What New Home Builders
Hope Buyers Never Learn

This Report Reveals Secrets About New Construction That Can Save You Thousands of Dollars!

If you are in the market to buy a house, one of the first things you will probably do is check out all the new construction in the area. Studies show that, given their "druthers", most people would rather buy a brand new home than purchase a resale. Like a new car, a new house has a special feeling attached to it, right down to that ‘new house smell’.

The average couple begins shopping for new construction in the following way: they buy the Sunday newspaper, circle all the big ads, climb into the car, and plan a day of visiting model homes. They are excited and in high spirits. After all, this is going to be great fun!

They drive up to the first sub-division. (Finding the model home in one of these developments is never difficult. You just look for the flags in the driveway, the sign on the lawn, and thousands of dollars in professional landscaping.) They pile out of the car, go through the door, and are greeted by an attractive, smiling salesperson. The conversation typically goes something like this:

"Just looking," they tell the Builder’s Representative.

"No problem," says the salesperson. "If you’ll simply register here, I’ll give you a brochure, and point you in the right direction."

They dutifully fill out the registration form, get the brochure, and tour the house. More likely than not, to exit the model home, they have to go right back past the Builder’s Representative. The salesperson, still smiling, stands ready to answer any and all questions they may have.

If the home they saw holds any interest for them, they will probably view the plot plan for the neighborhood. The salesperson points out which lots are still available, which have premiums and which are ready for immediate delivery. The salesperson will “sincerely” confide that a small, totally refundable, deposit will "hold" the lot they like best. This will give them a chance to think about it, without running the risk of someone else grabbing "their" lot.

At this point, the couple is feeling very comfortable with this pleasant and non-aggressive salesperson and are very appreciative of the special "insider-information" about the lot, so decide to leave the deposit.

After all, they have nothing to lose and everything to gain, right?
Wrong!

What the couple did when they first walked in and registered was to sign away their opportunity to have their own agent represent them if they buy from that builder – even though the builder was willing to foot the bill for that representation! When they left the deposit on the lot, they further sealed their fate.

Here’s the truth that builders hope you never discover. In today’s competitive market, most developers realize that the buyer for their home may already be working with a real estate agent, and THEY BUILD A COMMISSION FOR THE AGENT INTO THE SALES PRICE OF THE HOME. That’s right, the commission to pay YOUR agent is ALREADY figured into the price that the salesperson quoted you. And the house is the SAME price, even if you walk into the model home all by yourself, without a Buyer’s Agent.

How much money are we talking about? Well, if it is a $200,000 house, the builder may be offering anywhere from 2%, to a full 6%, for the agent who brings a buyer. That’s $4,000 -- $12,000 that you are paying, whether an agent represents you or not! What happens to all that extra money if you walk into the model home yourself, as the couple in the example did? The builder keeps it! And that is not even the WORST part.

While you are going to pay that extra money even if you do not have representation, the risks you run by just having the builder’s representative "take care" of everything could end up costing you a whole lot more!

There can be as many things wrong, although different, with a "new" home as with a "used" home. ALWAYS hire your own inspector to professionally examine the construction, code compliance and function of every aspect of a new home.

When visiting homes for sale in a new sub-division, there are many Do's and Don'ts that an astute buyer will religiously follow. Doing or saying the wrong things will almost always cost you, the buyer, thousands of dollars.

Salespeople in new sub-divisions are champions at creating the fear of loss. "It's not going to last" and "We're going up in price next week" are common statements said by "on site" agents. Keeping the traffic high in a subdivision, especially on weekends, allows the builder's agents to convince many naïve buyers to act when it was not in their best interest to do so. In reality, a much higher number of people look at a new home in a new subdivision before it is sold, than look at pre-existing homes.

DO: Make sure that your own Buyer’s Agent represents you before visiting a model home. Remember, you don't pay to have a Buyer’s Agent represent you, the builder does!

DO: Remember that the real estate agents that work selling homes in new sub-divisions are order takers. The developer advertises the sub-division, and the builder advertises his or her homes for sale, and the real estate agents working the sub-division holds the property open Monday through Sunday, waiting for buyers like yourself to walk in without representation.

DON'T: Do not negotiate on anything in an uninformed way. On site agents are normally paid a reduced commission, and in some cases are paid a salary plus a bonus on each home sold. The agent has a list of what the minimum price the builder will take for each home or lot. The agent knows exactly how many bushes the builder will include, how many flowering plants, if any, and exactly what amenities the builder will and will not include at his minimum price. The fewer amenities that the builder has to come up with at the minimum price, the more bonus the agent makes. The higher the price the home sells for, the more money the agent makes.

Many times an on site agent tells a client that the price is NOT negotiable, or that the appliances were NOT included, or that their "on site lender" was the ONLY lender they could use... and so on...and so on. The on site agent will say these things when they think they NOT being represented by a buyer’s agent. The buyer’s agent negotiates on behalf of a client, many things that were supposed impossible from a negotiation standpoint become possible!

DON'T: Do not write your name in a book, a showing list, an application to win a free trip to Disneyland or a gold plated coffee mug. Do not sign anything without a representative, namely a buyer’s agent.

DON'T: Do not let an on-site mortgage lender pre-qualify you for a loan. Never give anyone at the sub-division your name, address, or phone number. You know how to find them if you need them. The more information you provide, the easier you have made it for them to sell you and get the upper hand in a negotiation. If they know your name and address, with a little research, they can run a credit report on you and get a good idea how much you can afford to pay for a home.

DON'T: Never allow the agents to arrange for their lender to pre-qualify you for a loan. This gives the builder and his or her representatives all of your financial information. Most builders have special arrangements with mortgage lenders. These special arrangements are designed to offer some type of marketing program to lure buyers into the sub-division. It may be a special low interest rate, or no closing costs. This sounds great, but in most cases it is not. In the fine print, if you look hard enough, the rate accelerates in a short period of time, the loan balance is inflated to cover up front money to buy down the interest rate, the closing costs are not based upon a typical split so they are only “giving” you what they would normally pay anyway. Scenarios using their lender are not usually in your best interest. Your own lender almost assuredly will be able to match any other lenders "deal".

Remember, the builder and his or her representatives hold most all of the cards, they are not at all emotional about the sale of their homes and they negotiate deals day in and day out, so they are very good at it. When buying a new home, you are not buying what you see. You are buying what is written in the real estate contract you execute. In most cases, the real estate "Offer To Purchase" form is one that the builder has hired an attorney to put together to protect the builder. These contract forms are almost always very one-sided in favor of the builder.

Copyrighted by www.RealEstateABC.com