Should I Work With a Buyer’s Agent or a Builder?

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An unrepresented buyer is often disadvantaged in the real estate transaction process if they are not using an experienced real estate professional. It could be compared to going to represent yourself in a court case worth hundreds of thousands of dollars… and not bringing a lawyer to the table. Real estate agents are licensed and trained specifically to handle the many types of issues which can arise in the home buying process.

Many home buyers simply drive up to a new subdivision and negotiate directly with a builder. Here are several reasons why you shouldn’t.

A buyer’s agent represents the buyer’s best interest and helps guide a buyer through every step of the transaction with the least degree of hassle and frustration. A buyer’s agent’s only goal is to get the buyer the most value for the least money. Their purpose isn’t to just drive you around to look at properties (though they do, of course!): their real value comes a little later in the process, during negotiating and working through the legal and safety issues.

Buyer Representation

Always remember one thing: the builder representative is a salesperson to the builder, and is there primarily to represent the builder’s interest in the transaction. They may look and sound like a real estate agent there to help you: but their loyalty is to the builder

When a buyer deals directly with the builder’s representative and not a buyer’s agent (and therefore saving the builder the cost of a buyer’s agent), you are essentially paying the builder to not represent your interests. Real estate agents are licensed professionals bound by law and strict professional ethics and policies to work for the individual who signs with them.

In essence: would you rather have a builder to represent their own interests, or a buyer’s agent to represent yours?

Negotiation Assistance

Buyer negotiations without an agent can be effective… if they know what types of sale incentives are customary and typical, if they know how to compare things like alternative financing, if they know who is supposed to pay for what items during the course of the transaction (inspections, warranties, appraisals, titles, surveys, closing cost items), how much upgrades are likely to cost, how to handle any concessions from the builder, and any other issues.

A buyer’s agent handles ALL of these concerns, asking the questions a buyer working alone with a builder might not know to ask, and ensures that their client gets the best items for the least cost.

New Construction Inspections

If you are working with a buyer’s agent, they will generally always insist on and manage inspections. Why?

Most new construction properties have a number of new home defects which can dramatically impact liveability and resale value. Builder representatives are rarely likely to insist on or to manage proper third party inspections. Having a buyer’s agent on-hand to manage this part of the process alone can save new home buyers as much as the cost of an agent’s commission, and completely justifies a buyer’s agent involvement in the transaction.

Buyers are often under the mistaken assumption that a home warranty will take care of all these issues.

Buyer Agent Cost

Most buyer’s agents charge a 3% commission on the purchase of a home. But the buyer doesn’t pay this: the seller does. Reputable builders account for this expense. Occasionally, some builders will even inflate home prices to compensate for the expectation.

In short: the cost shouldn’t scare you! It’s a normal part of the process, and one which you don’t even need to pay.

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