Five Reasons To Use A Buyer Agent When Purchasing New Construction
August 21st, 2007 Categories: Buyers
We’ve all done it, you decided you want to buy a home. You don’t know a real estate agent and don’t think you are serious enough just yet. You think that a real estate agent will pressure you. So you start looking in the real estate section of the weekend newspaper and see all these great new properties with their teaser ads.
“No Money Down!”
“Starting in the low $300,000s”
“$10,000 in Closing Costs”
So you stop by the builder’s sales office. Just to take a look. Everything is new, everything is clean, everything is pretty– AND IT CAN ALL BE YOURS. The sales person takes you on a tour. Before you know it that sales person has taken your name, address and serial number (and has you sized up). And there just happens to be a place available for you.
Before you know it, you find yourself believing that you are getting a good deal. You dream about it. You talk to the people at work; because you know, the people at work always know everything about real estate. You may even talk to your family.
Next weekend rolls around, you revisit that builder in the shiny sales office with the bright and shiny sales people. Are those chocolate chip cookies she’s taking out of my new oven? Before you know it, you are signing papers. Papers you don’t read, and if you did, you don’t know what it all means. The sales person tells you everything will be fine, you can cancel if you want. You’re writing a check and meeting with their loan officer.
You just bought your new home and more times than most, a host of headaches.
Why?
Because you went into this purchase without any representation. Alone. No expert advice.
“But the sales person was nice & helpful.” you say.
Of course they are, they work for the builder and it’s their job to sell whatever the builder is building. THEY REPRESENT THE BUILDER.
WHO IS REPRESENTING YOU? NO ONE
And you think that’s not a big deal…it’s a new property what can go wrong?
Well let’s see:
-
The builder is more than a year late in delivery, interest rates have risen and you can’t buy this place anymore. Are you going to lose your deposit? More importantly- where are you going to live?
-
The unit you think you bought is no longer available, the builder tells you there was a mix up- that unit was already sold before you signed the papers, but there is another one just like it. Now you don’t have the unit with the great view- but something else. What are your options?
-
You didn’t get that nice fancy granite you wanted, but something else. The builder tells you its too late to change. What do you do?
-
The builder hands you a 500 page document that are the Condo documents or Home Owners Association Documents. You have 5 days to look them over. Where do you begin?
These are just some of the things that can happen and have happened to people buying new property.
Are you getting the picture? Buying real estate is like life: It never turns out like you expect.
I’m not saying you should never consider new construction. But when you do, make sure you bring along a buyer’s real estate agent. Someone who works for you and is looking out for your best interest.
Five Top Reasons To Use a Buyer Agent
1. You Are Represented In The Transaction
Having someone working for you will make all the difference in the world. You have a full-time job, how else could you afford this property? The agent will be there for you, when you can’t. She will explain the contract to you. She will point out where you are exposed and when you can lose your deposit. (I even waited in line for a client while he was at work. I called him to let him know when he should leave work to meet me at the sale office.) Your realtor will be there throughout the process. Your realtor may find another new construction project that you just may like even more.
2. The Sales Person Works for the Builder
The moment you walk into the sales office for that new construction project, the sales person (who may or may not be a REALTOR) will attempt to have you “sign-in.” Once you do that, you are giving up your right to having a REALTOR represent you as part of your sales price. (See #5 below) While that sales person will help you pick out upgrades and options, that sales person is still working for the builder. They are specifically trained to make the process smooth. Their goal is to sell the unit or lot you are interested in. They will introduce you to their loan officer and their title company when you can be getting a better loan from a company not affiliated with the builder.
3.
The Buyer Agent Advises You Along The Way
You will have many decisions to make during the process such as the grade and quality of your kitchen cabinets, bathroom tiles, flooring. Your agent will point out upgrades that will retain their resale value and not just the most expensive material. Things that you should have and things that are not important. And most importantly- things that you can afford. Also, your agent will explain when you get an independent home inspector.
