Benefits of real estate agent for buying new construction?

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WolfpackFan
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Benefits of real estate agent for buying new construction?

Post by WolfpackFan » Wed Jul 12, 2017 8:50 am

I'm trying to get an idea of the benefits of using a real estate agent when looking to purchase new construction? We are using one now, however we have been locating and visiting the new developments in our target area all on our own thus far, while talking to the agents representing the builders on site there. When should the usefulness of having a real estate agent start to be obvious, because it's not been helpful thus far. Are they supposed to help in the negotiation process or what?

Are there benefits to NOT use an agent when buying new construction?

Also, if we decide to "fire" this agent, any advice on the best way to break that news?
Last edited by WolfpackFan on Wed Jul 12, 2017 9:16 am, edited 1 time in total.

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dm200
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Re: Benefits of real estate agent for buying new construction?

Post by dm200 » Wed Jul 12, 2017 8:53 am

WolfpackFan wrote:I'm trying to get an idea of the benefits of using a real estate agent when looking to purchase new construction? We are using one now, however we have been locating and visiting the new developments in our target area all on our own thus far, while talking to the agents representing the builders on site there. When should the usefulness of having a real estate start to be obvious, because it's not been helpful thus far. Are they supposed to help in the negotiation process or what?
Are there benefits to NOT use an agent when buying new construction?
Also, if we decide to "fire" this agent, any advice on the best way to break that news?
One question (don't know answer) is whether the price and term you pay might be better when dealing with your agent?

Are you just looking at new construction or existing homes as well?

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8foot7
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Re: Benefits of real estate agent for buying new construction?

Post by 8foot7 » Wed Jul 12, 2017 8:54 am

WolfpackFan wrote:I'm trying to get an idea of the benefits of using a real estate agent when looking to purchase new construction? We are using one now, however we have been locating and visiting the new developments in our target area all on our own thus far, while talking to the agents representing the builders on site there. When should the usefulness of having a real estate start to be obvious, because it's not been helpful thus far. Are they supposed to help in the negotiation process or what?

Are there benefits to NOT use an agent when buying new construction?

Also, if we decide to "fire" this agent, any advice on the best way to break that news?
Can't speak to your last point but our experience in our new build (currently in progress) is exactly the same as yours. She's provided no value thus far--literally none--except to handle the logistics of the pre-drywall inspection, which I paid for. I'm sure she will be right there at closing to pick up her check though. If we ever do this again, which I expect not to because I have told everyone I will die in this new house, we will use a rebating buyers agent and put 2% back in our pocket. What a tremendous waste.

pshonore
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Re: Benefits of real estate agent for buying new construction?

Post by pshonore » Wed Jul 12, 2017 9:07 am

New construction is different. Not all builders list their new homes in MLS or "co-operate" (i.e. split commission) with agents. Some employ their own salespeople who do the marketing. Also, when I was selling, new construction usually was listed at 4% commission and anything less than a full price offer was discouraged and in most cases, ignored and not countered by the builder. At least that was the custom in my area. Where you live it may be different.

New construction is also different in that there are many more choices to make during the process. Colors, lighting, appliances, etc just to name a few. And for a lot of that stuff, there are allowances which you can exceed by paying the difference. Its a lot easier if your agent has been through the process a few times.

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Re: Benefits of real estate agent for buying new construction?

Post by Carefreeap » Wed Jul 12, 2017 9:16 am

Every situation is unique.

Back when I sold real estate in the very early 80s I was showing both used as well as new construction so that my clients could see the value between old and new. The older homes tended to have a better location being closer to schools and shops but most people love new. There was also some airplane noise from a nearby military airport that people needed to know about and evaluate themselves.

We had a good builder in town who cooperated with real estate agents. The market was slow and his team knew they needed as much help as they could get. The biggest value I was able to provide was to explain how the builder's interest buy-down (remember this was back when interest rates were 17-18%) didn't serve my clients well. As a marketing trick offering 10%-12% interest rates looked good but they were far better off taking 10% off the ENTIRE price.

YMMV. Some agents are better than others. Good luck with your purchase.

amythius
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Re: Benefits of real estate agent for buying new construction?

Post by amythius » Wed Jul 12, 2017 9:21 am

My relative negotiated on the New Construction cost of his home in late 2000s without the use of a Realtor. He was able to negotiate a lower price, as well as a lower Real Estate commission from the builder's sales / RE front office. I feel he largely benefited from not using a RE agent of his own -- as in he reduced his total cost and did not need 'hand-holding' from his own RE agent.

I was also able to do the same in late 2000s without the use of a Realtor, and reduced the total overall cost of my build by doing so.


