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When Buying New Construction, Should You Consider Hiring an Agent?

July 12, 2022

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Real Estate Agent Helping Clients

 
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 site agents work for the builder, they don’t represent home buyers exclusively in the purchase of a new home. However, these site agents genuinely do want you to be satisfied with your home, and your choices. Most will do their utmost to help you, however, their legal agency is to represent the builder’s best interest.

When it comes to working directly with the builder’s agents, they make it very easy and comfortable to work with them. It is understandable why some consumers would feel they may not need their own representation.


 

How the Law of Agency Works in South Carolina Real Estate


Whether you are working with a builder’s agent, seller’s agent or a buyer’s agent, the requirements for the disclosure of the different types of agencies available to the consumer, falls directly upon every licensed real estate agent or broker.

The law specifically states that at the first “substantive” discussion, the licensee must disclosure to the consumer their options and choices of the different types of agencies available to the public in SC. And, the licensee must present to them and encourage them to acknowledge this disclosure by signing the South Carolina Disclosure of Real Estate Brokerage Relationships form provided by the South Carolina Real Estate Commission.

 
South Carolina Disclosure of Real Estate Brokerage Relationships



 

Transaction Brokerage - The Default Position


If you work with the builder’s site agent to purchase your new home, the default agency relationship for that individual in relation to you is what is called transaction brokerage.

When you arrive at a new home neighborhood, the builder’s agent will ask you to sign in, or register. At that point, if your agent is not with you and you do not tell the builders agent that you have an agent you may be negating your opportunity to have representation! Many new home sites will not honor your agent if your agent does not attend your first site visit in person. If you want to have your own agent represent you, you may want to have that discussion with the site agent before you register and sign in.

Now certainly, the builder’s agent can help you with the transaction while at the same time understand that they represent the builder. While this single point of contact will seem very normal and comfortable, you should know what transaction brokerage really means and what you may be giving up by not having your own representation.

Transaction Brokerage as defined in the SC Real Estate Licensing Law Chapter 57, Article 1 Section 40-57-30(33):
"Transaction broker" means a real estate brokerage firm that provides customer service to a buyer, a seller, or both in a real estate transaction. A transaction broker may be a single agent of a party in a transaction giving the other party customer service. A transaction broker also may facilitate a transaction without representing either party.

The obligations and duties owed to a buyer in transaction brokerage listed below are explained in detail in the: SC Real Estate Licensing Law Chapter 57, Article 1 Section 40-57-350(L)(2):
 
  • Honest and fair dealing
  • Accounting for all funds
  • Use of skill, care, and diligence
  • Disclosure of material adverse facts
  • Present all offers in a timely manner
  • Limited confidentiality


 

Buyer Representation - It's Your Choice!


Many homebuyers today choose to have a buyer represent them, even when buying directly from a home builder. Simply knowing that they have someone looking out for their best interests can be the peace of mind that makes everything less challenging.
 
Below are the obligations of an agent that is representing you as a buyer’s agent. These are explained in greater detail in the:  SC Real Estate Licensing Law Chapter 57, Article 1 Section 40-57-350(E)(1):
 
  • Perform to the terms of the written brokerage agreement made with the buyer
  • Promote the interests of the buyer
  • Exercise reasonable skill and care
  • Comply with all laws, rules, regulations, and ordinances related to real estate brokerage
  • Preserving confidential information
  • Obedience 
  • Loyalty 
  • Accounting 
  • Disclosure 

So, the question arises, should you have representation when buying a new home from a builder?  While it is possible to buy a new home and not have an agent representing you, there are advantages gained by having a real estate professional working exclusively with you.

It is your agent’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 real estate licensee can work with you and do a great job helping you buy your next home, there are some agents that specialize in representing buyers. These agents are often referred to as 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, is skilled in buyer representation and often prefers to only work with buyers. A real estate professional that specializes in buyer representation in most cases has been trained and taken courses that concentrate on various aspects of the buyer representation. And the best news is, the use of a buyer representative in most cases is free! Just like in a resale transaction the commissions are paid by the builder/seller. And…in most cases there is no additional fee paid by the buyer to a buyer’s agent for their consultation and assistance.
 
The Buyer Representation Agreement is an agreement between you and your buyer representative that spells out the details of your working relationship. The Buyer Representation Agreement has many details including but not limited to: the duration of the agreement, the type of home you’re looking for, the obligations of both parties, and how the agent will be compensated for their time, skill and effort.

As mentioned above, it is very important that you have your buyer’s agent join you during your first visit the builder’s sales center. They must be recorded as your buyer agent when you register with the builder. This will ensure that the builder will honor your buyer agent’s representation. If you don’t register with your agent, you may be giving up the opportunity to have the builder pay for your buyer’s agent to represent you later.

A buyer’s agent 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 visitors with high-end features which are often not standard features that come with the basic floor plan. While they may be desirable, the expense of these up-grades may not fit your budget, and you could find that you’re emotionally swept away by the glitz, while adding significantly to the cost of the home. Rely on your Realtor® to keep you grounded, aware of what are upgrades and on budget.

Part of your agents’ job is to try and save you money and help you get the most bang for the buck!  Builders may not discount their prices, but they may offer incentives to purchase by a specific date or use their lender. Your agent can help you sort out which promotion or incentive will best benefit you financially. A good buyer’s agent will stay up-to-date with which builders are offering the best incentives, so you not only get the best home, but you find the best value for your money.

Your agent 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. A great buyer’s agent can’t give you legal advice but should be familiar with the different clauses and terms that builder’s use in their contracts. They can help you evaluate and understand the builder’s contracts and forms but if you need further legal advice, they will have to refer you to an attorney to answer your legal questions. Your buyer’s agent will be there right by your side as you complete your contract with the builder’s representative.
 
It is very common that builders in the Charleston use their own contract specific to how they do business. So, it’s a good bet that if you aren’t an experienced real estate professional, you’ll have never seen this document before!


 

Warranties and Inspections - What to Look For


While new homes are new, they may not always be without flaws or latent defects. Your agent should make sure the contract addresses how the builder will warranty the home for defects. And what protocols are in place for punch lists, warranty claims and emergency situations within the warranty period.
 
For more information on Whether or not you should have your new home inspected click this link.

When the goal is finding the right new home, it’s wise to have a partner guiding you. An experienced buyer’s agent is precisely the right person for the job. And it costs you nothing extra, and in fact could save you thousands!



This helpful and informative post outlining How a Charleston Realtor can be a big asset when buying a new home has been provided to CharlestonNewHomesGuide.com by Bill Byrd of Keller Williams – Byrd Property Group located in Charleston-Mt Pleasant SC.  As a real estate professional for close to 40 years, Bill has taught pre-licensing classes at the College of Charleston and the Charleston Trident Association of Realtors. In his career Bill has represented both home builders and consumers in the sale and purchasing of new homes. Bill is currently an active real estate broker and runs his real estate team the Byrd Property Group at Keller Williams Realty in Charleston with his daughter Waverly Byrd.  More About Bill



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Thank you for reading and sharing our articles from The Greater Charleston New Homes Guide. Our business is to know Charleston, SC's new home construction, home builders, neighborhoods, and homes so we may assist you as you take your new construction home journey. Please take the time to explore our site. The Greater Charleston New Homes Guide is considered the best and most reliable ‘local’ resource to new home construction, buildersneighborhoods, and homes throughout the Lowcountry since 2004.
 


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