4. The Buyer Agent Knows the Local Real Estate Market
Your agent has worked with builders before. They know which ones are dependable and which projects are a good value. They can tell if that $5,000 credit the builder is giving you for closing or “free” upgrades is really the best deal for you. In most cases, that $5,000 is tacked on somewhere else along the way without you realizing it- either with higher lender fees or title insurance costs.
5. You Are Already Paying For It
Especially in this buyer’s market, the builder has already budgeted into the sales price the cost of paying a buyer’s agent. Most buyers don’t know this. So what happens when the buyer does not have a buyer’s agent when buying the property? That builder has just made more money in the sale of your home. If you have not negotiated the price minus the amount of the agent’s fee, the builder will keep it for themselves. But they haven’t told you that. So, if you are already paying for it, why wouldn’t you want to hire a real estate agent to represent you? Most importantly, you need to have your agent with you BEFORE you make that first visit to a sales office. If you decide you need a buyer’s agent after you have “registered” with the builder, any buyer’s agents fees will come out of your pocket.
Virginia is a buyer beware state. It is up to the buyer to protect themselves in any real estate transaction. If it’s not the seller’s fault, its the buyer’s fault. Sounds simple. What it really means is that the buyer is responsible for finding anything wrong with a property. The builder doesn’t have to tell you most things unless you ASK! They also don’t have to tell you about the new interstate that’s going to built behind your property or anything else that is not related about your specific unit or lot you are buying.
Read what some other Bloggers have to say on the subject:
Elizabeth Weintrub : Brand New Homes-Buying New Construction from the Builder
Chronicles of a Tucson Home Inspector: Why oh why inspect a new construction home???
Teresa Boardman: Mortgage And Title: You Always Have a Choice.
Read also:
FAQ #3: What is a Buyer’s Agent and Why Should I Hire One?
| Discussion: 20 Comments »
Great insight for the folks who want to “go it on their own”. There are truly so many pitfalls that one may encounter through the building proces. I just think many people are not informed enough to know the real value a Realtor can bring to the process.
Thanks.
[...] I’m not listing the prices here- because they can changes according to demand. Contact me if you are interested. So, if you are looking for a condo and think that the Orange line condos are over-valued, come over to the south side. But don’t walk in without a buyer’s agent. Read my last post to understand why. Phase 3 units are for sale but still under construction- so you can’t see them yet. You have to buy it on faith. That’s not the way you buy real estate. Delivery is expected for Phase 3 starting in the 4th quarter this year– 2007. [...]
Great topic. Our market in Raleigh is about 1/3 new construction, so we deal with this quite a bit. It’s amazing the things a builder’s agent will tell, or worse yet, not tell an unrepresented buyer. One other big benefit a buyer’s agent brings to the party is the ability to check the sales history and see if the builder has discounted his price in the past. If so, it is more likely he will do it on the transaction at hand.
Excellent topic and congrats on your mention in the “Geekestate Blog”.
As a Broker and a Builder you are right on the money in most cases. True and false, the Professional Builder most likely has a fee for a Buyer’s Agent. Most of the times with the builder’s I talk to this fee comes out of the margin. Many don’t add the agents fee to top of the price, we look at the fee as a marketing expense.
If a Builder ever wants to shoot himself in the foot with the Real-estate industry have two different prices for a home. One for the Buyer represented by an agent. And another that lowers the sales price for the non-represented buyer. Once the words out that a builder has double pricing, the area Agent’s response to this builder most likely would be, to never bring that builder a client.
The largest value I have found in the custom building side is most agents will have the clients complete a New Home Wish List. When I’m bidding non-represented buyer’s home many of times it’s all verbal of their needs. I have them complete a wish list, but the next builder most likely will take the verbal needs of the buyer and create a bid. At this point any builder can be the low bidder only to make it up in change orders. This is where the agent can save many headaches for the buyer by having them organized before the first meeting of all the builders they choose to research.