Maybe it is due to my age -- but I feel that RE Agent's are not the norm or as useful as they had been in the past. But, if you are the type who needs the help, do not hesitate to use it.

AZAttorney11
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Re: Benefits of real estate agent for buying new construction?

Post by AZAttorney11 » Wed Jul 12, 2017 9:27 am

amythius wrote:Maybe it is due to my age -- but I feel that RE Agent's are not the norm or as useful as they had been in the past. But, if you are the type who needs the help, do not hesitate to use it.
It's an industry that is ripe for disruption. Low barriers to entry, high margins, and an inability to stop technology from giving consumers greater transparency will ultimately doom the majority of real estate agents. The cartel-like structure that many agents have enjoyed for decades will be upended as the Zillows, Redfins, and Opendoors of the world mature. I just don't know when or how it'll happen, but hopefully the industry is disrupted in my lifetime. It's long overdue.

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Re: Benefits of real estate agent for buying new construction?

Post by HueyLD » Wed Jul 12, 2017 9:27 am

WolfpackFan wrote:I'm trying to get an idea of the benefits of using a real estate agent when looking to purchase new construction? We are using one now, however we have been locating and visiting the new developments in our target area all on our own thus far, while talking to the agents representing the builders on site there. When should the usefulness of having a real estate agent start to be obvious, because it's not been helpful thus far. Are they supposed to help in the negotiation process or what?

Are there benefits to NOT use an agent when buying new construction?

Also, if we decide to "fire" this agent, any advice on the best way to break that news?
In my area, a builder only pays the real estate agent if (s)he accompanies the buyer on the very first visit. So, if you show up at a new construction site for the first time without an agent, the builder is under no obligation to pay the agent who shows up subsequent to the first visit.

One benefit of not using an agent is potential discount from the builder. The builder may be willing to offer you some discount because he won't have to pay the agent.

However, all real estate is local and it is up to you to check out your local market.

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Pajamas
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Re: Benefits of real estate agent for buying new construction?

Post by Pajamas » Wed Jul 12, 2017 9:34 am

The main advantage that I see to using a buyer's broker is to have someone who represents your interests rather than the seller's interests and of course to help screen and narrow down your choices to find the right property. If you already know what you want to buy and don't need someone to walk you through the process, you don't get any real advantage from having a real estate agent or broker involved, except that a buyer's broker generally splits the commission with the seller's broker and sometimes provides a fraction of that commission to the buyer as a rebate.
AZAttorney11 wrote: It's an industry that is ripe for disruption. Low barriers to entry, high margins, and an inability to stop technology from giving consumers greater transparency will ultimately doom the majority of real estate agents. The cartel-like structure that many agents have enjoyed for decades will be upended as the Zillows, Redfins, and Opendoors of the world mature. I just don't know when or how it'll happen, but hopefully the industry is disrupted in my lifetime. It's long overdue.
Foxtons from the UK tried to disrupt the unique NYC real estate market prior to the 2007-2009 financial crisis and eventually failed in doing so.

https://therealdeal.com/2007/11/15/behi ... -demise-2/

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WolfpackFan
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Re: Benefits of real estate agent for buying new construction?

Post by WolfpackFan » Wed Jul 12, 2017 9:40 am

The main advantage that I see to using a buyer's broker is to have someone who represents your interests rather than the seller's interests and of course to help screen and narrow down your choices to find the right property.
I've never fully bought into this line of thinking. At the end of the day, my agent needs me to buy a house to get paid, so they're not incentivized to be 100% upfront with all the drawbacks of potential properties. Agree on the usefulness of narrow down choices according to needs, but we're finding we are capable of that on our own.

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Re: Benefits of real estate agent for buying new construction?

Post by Cobra Commander » Wed Jul 12, 2017 9:57 am

It might be helpful to have a go between for negotiating issues as they arise. That said, some agents are more willing to go to bat for you than others and some are more effective at negotiating than others. Some don't want to cause any issues that might derail the deal so they'll try to mollify you and smooth over what should be material issues because they don't get paid unless the deal closes. As another poster said, there are generally low barriers to entry to be a real estate agent and I think it can be difficult to evaluate on the front end how effective any given agent will be.

I think if you had a realtor with an engineering or construction background that could be very helpful if they were willing to swing by the construction site say once per week or so and let you know if the builder was making serious mistakes that you wouldn't otherwise notice.

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Re: Benefits of real estate agent for buying new construction?

