Buying a Brand New Home... Still Need an Agent?

(This is a re-post of something I put in my forum last year.)

I've spent a large part of the day today working on behalf of a client that purchased a custom built home. While my official duties ended at closing a little over six months ago, I have continued to work with this buyer since that time to try to help ensure that the house we contracted to have built is as it should be.

This brings me to the point of today's blog. Many times buyers that are looking at new homes don't feel the need to have their own agent. "The nice people at the community's office are so helpful," etc. And, yes, they are. However, they work for the builder or the community. They are hired to represent that builder... not the buyer. Unless the buyer brings their own agent, the buyer doesn't have a representative in the process.

Much of the time, it will be fine. However, one may discover that the contract (other than perhaps a standard Realtor Association contract) may have a lot of one sided language in it. A few examples of this might be cancellation clauses, or worthless warranty provisions. One contract that I recently dealt with had a provision that allowed the builder to cancel the contract for any reason or without reason and refund the earnest money and a small amount for damages... right up to closing. Imagine that a buyer sold their current residence, and then the day before they are to close on both properties, the builder decides they can get a better price for the house this buyer has been waiting over the last eight months for. Now they don't have a house to move into, and they may not have a house to stay in. Another phrase that I dealt with allowed the builder to change the specs of the house being built with no notice. They could substitute materials and finishes for others that the builder deemed as "at least equal to" what was ordered by the buyer. Can you imagine a buyer ordering new furniture, and then finding out days before closing that some of the finishes in the house aren't going to be what they ordered, and if they refuse to close they may lose their earnest money, or even more.

Most of the time, the writers of the special stipulations in the contracts are not envisioning these situations. They are trying to protect their clients, the builder, from other issues. But, if the language is there it may be exploited.

In other cases, having a buyer's agent might clue one in to other aspects of the purchase. Perhaps there are other communities that might work as well or better for the buyer. One shouldn't expect that the community agent will point out those other new homes. Or knowing what inducements are being offered in other areas. Also, a buyer's agent will likely recommend an inspection, and possibly other services that the community agent won't recommend. And don't forget financing. Many times the community has special arrangements with particular finance companies. These might not offer the best deal for the buyer, so having an agent that is tuned in to some other sources may reveal other options.

The bottom line is that being unrepresented isn't a great idea, and probably won't save you any money.