The New Home Wish List has been a personal drive to educate the buyer’s, agents and builders to get it in writing.
Eric/Bob: Thanks for another REALTOR view point. Most people think that nothing can go wrong with new construction- because it’s new. Buyer’s need to learn that things can go wrong with ANY real estate transaction- especially if they don’t understand the business.
Duane- Thanks for giving a builder’s perspective. You sound like a custom builder. I do that with my clients- I actually ask them to make 3 lists
-gotta have
-nice to have
-don’t cares.
I tell them it’s their homework to think about what they are looking for before we start looking at houses. It seems to help them talk about what’s important to them.
Local builders on larger projects played all sorts of games with the real estate agents here during the crazy years- (e.g., agents not welcome, low commissions) – but the established builders didn’t do that.
Mary,
I prefer when quoting a home to receive a “gotta have” wish list. The “nice to have” and “don’t care” seem to get hazy when pricing the home for the buyer. By producing a quote with all the possible wants can confuse and scare a buyer with an over priced home bid. Once I produce a quote from the “gotta have” list, and the price is under where the buyer thought they would be, then they can work on pricing for the “nice to have” features they may want to add.
I use an online wish list that also is a lead generator. This way the buyer and yourself each receive a copy of the wish list. You can see how mine is set up at http://www.marlinkbuilders.com feel free to test a wish list by entering “Test” in the buyers name and your e-mail address in the buyer’s data box.
As for the builders “playing all sorts of games during the crazy years” those days are done for the builders. I’m guessing you are not seeing these games in today’s market.
[...] I’m interested to see what happens with this project. I want nothing more for it to succeed. I think it will do wonders for the neighborhood. If you are interested in buying, give me a call, because you are going to need a buyer’s agent. [...]
[...] PS – Check out this related article by fellow blogger Mary De Luca over at BeltwayRamblings.com [...]
[...] you as your buyer agent. It’s most important in a pre-construction situation to have your own representation. It’s more than just picking out the color of your granite counter [...]
Mary
What great insight at new condo buying in Northern Virginia– and I’m sure it is much like you describe–they really are just going to look. And “the Builder rep was so nice….” aghhhhhhhhhhhh. Yes I’ve heard it all before too. And it drives me crazy.
My biggest real estate fights/disputes have been with builders…they don’t happen often, but they are always tough, they are used to getting there way. So that would be reason 6, “Who will be there to fight for you if this thing goes bad?” That, and like your builder commented on the poor idea of dual pricing, the builder has more of a stake in keeping us Realtor’s happy than an individual buyer. Terry McDonald- your guy in Charlotte NC!
[...] you when you purchase new construction. Take a look a this great article that outlines 5 top reasons to use a buyer's agent in new construction. If you are considering purchasing a new home, make sure you contact a real estate agent that is [...]
You’ve done a great job of summarizing for home buyers why they need an agent representing them when purchasing new construction. So often buyers think that they can negotiate a better deal if they don’t have an agent, but what they don’t realize is that they usually would have received the same deal even with an agent. And, an agent can save them money by helping them avoid the pitfalls that can occur for unrepresented buyers with new construction. Take a look at my latest post on building inspections and new construction…I’ve listed some of the problems I’ve found on my building inspections for brand new homes.
http://www.realestateinfostl.com/blogs/karen_goodman/archive/2007/12/04/st-louis-real-estate-new-construction-why-hiring-an-inspector-can-save-you-money.aspx
It’s odds-on for strange couplings…
Embarrassingly stitched-up and awkward with a military/sci-fi bent, he’s a metaphorical love child of The Office’s David Brent…
You bet. The last thing that you should want as a buyer is to be swept away in the pretty model home and forget that you should have an objective person represent you.
[...] 5 Reasons to Use a Buyer’s Agent When Purchasing New Construction [...]
