Builders are ramping up construction, which gives your clients more options on the market. But buying a new home is often more complicated than a traditional real estate purchase. Here’s how your services are deeply important to smoothing out this type of transaction.

Buyers purchasing a brand-new home have extra concerns you need to address beyond those who are buying a resale property. For one, the transaction timeline for a home still under construction is likely to be much longer—often six months or more—so you’ll have to have a higher tolerance for managing the emotions of potentially impatient clients. New-home buyers also are at high risk of blowing their budgets, as the costs of custom upgrades to the blueprint floor plan can quickly mount. And if your client has made a purchase decision based on a model home, any deviation in the final product could spark a dreaded case of buyer’s remorse.

Though your goal is to be a strong ally for any client, new-home buyers may need even more support through a more complicated transaction that could present more roadblocks to their satisfaction. You might consider taking a course offered by the Real Estate Buyer’s Agent Council devoted entirely to new-home construction and buyer representation, particularly as opportunities to work with new-home buyers increase. Construction is expected to be more robust across the country this year, with single-family housing starts forecasted to rise 5 percent, according to the National Association of Home Builders.

With inventory at record lows, more buyers may consider new construction as a way to flesh out their real estate options. Real estate professionals who work the new-home niche offer their insights for servicing these clients.

Draw a Distinction Between You and the Builder’s Agent

Buyers may first be lured to new-home construction after viewing a model home online. The builder’s salesperson likely will hurry to their aid to help them consider their purchase options. But some buyers mistakenly assume that salesperson is their representative, when in reality, he or she works for and represents the builder’s best interests.

Your job is to show the buyer that your goal is to help them make an informed decision that best suits their needs, not to simply sell a property, says Monica Neubauer, ABR, CRS, a sales associate with Benchmark Realty in Franklin, Tenn., and a REBAC instructor. You can help buyers understand many items, such as resale potential, strength of the builder’s asking price against comps, and the buyer’s negotiation leverage—all of which are not the responsibility of the builder’s agent.

Some buyers also may be misinformed about the commission structure, wrongly believing that they can subtract the payout for the builder’s agent from the overall purchase price. “The majority of builders compensate [their agent] out of their marketing budget,” says Jeffrey Gould, broker-owner of Jeffrey Gould Real Estate in Brandon, Fla. “This budget does not go hand-in-hand with the cost of any individual home, so the buyer would not be entitled to that reduction. In fact, from conversations I’ve had with [new-home buyers] who did not use a real estate professional, the opposite is true. It seems like their overall costs or concessions were not as good as the buyers who used their own agent.”

Educate Buyers on New-Home Traps

From the onset, new-home buyers need to know what they’re getting into. Here are some ways you can prepare them for the transaction.

1. Identify timelines. Gould makes buyers aware of all the steps involved, including building permits, design selections, inspections, and walk-throughs.

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Source: National Association of Home Builders


2. Explain upgrades versus standard builds. Model homes often reflect the higher end of options available. The arched doorways, stone exteriors, window seats, and abundant fireplaces in a model home may not be part of a standard package. Will your buyers be satisfied with losing some of those features in order to control costs? “All builders are different, and all builders have their own baseline to what comes standard with the home and what is an upgrade,” Gould says. “As I am viewing homes with clients, I will keep asking the builder’s sales agent to explain what are upgrades in the home and what is standard.”

3. Understand pricing. The base price quoted by the builder does not reflect all the upgrades buyers may want to add. So the cost may jump thousands of dollars depending on your buyer’s requests. Gould asks builders to print out an estimate of the home with some of the structural items his buyers are considering. Most of the construction options and pricing are configured at a remote design center, so buyers may need to sign a purchase contract before solidifying their design selections.

4. Account for comps. Buyers can add too many upgrades when selecting countertops, flooring, and lighting. Though they’re buying new, your clients still need to understand comparable homes in the area to ensure they make a wise investment, Neubauer says.

Find Points of Negotiation Other Than Price

Negotiating is still an important part of buying a new home. While it’s true that builders resist lowering a home’s price so they can maintain their market comparables, they sometimes are willing to add an incentive if buyers, say, use the builder’s preferred lender.

“Currently, the inventory of available homes for sale is very low,” Gould says. “Builders know this and are setting their prices accordingly. In general, builders would rather offer concessions in other areas like design center options. … The key is to know your builders and the incentives they offer. There is a builder in my area that is offering design center options and is refunding up to $2,000 for out-of-town buyers’ air travel and hotel costs. Regardless of what the builder is offering in options, I always have the builder’s sales agent submit an offer to the builder in hopes to always do a little better.”

See the Entire Project Through to the End

Don’t vanish right after the purchase contract has been signed and then show up months later once construction of the home is complete. Builder’s agents sometimes unintentionally fail to copy you on their correspondence with buyers, Gould says. If you don’t make the effort to remain updated and part of the process, you could be uninformed when it comes time to close. Continually checking in with clients also will help them feel less alone.

“I stay involved throughout the entire process,” Gould says. “Once we are under contract, I do let buyers know that a majority of the contact they will be having will be directly from one of the builder employees but to reach out to me if they have any questions or concerns. I contact my client every three weeks or so to just check in and see if they need anything. As we get within a month of completion, I do start to contact the buyer more often.” Gould also lets his buyers know he’s available to attend preconstruction updates, design studio visits, and walk-through meetings.

“Buying a home is supposed to be an exciting time,” Gould says. “I try my best to make it as fun and exciting as possible. There are a lot of different hands involved in building a home: The builder’s sales agent, builder contracts, permitting, and the build process. At times, I find I need to act as a counselor or advocate for the buyer. Setting expectations early on in the process certainly helps in making the transaction smoother.”

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