade.
Maybe you want a different sink, flooring, cabinets, appliances or another feature.
Not everything is negotiable, and every builder is different.
But an experienced agent can help you understand where there may be room to ask.
There's a big difference between knowing what you want and knowing what questions to ask.
One of My Biggest Concerns: Inspections
Just because you're buying a brand-new house doesn't mean I recommend skipping an independent home inspection.
Actually, I like inspections during new construction.
One of the inspections I encourage my buyers to consider is a pre-drywall inspection.
Think about what happens during construction.
Before the drywall goes up, you can see framing, plumbing, electrical components, ductwork and many other parts of the house that will eventually be hidden behind walls and ceilings.
Once the drywall is installed, many of those areas become much more difficult to see.
That's why, when the builder permits it and the timing works, I like having an independent inspector look at the home before everything gets covered.
Inspect It Again Before Closing
I also like another independent inspection when the home is substantially complete and before closing, when the contract and builder allow sufficient access and time.
The house may be brand new, but it was still built by people.
Things can be missed.
There may be items that need adjustment, repair or completion.
The goal isn't to attack the builder.
The goal is to identify reasonable issues while they're easier to address.
And remember: a builder walkthrough is not necessarily the same thing as an independent home inspection.
What About the First-Year Warranty?
Many buyers have heard that new homes come with a one-year warranty, but don't assume every builder's warranty is identical.
Read your particular warranty.
Understand what is covered, what isn't covered, when coverage begins and how problems must be reported.
For FHA new construction, for example, HUD retains a one-year warranty requirement covering certain defects in equipment, materials or workmanship supplied or performed by the builder, subcontractor or supplier.
Private builder warranties can have their own terms and procedures.
If you have warranty coverage approaching its expiration date and you didn't have a thorough inspection before closing, I believe it's worth considering an independent inspection before that warranty period expires.
Give yourself enough time to document and report covered issues according to the builder's warranty procedures.
So, Can I Save Money by Not Using an Agent?
Possibly—but don't assume you will.
That's the important distinction.
A builder may have incentives available whether or not you have an agent. Policies vary between builders, communities and even individual homes.
What I don't want a buyer to do is give up professional representation because they believe they're automatically going to receive the agent's compensation as a discount.
Find out the actual numbers.
What is the price with an agent?
What is the price without an agent?
What incentives are available?
What does the builder pay toward closing costs?
What upgrades are included?
Then compare the complete transaction.
If the numbers are identical—or close to identical—I'd rather have someone on my side helping me through the process.
My Advice Before Visiting New Construction
If you're thinking about buying a new construction home, my advice is simple:
Talk to your agent first.
Do it before filling out an online registration.
Do it before calling the builder.
And especially do it before walking into the model home and registering yourself.
Depending on the builder's policy, that first contact can matter.
I've seen how much goes into a new construction purchase—from choosing the property and understanding the contract to upgrades, deposits, inspections, walkthroughs and closing.
In my opinion, having someone experienced looking after your interests is worth far more than assuming you'll save money by going in alone.
Final Takeaway
A new construction home can be a wonderful purchase. Everything is new, you may have warranty protection, and depending on the builder and stage of construction, you may have opportunities to choose features that make the home yours.
But new doesn't mean simple.
Before you walk into a builder's sales office, give me a call. I'll help you understand the process, the numbers and the questions you should be asking so you can make the best decision for you and your family.
If you're considering new construction in Jacksonville, St. Johns, St. Augustine, Nocatee, Mandarin, Fleming Island, Ponte Vedra Beach or the surrounding Northeast Florida area, I'd be glad to help you through the process.
Michael Nobles
CrossView Realty