I contacted the County Supervisor reference Stanley Martin Homes
Rampant water intrusion into Stanley Martin homes in the Belmont Bay community. Most have been repaired, some 4 or 5 times, including mine – but some still leak, like mine and two of my neighbors. Whenever it rains for a long period of time or wind-blown rain, we have water intrusion into our homes. The intrusion appears to be coming in through the exterior brick veneer sidings and into the tops of the window sills. I have enlisted the services of professional engineers and an architect to determine source of problem and recommended solution (see below). Initial findings indicate blatant disregard for both International Residential Codes and Virginia Building Codes. Most of these code violations would have been found if the county code inspectors had actually inspected the homes during initial construction (in 2001). Water intrusion can cause structural failure, toxic molds/mildews, termites and health problems. Shortly after moving into this home, I was diagnosed with pneumonia. I am very healthy and work out everyday. My dog almost died from anemia (cause unknown) and I had to spend $1,500 to save her life.
I am asking for Mr. Principi’s help with the following:
1) Call Stanley Martin Corp and ask them to hire a professional (3d party) engineer to diagnose and recommend a solution that fixes the leaks once and for all. For my home and the other homes in our neighborhood that still leak.
2) Ask them to actually repair my home, at no charge to me, in accordance with mutually agreeable recommendations from professional engineers and comply with ALL Virginia and International building codes. For my home and others still leaking.
3) Ask them to reimburse me for my expense to hire professionals to diagnose the problem, and the $1,000 deductable for my $3,500 homeowners insurance claim as a result of water intrusion.
4) Pass a county or Petition the State lawmakers or Attorney General to ban Stanley Martin from building anymore homes in Virginia until problems are resolved.
5) Pass a county law or Petition State lawmakers to ban the use of “disclaimer” statements in residential home sales and require disclosure statements for all home sales. I am the second owner of this home. The original owner did not disclose this problem to me because of a disclaimer… he is now the President of the Belmont Bay Homeowners Association (Mr Gene Rainville). There are many other second homeowners in my neighborhood in this situation due to dishonest homeowners and Realtors.
6) Authorize a budget to establish public information warning potential buyers, sellers and renters to demand thorough water intrusion testing, mold testing, and obtain “disclosure statements.”
I also had an architect comme out and these were his findings (applies to all Stanley Martin homes in my neighborhood).
JOHN HUGH McLEOD IIIARCHITECT LLC
2712 Bowling Green Drive, Vienna, VA 22180 703-280-1090/703-819-6663(c) john@mcleod-arch.com
September 27, 2008
Major Marvin Iavecchia
13777 Ulysses St.
Woodbridge, VA 22191
Re: Water Intrusion
Dear Marvin,
I visited the property at the above address on September 18, 2008 regarding the water intrusion. I
gathered information from the Owner (you) and representatives of the original construction
contractor, Stanley Martin, and made visual observations. The following is a summery of my
observations, analysis and recommendations. No invasive tests were performed, and no
guarantee is made as to the correctness of the analysis, or the effectiveness of the
recommendations.
1. Observations
a. Construction Of Wall
The house wall construction is wood frame with single wythe brick veneer. The east
wall (left side as one faces the front) is the source of the leaks, and is two stories plus the
gable in height. The roof overhangs the wall by about 1 foot. Slight gaps between the
wood trim and brick were observed at the comers.
The roof of the projecting bay window has metal step flashing, and as part of previous
attempts to correct the water intrusion, bricks have been removed and additional counter
flashing installed. Weep holes are located below the windows, but no weep holes were
observed above them, and the joint between the steel angle lintels and the bricks are
caulked with sealant.
According to the Owner, a section of sheathing was removed from inside the attic
allowing observation of the back of the brick veneer. The cavity was of minimal
dimension and encumbered with mortar. The workmanship of the masonry on this
concealed side was poor.
b. Evidence Of Water Intrusion
Damage to the interior finishes of gypsum wallboard and paint were observed at the
heads and jambs of the first floor windows. According to the Owner, water intrusion was
greatest during the driving rains of tropical storm Hannah. During this event, large
amounts of water came through wall around the kitchen window, and the water inside the
wall in the living room was sufficient to telegraph the pattern of the wood framing
through the wallboard.
lof3
JOHN HUGH McLEOD IIIARCHITECT LLC
2712 Bowling Green Drive, Vienna, VA 22180 703-280-10901703-819-6663{c) john@mcleod-arch.com
Significantly, no water intrusion has been reported or observed at the second floor
windows. The water may be getting through the veneer below the level of the second
floor window heads.