Post by BW1985 » Wed Jul 12, 2017 10:47 am

WolfpackFan wrote:
The main advantage that I see to using a buyer's broker is to have someone who represents your interests rather than the seller's interests and of course to help screen and narrow down your choices to find the right property.
I've never fully bought into this line of thinking. At the end of the day, my agent needs me to buy a house to get paid, so they're not incentivized to be 100% upfront with all the drawbacks of potential properties. Agree on the usefulness of narrow down choices according to needs, but we're finding we are capable of that on our own.
This was my experience as well, my agent just wanted to get the deal closed. They didn't help with finding my house, we could do that ourselves, and they didn't help with the negotiations either. I don't see anything that the agent really does to 'represent my interests'.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: Benefits of real estate agent for buying new construction?

Post by bubbadog » Wed Jul 12, 2017 10:55 am

If the OP cannot see any benefit (nor do I) maybe it is time to sever ties with the agent.

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Re: Benefits of real estate agent for buying new construction?

Post by SeaToTheBay » Wed Jul 12, 2017 11:00 am

HueyLD wrote: In my area, a builder only pays the real estate agent if (s)he accompanies the buyer on the very first visit. So, if you show up at a new construction site for the first time without an agent, the builder is under no obligation to pay the agent who shows up subsequent to the first visit.
I had the same experience last year, thought it was unfair but we ended up really not needing an agent, even though the builder was (and continues to be) a real pain. I don't think the agent would have helped much in our case.

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Re: Benefits of real estate agent for buying new construction?

Post by pshonore » Wed Jul 12, 2017 12:03 pm

SeaToTheBay wrote:
HueyLD wrote: In my area, a builder only pays the real estate agent if (s)he accompanies the buyer on the very first visit. So, if you show up at a new construction site for the first time without an agent, the builder is under no obligation to pay the agent who shows up subsequent to the first visit.
I had the same experience last year, thought it was unfair but we ended up really not needing an agent, even though the builder was (and continues to be) a real pain. I don't think the agent would have helped much in our case.
Some builders prefer to have an agent on their end. They want to build houses - not explain the construction process/details or answer the literally answer the hundreds of question that arise during the building of a new house, especially if they're building 5 or 6 houses at a time. I sold a lot of new construction and was quite familiar with process. I knew well what the builder would do and what he would not do (and why). For example, some folks wanted their own cabinet company. Not an option. The builder worked with one company, knew they were reliable, stood behind their work and more importantly adhered to the builders timetable which meant things were finished and closed on time. Like a lot of other things, there are details that you cannot appreciate unless you've been there.

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Re: Benefits of real estate agent for buying new construction?

Post by FoolMeOnce » Wed Jul 12, 2017 12:10 pm

If Redfin is available in your area, you can try an agent with them. Their agents are salaried, so have less incentive to push you into just any old purchase (I believe bonuses are based on a mix of client satisfaction and sales). And they refund some of the commission to you. We used them for our sale and purchase a few years ago (not new construction) and were very pleased.

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Re: Benefits of real estate agent for buying new construction?

Post by AZAttorney11 » Wed Jul 12, 2017 12:28 pm

Pajamas wrote:Foxtons from the UK tried to disrupt the unique NYC real estate market prior to the 2007-2009 financial crisis and eventually failed in doing so.

https://therealdeal.com/2007/11/15/behi ... -demise-2/
Lots of things have changed in the last 10 years. Disruption isn't always successful on the first (or second, third, etc.) attempt, but the cartel-like structure of the real estate industry will be busted eventually.

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Re: Benefits of real estate agent for buying new construction?

Post by AZAttorney11 » Wed Jul 12, 2017 12:34 pm

WolfpackFan wrote:
The main advantage that I see to using a buyer's broker is to have someone who represents your interests rather than the seller's interests and of course to help screen and narrow down your choices to find the right property.
I've never fully bought into this line of thinking. At the end of the day, my agent needs me to buy a house to get paid, so they're not incentivized to be 100% upfront with all the drawbacks of potential properties. Agree on the usefulness of narrow down choices according to needs, but we're finding we are capable of that on our own.
No one protects your interests like you. No one. Especially not a real estate agent.

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Re: Benefits of real estate agent for buying new construction?

Post by Pajamas » Wed Jul 12, 2017 7:52 pm

AZAttorney11 wrote: No one protects your interests like you. No one. Especially not a real estate agent.
Certainly, the same could be said to be true of anyone who provides a service to you, from your banker to your waiter, but the seller's real estate agent explicitly represents the seller's interest, not the buyer's.

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Re: Benefits of real estate agent for buying new construction?

