Common Misconceptions about New Construction Purchases

Purchasing a new home directly from a builder without representation from a knowledgeable and experienced buyer's agent is very dangerous for buyers. Buyer's agents are experienced in helping clients purchase brand-new homes, they can provide a lot of value by helping consumers avoid mistakes and save significant amounts of money.

A common misconception about working with builders is that builders don't negotiate.  The builder’s salesperson will usually give the impression that sale prices aren’t negotiable. Although there is some truth to that, a buyer’s agent can provide some leverage. Builders who won’t budge on sales prices, for instance, may instead offer to pay closing costs or include design upgrades.

Another important factor is the timing of the sale. Knowing when it’s best for clients to buy or to hold off can save clients a lot of money. For instance, if a new phase of construction is set to start, this can mean the purchase price of properties from the previous phase is set to go up. Reserving a property before that can mean big savings for buyers—as well as instant equity.

Some new-home buyers also believe that if they do not use a buyer's agent for purchasing a new home, the builder will reduce the home price by the amount of the commission that would have been paid. This is simply not true. Builders don’t want to lower prices because that will have an impact on future home sales in that neighborhood. Furthermore, builders expect to pay commissions to buyer's agents, so they figure that cost into their marketing budgets. Buyers who opt out of working with a buyer's agent are not saving themselves any money. The commission that was not paid will go straight to the builder’s salesperson, or the builder will keep it as profit.

When it comes to purchasing new construction, there is a common misconception among buyers that the process is pretty straightforward: walk into the builder’s office, pick a lot and design, and sign on the dotted line. What many potential buyers don’t consider is that the friendly and helpful salesperson working for the builder at a new-home site is representing the builder—and is there only to look after the builder’s best interests. It's very important to know that buyers who are not represented by their own agent are taking a big risk with what is probably their biggest investment.

Ask us how we can help you navigate the process of purchasing a new construction home.

excerpts from Real Estate Express and Realtor.org