Maximizing
PROFITS
REALTORS CAN HELP
NEW HOME BUYERS MAKE THE
MOST OF THEIR INVESTMENT
[ WRITTEN BY R.P. WHITTINGTON ] [ PHOTOGRAPHED BY HOPE KINCHEN ]
Most people would not make a large commercial
investment without legal representation or schedule major surgery without medical advice. So why would some home buyers bypass
using an agent or realtor when they are making one of the largest investments in their lives?
When potential homebuyers plan to “go it alone,”
that’s the question Phil Pierce of Prudential Network Realty poses to them. Pierce knows a lot about real estate in
the First Coast. He’s among the top 2 percent of Prudential brokers nationwide-selling more than $25 million in residential
properties and condominium units over the past year.
“A good real estate agent knows the inside information
that the buyer usually doesn’t,” Pierce said. “Can you negotiate the seller off the contract price, what
upgrades are available at little or no cost, what locations and sizes of lots are available in a new development, what are
the seller’s ‘trigger points’-these are just a few of the questions a good Realtor will have the answers
to, and those answers usually translate into better home values for the buyers.”
When it comes to buying in a new home development,
the incentives for buyers to use agents are even greater. “With a big builder like Pulte, Centex or Lennar, the builder
has already built the sales commission in to the price of the home, so buyers are going to pay the commission whether they
have a real estate agent or not,” Pierce said. “From that vantage point, it doesn’t cost the buyer anything.”
It
is a common misconception that buying a new home directly from the builder, without the assistance of a real estate agency,
can save buyers money. However, the price of a new home is the same whether you have an agent or not.
“Therefore, common sense should tell you that
you should use a professional to help with contract negotiations, researching loans, or helping you to decide which lot is
best suited for you,” Pierce said.
When purchasing a new home in a subdivision, the builder’s interest is represented
and protected by their on-site agent (who, in most cases, is also a licensed real estate agent). However, the seller’s
agent’s sole responsibility is to earn the builder as much money as possible by selling new construction at the highest
possible price. Since this agent solely represents the builder, and the agent’s salary or commission comes directly
from the builder, they stand to earn more money if they sell the property above market price, or with fewer amenities.
One broker associate, who currently works for a real
estate firm, spent 10 years representing builders as an on-site salesperson-witnessing both sides of the transaction. She
always felt concern for buyers who didn’t have an agent or Realtor, because ‘they didn’t receive any discounts
and didn’t have the support system they deserved” when making such a major transaction.
“If builders
rely on real estate professionals to sell their homes, then why wouldn’t you, the buyer, take the same precautions in
assuring yourself the best service and expertise in making such an important decision?” Pierce said.
When representing a buyer, Pierce said a good agent
will conduct the research the buyer doesn’t generally have time for-checking out the builder’s programs to find
the best fit, providing a thorough inspection of the new home during and after construction, reviewing the builder’s
track record, and a variety of other issues.
“To rely on the seller’s agent to do these
things is really like the fox guarding the henhouse,” he said. On inspections alone, Pierce said that “90 percent
of the time” he finds something that needs to be corrected or repaired to ensure the house is built to the established
codes.
“Generally, I’ll find certain electrical
wiring not installed properly, handrails not built to code, problems with shingles, roofing, trusses, stairs, or inferior
nails and other materials used during construction, “ he said. “Since repairing or bring these items into code
will cost the builder more money, a seller’s agent will not necessarily point these out unless the buyer’s agent
does.”
And while the old adage on buying any property (location,
location, location) is certainly still important, Pierce said there are other factors buyers must also consider.
“Most people move more frequently than in the
past, so you much consider all the facts and look toward appreciation, resale value, the home builder’s reputation,
and other factors,” he said. “Certainly, you’ll be much happier finding a home you like that could double
in price five years down the road rather than one that doesn’t.”
Also, some new homebuilders are more progressive than
others-offering amenities like granite countertops, stainless-steel appliances, wiring for surround-sound and other add-ons
that bring more value to the purchase.
“A good agent does his or her homework to find
those added values and bring those to the buyer,” Pierce said. “Likewise, knowing the builder’s total inventory
lets me know which builders are offering better prices, and which are more apt to offer more upgrades to move the property
and it won’t cost my buyer anything extra.”
So, with so many new home communities to choose from,
Pierce suggests you research the following questions before you buy:
• Is this a good builder? Does he/she have
a solid reputation, years in business, etc?
• How does the quality of his/her product compare to that of other
builders?
• What are the existing inventories of the various builders?
• How do builder models
meet your needs (floor plans, square footage and/or location)?
• If you buy and sell the home in a few years,
what upgrades should you include to be competitive?
• If you do sell in a couple of years, will the builder
be finished with construction in the neighborhood, or will you be competing with the builder when you sell?
“When you find the answers to these questions,
ask yourself if the time spent in researching these answers was time well-spent based on the value of your time,” Pierce
said. “Unless buyers have a lot of time on their hands, most see that having a real estate professional collecting this
information just makes good sense-financially and from a long-term investment standpoint. This is especially true when you
are buying a new home from a builder.” œ
All information deemed reliable but not guaranteed. 