Post by BW1985 » Wed Jul 12, 2017 8:52 pm

Pajamas wrote:
AZAttorney11 wrote: No one protects your interests like you. No one. Especially not a real estate agent.
Certainly, the same could be said to be true of anyone who provides a service to you, from your banker to your waiter, but the seller's real estate agent explicitly represents the seller's interest, not the buyer's.
I think agents ultimaltely represent their broker's interests, and their own, which is closing the deal and getting paid. The details are minutia in comparison. Maybe I'm jaded but that's the way I see it. I'm sure there are truly great RE agents out their just as there are great financial advisors.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

AZAttorney11
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Re: Benefits of real estate agent for buying new construction?

Post by AZAttorney11 » Wed Jul 12, 2017 8:53 pm

AZAttorney11 wrote: No one protects your interests like you. No one. Especially not a real estate agent.
Pajamas wrote:Certainly, the same could be said to be true of anyone who provides a service to you, from your banker to your waiter, but the seller's real estate agent explicitly represents the seller's interest, not the buyer's.
No, they don't. The seller's real estate agent does not have a fiduciary duty to their client, many real estate agents are eager to enter into a dual representation agreement, and anecdotes abound about real estate agents pushing their clients into making a deal. Agents are interested in one thing -- getting a deal complete so they can collect their commission.

By the way, here's some news about possible disruption to the real estate game.

https://www.housingwire.com/articles/40 ... id=1809765

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Go Blue 99
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Re: Benefits of real estate agent for buying new construction?

Post by Go Blue 99 » Wed Jul 12, 2017 9:26 pm

We are using an agent for our new construction home. He does a 1.5% rebate so we figured it would be a good way to have expert advice and get some money back after closing.

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Re: Benefits of real estate agent for buying new construction?

Post by Pajamas » Thu Jul 13, 2017 8:24 am

AZAttorney11 wrote:
AZAttorney11 wrote: No one protects your interests like you. No one. Especially not a real estate agent.
Pajamas wrote:Certainly, the same could be said to be true of anyone who provides a service to you, from your banker to your waiter, but the seller's real estate agent explicitly represents the seller's interest, not the buyer's.
No, they don't. The seller's real estate agent does not have a fiduciary duty to their client, many real estate agents are eager to enter into a dual representation agreement, and anecdotes abound about real estate agents pushing their clients into making a deal. Agents are interested in one thing -- getting a deal complete so they can collect their commission.

By the way, here's some news about possible disruption to the real estate game.

https://www.housingwire.com/articles/40 ... id=1809765
Maybe not in Arizona, but they do in New York.

https://www.dos.ny.gov/forms/licensing/1736-a.pdf
A seller’s agent has, without limitation, the following fiduciary duties to the seller: reasonable care, undivided loyalty, confidentiality, full
disclosure, obedience and duty to account.
A buyer’s agent has, without limitation, the following fiduciary duties to the buyer: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account.
Broker's agents and dual agents have different obligations.

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WolfpackFan
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Re: Benefits of real estate agent for buying new construction?

Post by WolfpackFan » Fri Jul 14, 2017 7:10 pm

Thanks everyone for your responses. Sounds like we don't need an agent for new construction. Looks like we may look into Redfin for selling.. it looks like fees would be 4.5% rather than typical 6%. Holla atcha boy.

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Re: Benefits of real estate agent for buying new construction?

Post by TropikThunder » Fri Jul 14, 2017 7:53 pm

WolfpackFan wrote: Are there benefits to NOT use an agent when buying new construction?
Hopefully not hijacking the thread, but have others encountered and/or worked with this situation: I was house hunting and stumbled on and toured a new development under construction. The agent staffing the sales center works for the same large agency that the builder uses as seller's agents, but she presented herself as a buyer's agent. I'm not terribly up to date on dual agency etc, and her comments did seem buyer-oriented, but I'm wondering how common that is. I started the process from a similar point of view of OP in that I chose not to engage a buyer's agent before hand since I didn't need help identifying a property and it is my understanding that builders often have incentives for keeping everything in house.

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Re: Benefits of real estate agent for buying new construction?

Post by miamivice » Fri Jul 14, 2017 7:56 pm

WolfpackFan wrote:I'm trying to get an idea of the benefits of using a real estate agent when looking to purchase new construction? We are using one now, however we have been locating and visiting the new developments in our target area all on our own thus far, while talking to the agents representing the builders on site there. When should the usefulness of having a real estate agent start to be obvious, because it's not been helpful thus far.
An agent can help by:

1) Driving you around.

2) Putting together tour lists of new construction homes for you to go look at, so you don't have to spend your time finding new construction homes.

Other than that, I don't see there is much value in an agent for new construction. My experience is that prices & terms were not negotiable items when we bought new construction, so an agent could not help us with that.

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