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How to get a deal with a new home builder.


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It’s incredibly enticing and exciting to walk into a new home builder’s construction site and buy a brand new house on the spot.  The slick new finishes, gleaming appliances, and options to personalize are all but irresistible.  The builder even helps with easy financing from one of his “preferred” lenders.  And, it seems to be a low pressure sales environment where they only ask you quite casually to fill out their info/registration card if you don’t buy that day.  But, there are plenty

of hidden pitfalls you need to watch out for.

First, once you sign in your information, you’ve actually just forfeited your ability to get the builder to pay for a real estate broker to represent you in the transaction.  Since the real estate agents you meet work for the builder, they’re more than happy to work with you directly, without proper representation for you.  While they may seem quite nice and helpful, they’re there to look out for the interests of the builder.

So, you should always find an experience real estate broker who has worked with new home construction to represent you on each and every visit, especially the first visit.  Having a real estate broker at your side who’s paid by the builder is an amazing value, as her fiduciary duty is to you and you alone.  Indeed, the value that a good real estate broker can bring is worth paying for one out of your own pockets.

Here’s why:

In order to get a good deal with any home builder, you’ll need to negotiate sharply.  Negotiation itself is a combination of deep market knowledge and skills gained through experience.  So, even if you get some ideas and tips from this forum or anywhere else on the Internet, it’s still not quite the same as having a seasoned real estate broker at your side who has successfully negotiated with builders.  A typical deal negotiated by our

firm ranges between 1-7% off the asking price.  By contrast, it’s very difficult, if not impossible for a home-buyer to negotiate a significant discount due to the builder’s superior market knowledge and
operating policy.

Once you get into contract with a builder, it’s all too easy to be completely overwhelmed with the tall stacks of paperwork that needs to be carefully reviewed and signed.  Just as with a regular purchase, having a real estate broker review the documents for you really helps you avoid pitfalls and bring a peace of mind to the experience.  Sometimes, seemingly simple choices can mean a difference of several thousands of dollars.  A seasoned professional can tell the difference right away.

When it comes to options, many builders, especially the national builders, offer an endless arrange of upgrading opportunities.  Of course, that’s because these upgrades and options are a major profit center.  Without prior experience in construction and knowledge of market trends, it’s all too easy to overpay or select options that would immediately be outdated.  A good real estate broker can help you select those options that fit your lifestyle and gets you the best return.  Sometimes, this means knowing which options can be done after the close of the purchase for less than what the builder charges.

Finally, a real estate broker can help you evaluate the quality of the construction as she’s seen hundreds or thousands of new homes and knows what to look for.  This means she can stop issues as they come up before the deal even closes.  And, at the final walk-through, she can even save you money that would otherwise be paid to an inspector.  Even though real estate brokers are not licensed for inspections, they can help spot the common issues that are readily visible, since professional inspectors have limited access at new construction units.

So, if you’re interested at all in a new home around the Bay Area, give us a call or drop us an email.

Tina Lam

Tina Lam

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