2. Analysis
Masonry walls are almost never water tight, and accepted practice assumes there will be
some water intrusion. This problem is solved by having a cavity between the outer wythe of
masonry and the backup wall, whether framed or masonry, with a water barrier on the outer
face of the backup wall. The outer masonry wythe acts as a rain screen, and any water that
gets through it is intercepted by the water barrier in the cavity and directed back out by
flashing through weep holes at the bottom of the cavity. The cavity breaks the capillary
action and provides an unobstructed path to the weep holes. For this reason, it is important
for the cavity to have a minimum dimension and be kept clear of obstructions during
construction.
These elements of design are explicitly required by the Virginia Uniform Statewide Building
Code (VUSBC) which incorporates by reference the International Residential Code (IRC).
The following are taken from the 2006 IRC, earlier codes had similar or identical language.
See also the attached Figure R703.7, Masonry Veneer Wall Details.
R703.7.4.2 Air space. The veneer shall be separated from the sheathing by an air space of a
minimum of a nominal 1 inch (25 mm) but not more than 41/2 inches (114 mm).
R703.7.5 Flashing. Flashing shall be located beneath the first course of masonry above
finished ground level above the foundation wall or slab and at other points of support,
including structural floors, shelf angles and lintels when masonry veneers are designed in
accordance with Section R703.7. See Section R703.8 for additional requirements.
R703.7.6 Weepholes. Weepholes shall be provided in the outside wythe of masonry walls at
a maximum spacing of33 inches (838 mm) on center. Weepholes shall not be less than 3/16
inch (5 mm) in diameter. Weepholes shall be located immediately above the flashing.
The wall, as constructed, appears to be in violation of at least two of these code
requirements. The presence of flashing over the lintels could not be determined. The lack of
weep holes above the window lintels prevents water in the cavity from escaping to the
outside, resulting in it following the only alternate path, into the interior of the house, with
the attendant damage. The caulking of the joint between the lintels and the brick may
actually make the situation worse by preventing the water from seeping out there.
3. Recommendations
It is impossible to know from the visual observation how drastic or invasive a solution will
be required to solve the problem. The following are offered as increasingly sure but costly
repalfs.
200
JOHN HUGH McLEOD IIIARCHITECT LLC
2712 Bowling GreenOrfve, Vienna, VA 22180 703-280-1090f703-819-6663(c) john@mcleod-arch.com
a. Install weep holes above the first floor window heads. Remove caulking at joint
between lintels and brick, and drill weep holes in mortar joints. The problem
with this is that it will be very difficult to remove the mortar without damaging
the flashing that is presumed to be over the lintel, and it does not address possible
blockages to the cavity.
b. Remove and reinstall brick in a triangular area above the first floor window
heads. With the brick removed, inspect and repair the flashing and clear any
obstructions in the cavity. Reinstall the brick with weep holes.
c. Remove and reinstall the brick veneer from the entire wall, at least down to the
level of the first floor window sills. With the brick veneer removed, inspect the
water barrier, sheathing and flashing. Replace any sheathing or framing damaged
by water. Repair and tape all joints in the water barrier. Insw.llflashing over all
lintels, extending it beyond the ends of the lintels. Reinstall the brick veneer with
a I” minimum cavity, using appropriate methods to keep the cavity clear of
mortar droppings and debris. Install weep holes over all lintels.
Please do not hesitate to call or email if you have any questions or need further assistance.
Thank you for giving me this opportunity to work with you.
