Do You Need an Agent for a New Build Home?

Even if you're buying a brand-new home from a builder, it's important to have an agent representing your interests.

As a home buyer working with a builder of a new construction home, it's important to have representation. Why is it important to work with an agent when buying a new home? Today I have Susan Titus with me to discuss this issue.

First of all, the representative at the builder’s site works for the builder, so their goal is to maximize the builder's profit, not to protect your hard-earned money. Secondly, you have to remember that when you look at model homes, you're seeing dressed-up homes that have upgrades that aren't included in the price of the home. You should also know that building companies may offer incentives to work with companies like their own mortgage company, but the loans offered may not be the best deal for you as a buyer in the long term.

The most important thing to remember is that the contract favors the builder. Working with an agent will give them a chance to help you understand the risks, timelines, and requirements. They can also help negotiate some fees that may be standard to the seller that the builder isn't normally apt to pay.

The representative works for the builder, not for you.

You may be wondering why you can't save the cost of a buyer's agent's commission just by working with the builder. The cost of commission for an agent is actually built into the price of the home. Even if you don't work with an agent, the builder is not going to discount you that cost of a commission; they're going to put it in their pocket as profit. The builders want the prices to appraise and continually escalate, so they will not give you a discount just because you didn't have a representative helping you.

Also, know that you can't go out looking at model homes, find one you like, and then call an agent and ask them to write up a contract. Your agent has to accompany you on the site or call and register you with the builder before you go on site. If you go to the site without an agent, you will be tagged, and then you will not be able to be represented if you decide to go back with that agent.

I hope that clears things up for you when it comes to working with builders and the process of buying their properties. If you have any questions, give us a call or send us an email. We'd be happy to help you out!

How Do Home Appraisals Work?

Whether you are buying or selling a home, the appraisal can directly impact you. An appraisal is someone’s objective value of what a property is worth in today’s market.

Many people have asked me, “What is an appraisal?”

An appraisal is someone’s opinion of value of what a property is worth in today’s market. Appraisals are fairly accurate. Usually, once a home is under contract, the bank will send out an appraiser to verify the value of the property.

You might not be aware that as soon as appraisers get a request to look at a home, they contact either the listing agent or the buyer’s agent and ask for a copy of the contract. They look at the contract to see what the sales price is, and then they look at the house to see if they can justify that sales price. The appraisal prevents the buyer from paying more money than the home is worth.

I would say that 95% of appraisals come in at the sales price, which usually makes buyers and sellers unhappy. Sellers get upset because they think their home is worth way more than the market value. Buyers get upset because they thought they were getting a bargain.

Although it’s common to be disappointed when the sales price appraises, you really shouldn’t be. The appraiser is only doing a favor to the bank to justify the sales price and make sure that the home is not worth more or less than what it is being sold for.

Do not be disappointed if the appraised value matches the sales price.

If you are the seller, you need to make sure that the buyer’s agent and the lender are on the same page. The appraisal should be ordered as soon as possible because it can take anywhere from seven to 21 days to complete the appraisal. You can order the appraisal the minute the home goes under contract.

Also, if you are the seller and the sales price does appraise, you will not see a copy of the appraisal. The buyer is the one who pays for the appraisal, so the buyer is the only one who should see it. If you are the seller and you do see the appraisal, that is a bad sign; your property did not appraise to the sales price.

Finally, keep in mind that appraisals for home sales are different than appraisals for refinancing your home. If you refinanced a year ago or even six months ago, that home appraisal has no value in the current marketplace.

If you have any questions about home appraisals or about real estate in general, give me a call or send me an email. I would be happy to help you!