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Some Facts about New Construction
Having a realtor represent your interests in a new
construction purchase in the State of Florida does not cost you any money as a buyer. The
builder has included a percentage into his home's price for the purpose of broker
participation. Legally, the builder must have one price for all buyers, whether
represented by a broker or not! The builder will just make more profit when you do
not have representation. Strangely enough, most successful builders prefer that buyers be
represented by RealtorsŪ, it makes things go more smoothly and creates happier
clients. How could even a small development of 50 homes, have a smooth sales process
if the builder's agent is handling all the details of 15, 20 or even 30 transactions at
once?
There are three types of new construction.
Tract homes are built in developments or sub-divisions, usually 50
homes or more. This is the least expensive type of new construction. Buyer's
choose from a limited number of "elevations" (exterior appearances) and floor
plans. From that starting point buyers are given a choice of flooring, kitchen,
bath, appliance and landscape "upgrades". This allows the buyer to
individualize their home. It allows the seller to increase their profit
margins. Remember, the agent sitting onsite for the builder is not representing your
interests. An experienced Realtor'sŪ input can be a lifesaver at this
point! Remember, developers usually aren't very flexible on base price of their
homes but upgrades can be negotiable. Most respected builders and developers welcome
buyers who are represented by a RealtorŪ in a new home purchase.
New homes may also be so-called spec homes. Spec
stands for speculation, meaning that the builder has built the home under the assumption
that a buyer will be found to purchase the home during construction.
This is common when buildable lots become scarce in an area. For example Melbourne Beach
and Indialantic. Buyers who can't find what they want on the resale market, and want
a home sooner it takes for new construction, often buy spec homes. Many times the
buyer can choose flooring, paint and landscape options during construction of these
homes. Pricing of spec homes and upgrades are usually negotiable, which is why
buyers need a Realtor'sŪ market savvy and experience when buying one of these homes. Once
again, most reputable builders welcome buyers who are represented by a RealtorŪ in these
transactions as well.
Custom building is the third type of new construction. This
is the most expensive, complicated and rewarding type of new construction. An
experienced RealtorŪ can be a lifesaver here. Of particular value will be is
your Realtor'sŪ input on expected future growth in the area, market pricing factors,
construction financing pitfalls and help in choosing the perfect lot for your home's
footprint and layout. Buying a custom built new home is a complicated
undertaking that involves many more decisions than buying an existing home.
A few words
about "registering" with builders!
It is important to understand that buyers who wish to be
represented by a RealtorŪ must be "registered" along with their RealtorŪ on
their initial visit to the "sales center" or developer's offices. In
actuality it is your Realtor'sŪ representation of you that is being recorded. If
you go with out your agent on the initial visit and purchase within the next 3 months we
cannot represent you on any purchase made with that builder at that site. The reason
is that if you do not have representation on your initial visit and decide to purchase
there, the seller's agent is considered to be the "procuring cause" of the real
estate transaction and no commission can be paid to a third party.
The easiest decision
you have to make... To be represented or not?
How can I best compare different
builders or projects? With experienced help! As an experienced
RealtorŪ, working as your buyer's agent, it is our duty to represent your
interests. We will share with you our experiences and expertise regarding the past
performance, present activities and future prospects for any builder you are
considering. We will register you at any project, or projects, you are
interested in on your initial visit. We will ask questions, listen to the agent's
answers and look for potential problems. We will view the development and individual
homesites with you even show you individual homes. We will give you an honest
evaluation of how the home, the development, and
the builder measure up today and for future
value.
What factors should I consider in
selecting a lot within a new subdivision? Location is the cornerstone of value in
real estate. As a rule of thumb it pays to spend more for location. But location
costs more! Waterfront lots, oversized lots and golf course lots are all desirable and will bring a premium today
and in the future. We can use our experience and professional knowledge to advise
you about these issues. Ultimately, every individual has a unique set of values and
needs that will determine what any particular piece of property is worth. We can
help by giving you an honest assessment of how different types of sites are valued by the
marketplace.
Is it a good idea to use the
builder’s mortgage financing package?
Sometimes! Possibly, depending on your personal finances and the type and amount of
incentive the builder's financing includes. The builder may pay for the title policy
or pay a portion of the closing costs. We have a spreadsheet for you that will
compare any number of various financing scenarios to see which one is best for you
now! And in the future.
What is included in your new home? What you see in the builder's
model may not be included in the price of your new home. Items to ask about include
window coverings, ceiling fans, landscaping, fences, appliances, crown moldings, tile
floors, countertops, whirlpool tubs and other luxuries. Some builders include an
oven, range and dishwasher, but not a refrigerator! Others may include the
refrigerator. Nobody likes surprises, particularly on the walk through of their new
dream home one hour before closing!
Which upgrades should I purchase? Kitchen and bathroom
upgrades are generally the best investment. Going with a higher grade of flooring
(from carpet to tile) usually is a good investment. However, upgrading to the most
expensive tile may not give a return on your expenditure at sale time. Upgrades
should be consistent with what is customary in homes within the area and price
point. Most "add on" items may be purchased more economically after
closing. For example, a builder-installed microwave could cost twice as much
as purchasing one yourself later. In general, builders try to charge a high-markup
for upgrades.
Remember...
It costs you nothing to have professional representation,
assistance and counseling from a professional RealtorŪ when building a new home!
All compensation earned by your RealtorŪ is paid by the builder and does not effect
on the price of your home. Reputable builders encourage RealtorŪ participation. Top
builders know that represented buyers enjoy a smooth, quick and positive buying
experience.
Hiring an experienced RealtorŪ as your buyer's agent gives
you an advocate for your financial interests. The developer has a selling
agent representing his financial interest. Level the playing field, your
Realtor's experience and influence represents strength and leverage on your behalf. If you
ask the right questions at the right time, you may get some very surprising answers at a
later date.
Resale value and future equity. Make the most of your
investment. Questions concerning site locations, builders, designs and upgrades are
important. Your RealtorŪ knows you are not just building a home today, you're building an
investment for your future.
Two heads are better than one. Buying a home requires the
teamwork, communication and cooperation between many different entities. No
one is better trained or more experienced at coordinating the complex interaction between
buyer, builder, lender, and title company than your experienced RealtorŪ.
As your
buyer's agents we will always represent you, and your interests, in the
purchase of your new home.
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