Sincerely,
John Hugh McLeod ill, Architect, LLC
John McLeod, Member
Attachments: Figure R703.7, Masonry Veneer Wall Details
Invoice
30f3
MIN. CLEARANCE OF
3/4-IN.(19 mm)
WALLBOARD
WATER.RESISTIVE BARRIER OR .
APPROVED WATER.REPELLANTb
SHEATHING
MASONRYVENEER
1 IN. AIR SPACE OR
1 IN. MOR11\REDSPACEc
WATER.RESISTIVEBARRIEROR
APPROVEDWATER-REPELLANT
SHEATHING WALLBOARD
METAL TIEb INSULATIONBETWEEN STUDS
STEEL UNTELd
SEALANT
MASONRYVENEER
For SI: 1 inch =25.4 mm.
a. See Sections R703.7.S. R703.7.6 and R703.8.
b. See Sections R7032 and R703.7.4.
c. See Sections R703.7.4.2 and R703.7.4.3.
d. See Section R703.7.3.
FIGURE R703.7-continued
MASONRYVENEER WALLDETAILS
2006 INTERNATIONAL RESIDENTIAL CODe8
WALLCOVERING
I
I
237
I am a Soldier in the Army and I will be deploying to Iraq in February. I bought a 2001 Stanley Martin built townhome from the original owner, in Belmont Bay (Woodbridge, VA) the summer of 2006. Since I moved in, rainwater has been leaking into the house causing thousands of dollars in water intrusion damage, mold, and mildew. Only after I discovered the leak did I learn that the home had been leaking since it was built and the previous owner knew it, but did not disclose it to me. In fact, the previous owner is now the President of our Homeowner’s Association. My entire community has been enduring this problem with over 15 other Stanley Martin built homes that leaked when it rained. Stanley Martin attempted to band-aid-fix the problems – sometimes three or four times, many have been successful but some have not. It’s only a matter of time. My home has been “repaired” by Stanley Martin at least four times over the last five years, and it still leaks. Unfortunately Stanley Martin takes the quick, cheap easy way out rather than really fixing the problems. They don’t hire professional independent engineers who specialize in residential water intrusion, they use poor building materials, they hire unqualified laborers to do the work of professionals, they do not build to the International Residential Code standards, they do not inspect the work and they do not stand by their work. Stanley Martin Corp should not be allowed to build any more homes or buildings in Virginia (or anywhere else in the United States) until they repair the homes they have already built. I know of at least five other Stanley Martin homes that still leak, including mine. I developed pneumonia shortly after discovering the leaks even though I am very fit and healthy. My dog Lucy mysteriously became anemic and would have died if I hadn’t spent $1,500 on a blood transfusion and medication. Anyone buying or renting a home in Belmont Bay must demand the owners pay for an independent water test (test the home for water leaks) and a professional mold and mildew test. DO NOT SIGN A DISCLAIMER. DEMAND A DISCLOSURE STATEMENT from the owner as a condition of the sale or rental agreement. INSIST THEY ANSWER, IN WRITING, IF THE HOME HAS EVER LEAKED. This applies even if the home is brand new and you’re buying directly from Stanley Martin. DEMAND A WATER TEST and explicit water intrusion coverage in your warranty! The attached pictures are dated from last fall, but the condos with the scaffolding are currently being repaired (by a different homebuilder company). Marvin Iavecchia, 703-232-2032, marvin.iavecchia@us.army.mil
The pros of using a true buyer’s agent for a new home purchase are innumerable; notice that I said true buyer’s agent. I am a speaking about someone who is versed on new home and new construction matters. While I agree that you don’t need an incompetent agent to buy a new home, I would, however, disagree that you don’t need a qualified buyer’s agent to maximize one’s purchase.
[...] Knowing you need a building inspection when purchasing a new construction home is just one reason that you should always have a buyer’s agent representing you when you purchase new construction. Take a look a this great article that outlines 5 top reasons to use a buyer’s agent in new construction. [...]