December 15, 2020
Categories: Tools
When purchasing or selling real estate many buyers and sellers choose to be represented by licensed industry experts who specialize in knowing real estate law and contracts and who are experts at negotiation. Realtors® are specialists who have been examined and are certified by the state specifically in real estate sales. What might not occur to many potential homebuyers is that there are quite a few significant differences between buying a new construction home versus a resale home, and the benefits of having a real estate agent to help navigate this process.
One key difference is that in new home construction the builder frequently has a sales showroom and model homes which buyers visit to become familiar with the floorplans being constructed in the neighborhood. Home builders staff their sales centers with sales representatives who are frequently licensed as Realtors®. Because these sales staff work for the builder, they don’t represent you exclusively in the purchase of a new home even though they do want you to be satisfied with your home, and your choices. Most do their utmost to represent you well, however, their legal agency is for the builder.
In this circumstance, it would be easy to wonder why you need a Realtor® of your own when the builder is supplying one at their sales center. If you work with the builder’s sales agent to purchase your new home, that individual is in the position of dual agency. This is a person who acts for both the sellers and the buyers. While a single point of contact simplifies things, you should know that a dual agent as defined in the South Carolina Code of Laws may:
(a) in acting as a dual agent, a licensee represents clients whose interests may be adverse and that agency duties are limited;
(b) the dual agent may disclose information gained from one party to another party if the information is relevant to the transaction
There are exceptions related to disclosure where the state prevents disclosure of information related to negotiations, motivations, and willingness to pay or accept more or less than the listed sale price for the property.
So, the question arises, should you use a Realtor® when buying a new home from a builder? While it is possible to buy a new home and not have a Realtor® representing you, there are advantages gained by having a Realtor® working exclusively with you.
It is your Realtor’s® job to know your local market and all aspects of buying a home in the area you’ve selected. They are expected to have insider knowledge about builder reputations and the quality of specific builders’ homes. Their local knowledge is extremely valuable to you as a buyer.
While any Realtor® can work with you, there are some Realtors® who specialize in representing buyers specifically, called a “Buyer’s Agent”. You would be well served to consult a Buyer’s Agent to represent you when you are buying from a builder. Your Buyer’s Agent has a fiduciary responsibility to represent you, and only you during the sale.
According to Cornell Law, “A fiduciary duty is a legal duty to act solely in another party's interests. Fiduciaries may not profit from their relationship with their principals unless they have the principals' express informed consent. They also have a duty to avoid any conflicts of interest between themselves and their principals or between their principals and the fiduciaries' other clients. A fiduciary duty is the strictest duty of care recognized by the US legal system.”
A Buyer’s Agent, also known as an Accredited Buyer’s Representative (ABR®), is a Realtor® who has gained specialist knowledge in buyer representation. Realtor Magazine explains that an ABR has taken “courses that concentrate on various aspects of the buyer’s side, from negotiating to short sales and foreclosures and improving customer relationships.” And the best news is, there is An ABR is compensated for their services from the commission the seller pays. There is no additional fee paid by the buyer to the ABR for their consultation.
Have your ABR join you as you visit the builder’s sales center. They must be recorded as your buyer agent when you register with the builder. This prevents the loss of representation of you by your ABR. If you don’t register your ABR agent at the time you register with the builder, you may not be able to have representation from your ABR later.
Your ABR can utilize their experience to help you select floorplans that fit your lifestyle and budget while you’re touring the models. They can be a great help when you’re trying to remain focused. Often in the models, builders dazzle with high-end features which are not standard to the plan. While they may be desirable, the expense of these up-grades may not fit your budget, and you could find that you are emotionally swept away and bust your budget. Rely on your Realtor® to keep you grounded.
Part of your Realtors® job is to try and save you money. Builders may not discount their prices, but they may offer incentives to purchase by a specific date or use their lender. Your Realtor® can sort out which promotion or incentive will best benefit you financially. Ask them to stay up-to-date with which builders are offering what so you not only get the best home, but you find the best value for your money.
Your ABR will also help during the negotiation process to ensure you have the correct information about what is included in the home and what is not included. The ABR accepts the responsibility for reviewing the builder’s contracts and forms to inform you of all terms and conditions. Make sure you get the ABR to guide you as you complete contracts.
While new homes are new, they may not always be without flaws or latent defects. Your ABR should direct you and help word your contract with the builder to address situations of latent defects.
When the goal is finding the right new home, it’s wise to have a partner guiding you. A Realtor® or ABR is precisely the right person for the job. And it costs you nothing extra, and in fact could save you thousands!
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Categories: Tools