Do I Need a Buyer’s Agent for a New Construction Home?

Posted by Lee and Katherine Keadle on Wednesday, December 20th, 2017 at 3:22pm.

do you need a buyers agent for new construction

Many buyers assume they should use the builder's agent when they purchase a new construction home. They often believe they will save money or make the process easier by working directly with the agent on site. However, it's important for buyers to understand that using the builder's representative puts them in a situation where there are competing loyalties and interests. Being represented by the builder's agent during your purchase makes as much sense as a court trial where both parties use the same attorney to represent them.

Does it Save Money to Use the Builder's Agent?

It's free to have your own buyer's agent represent you during a new construction purchase. Especially buyers coming from out of state think they have to pay their buyer's agent out of their own pocket, but in South Carolina the seller pays both the listing agent and the buyer's agent. In other words, there is no cost for you to a have your own representation - whether the purchase is new construction or a pre-owned home. In either of these cases, if you choose to use the listing agent/builder's agent or to represent yourself, the seller keeps the commission your buyer's agent would have earned. With new construction, the builder keeps the money that would have been paid to the buyer's agent, so there is no discount or incentive to forego your own agent. If you can have your own Realtor represent your best intentions during the building process at no cost, why not take advantage?

Who Does the Site Agent Work For?

The site agent's job is to represent the builder, and he/she works solely at the community where the builder is currently constructing homes. Once the homes sell in the current community, the site agent follows the builder to the next project. The site agent is extremely knowledgeable about her builder's floor plans, upgrades and finishes, time frame, and the community itself. However, since she only sells that particular community, she is not as familiar with comparable neighborhoods and areas.

Using the Builder's Agent: A Conflict of Interest

The site agent is under contract with the builder to sell homes in a particular community. If you rely on the builder's agent to find you the perfect home, and she can only sell you homes within her community, you probably won't be hearing the pros and cons of living in that community. On the other hand, a buyer's agent can take you to many new communities and help you compare all of them so that you find the best fit for your family. For example, if public schools are an important factor in your decision, your buyer's agent can recommend a list of neighborhoods in your price range to consider and give you resources to see for yourself which public schools rank best in Charleston.

It's important for buyers to be able to consider all of their options before deciding on a home, and if you're only hearing from the builder's agent that Dream Acres is the place to live, you could be missing out on better options.

A Buyer's Agent Cares About Resale Opportunity

When we represent buyers purchasing a home (whether it's new construction or not), we're confident that years later when it's time for them to sell their home, they're going to contact us to be their listing agent. Repeat business and recommendations to friends and family are the reasons that The Keadle Group is one of the top ranked Charleston real estate teams.

During the buying process, we want to help our clients find a home that will perform well in our local market, increase in value, and be sellable at whatever point they decide to move on to another home. We've talked in numerous blogs, social media posts, etc. about why buyers should think of their home purchase as an investment. Overall value and resale are just as important for buying new construction homes as pre-owned homes. Our top priority at the end of the day is having happy clients who feel confident they made the best choice for their families.

Houses are usually harder to sell in the future when they back up to a busy road, have fewer than 3 bedrooms and 2 baths, have an odd floor plan, or are zoned for lower performing public schools among other factors. A good buyer's agent will help you to weigh your options and find the best home for resale potential because that Realtor will be helping you sell that home in the future. Meanwhile, the builder's agent will be selling homes in whatever community the builder is currently developing.

Your Buyer's Agent Can Help with Selections

It's important that the upgrades, finishes, layout, and other selections will be good for resale and overall value in the future (see above). Picking out selections can get expensive and can add $30-70K to the purchase price of the home. For many upgrades, buyers will get the money back (and usually more) when it comes time to sell the home in the future. However, sometimes buyers get so excited in the selection process that they tack on exorbitant costs on upgrades that are too specific or expensive to be able to recoup the money spent. Getting feedback from your buyer's agent who works across the board with lots of different buyers throughout Charleston will help to create a better real estate investment overall. A buyer's agent can advise you where to put your dollars to get the most out of your house in the long run.

Can a Buyer's Agent Help Negotiate on Price?

Builders typically won't negotiate on price because they need to keep their prices on a firm and steady rise as they develop out a community. Each phase brings a new and higher set of prices, and sometimes builders don't wait until a new phase is introduced to increase prices on floor plan or lots. Instead of negotiating on price, builders offer allowances to pay for a certain dollar amount of upgrades. It's easy to understand why having a buyer's agent negotiate your allowances gives you a stronger advantage compared to the site agent. For example, we recently represented the buyer in a new construction spec home where we negotiated a stainless fridge for no cost to our buyer. He certainly wouldn't have gotten the free fridge if he had used the builder's agent because I was willing to push the builder more than the site agent would have.

How does a Realtor Get Paid on New Construction?

Builders include in the list price commission for both the site agent and the buyer's agent. If the buyer does not have his own agent representing him, the builder keeps the commission that would have gone to the buyer's agent. No discounts or incentives are given in place of this cost, which is why builders make more money when the buyer uses the site agent.

Contact The Keadle Group to Consider Your New Construction Options

As buyers' agents who specialize in Charleston new construction homes, we'd be happy to set up a time to meet with you so that you can compare all of your options. We can recommend a list of neighborhoods to consider based on your price range and the areas that best suit your needs. Seeing these homes and communities in person will help to compare the pros and cons of each, and your feedback can help us to make sure we're making the best recommendations for you. Contact The Keadle Group to schedule an appointment!

1 Response to "Do I Need a Buyer’s Agent for a New Construction Home?"

Jennifer Pratt wrote: THIS IS A FANTASTIC BLOG!!!!!

Posted on Friday, December 22nd, 2017 at 12:31pm.

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