- The Washington Times - Friday, July 27, 2001

Strolling in and out of model homes at residential developments tempts many people into buying a new home rather than a resale. It's hard to resist a shiny, fresh home with all the latest technology and modern design elements.

Buyers of new homes often think when they are choosing this rather than a resale that they don't need to work with their own Realtor since each community has a sales representative. But local new-home experts and Realtors agree that working with a buyer's agent is perhaps even more crucial for new-home purchasers than for resale buyers.

Realtors are often considered to be most valuable during the negotiating process, but little negotiating on price is taking place in the hot new-home market. Buyer's agents are needed more for protecting the rights and interests of the buyers of new homes and can provide valuable advice and expertise.

"Realtors know a larger universe of what's out there and available to buyers in terms of different areas and services," says Debbie Rosenstein, president of Rosenstein Research Associates. "It's just an added peace of mind to work with a Realtor when you buy a new home. It's their business. You don't go to a pharmacist when you're sick, you go to a doctor. It's always a good idea to go to someone who knows the business they're in."

According to Realtor Carol Greco of Long & Foster Real Estate in Annandale, "One of the main reasons to use a Realtor when you buy a new home is that builder's contracts are 100 percent slanted to favor the builder. Working without a Realtor is like hiring the prosecutor to represent the defendant at a criminal trial."

Working with a buyer's agent will not cost the buyer any additional money, which is often a surprise to consumers.

"People used to think that if they bought a new home using a Realtor, the price would be higher, but this was never the case," Mrs. Greco says. "The builder pays the sales commission."

"It's always to the buyer's advantage to have representation, and, since it doesn't cost more, why not hire someone to help?" asks Realtor Donna Siegel of Weichert Realtors in Bethesda and McLean. "It's just a good idea to have another set of ears there when you're signing papers and making decisions, someone who can say later, 'No, this isn't what we agreed on.' The builder's sales agents usually like working with a Realtor, too, because things go smoother for everyone that way."

Even though negotiating over price is rare these days, buyers can use the help of a Realtor when choosing a lot and deciding which optional features to purchase, or when problems occur.

"Buyers are often caught up in the moment of buying and don't spend enough time deciding which lot to choose," says Rosie Harsch, a Realtor with Long & Foster Real Estate in Vienna. "People don't realize how important it is to choose the right lot. Lots of times, builder's agents will put people on the wrong lot. Sometimes a builder trying to get rid of a 'drecky' lot will offer a discount to a buyer, but the buyer needs to be really careful about this decision.

"When a buyer has an agent with them, the builder has more to lose if they are treating the client badly," she says. "Builders need to worry a lot about their reputation, which depends a lot on word of mouth. Agents know which builders are the good ones and which ones are not."

Realtors often know about developments even before ground is broken, which can help buyers decide not only which lot to choose but also where to look.

"Agents have the experience to tell consumers about things like putting a hold on a lot, which won't cost them any money and could help them save some money," Mrs. Siegel says. "We also know about other developments which may interest a buyer, and we can educate buyers about builder's reputations.

"In one case in Vienna, I was able to help a couple buy a house in a new development before it was advertised," she says. "They paid $650,000 for the house, and now those homes are selling in the $900,000s."

Once buyers have decided where and which lot to buy, they're often confronted with lists of options features for the new home.

"Some builders take advantage of a buyer without representation by encouraging them to buy options which they may not want or sometimes encouraging them to not [request] any options just so the builder can finish the house more quickly," Mrs. Harsch says.

"I've gone in and asked to look at other sales contracts in a new development to see what options other people are choosing, because that can make a difference in the eventual resale value of your house," she says. "If the house next door will have every available option put on it, that could be good for your eventual resale value, but you don't necessarily want to do that on your house."

Optional features are a matter of personal taste, but they also affect the value of a property.

"You may want to add every fancy doodad available just to enjoy your home, but an agent can help you decide what the value is in the long term," Mrs. Greco says. "An agent can tell you whether you should add a humidifier to the house from the builder or buy one at Home Depot, and can help you decide whether to put in Formica or Corian counters in the kitchen."

Agents offer the advice of an expert who has seen hundreds of homes and can identify design trends. They can help a customer negotiate for custom items or find out how to make custom changes, Mrs. Siegel says.

While picking options sounds like fun, Realtors can also help buyers with the less pleasant aspects of home buying, including solving problems and finding financing.

"A Realtor who's knowledgeable about the market can help you make decisions, help you find a home inspector, and help you find someone to fix any mistakes that a home inspection might turn up," Miss Rosenstein says.

"One of the most important things an agent can do is put things in the contract that will protect the buyer," Mrs. Greco says. "Lots more things go wrong with new homes than with resales, and buyers need to be allowed to have a pre-drywall inspection and a final walk-through inspection, too.

"This is especially important right now, because with the local labor shortage there have been more problems," she says. "Each house has a huge number of items which need to be checked before and after the drywall goes up."

A real estate agent can work with a foreman on-site to correct flaws or act as a go-between when a buyer is unhappy with the finished product.

"If a buyer is unhappy, a builder's representative could say that they finished the house according to the buyer's choices, but an agent can negotiate with them to have items replaced or fixed more easily than a buyer," Mrs. Siegel says.

Problems in completing a house on time are common.

"I can usually negotiate with a builder and work something out for my buyers if their house isn't ready and they have sold their old home," Mrs. Siegel says. "Sometimes a builder will be willing to allow furniture to be placed in the garage or the basement, or even put in the house before settlement as long as the people don't stay there. I can also find temporary housing solutions for people more easily than they can on their own.

"While these problems are occurring more in this hotter market, when things were slow there were problems with builders going under and buyers losing their deposits. Buyers needed an agent's expertise and protection then, too," she says.

Mrs. Siegel says the market is slowing just enough that buyers can occasionally negotiate now on options or lot premiums, especially if a community is near closeout or has an immediate-occupancy home available. Buyers can also save money when choosing a loan program with the help of a Realtor.

"When a builder gives a buyer $5,000 toward closing costs to go to their preferred lender, they're not really giving anything away," Mrs. Harsch says. "That money is paid eventually somehow either in additional points or a slightly higher interest rate. A good agent will help a buyer shop around for other lenders and will know where to go for a great loan."

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