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I am buying a sheahome in southern california. I went to one of their model homes and loved their model. I did not take a real estate with me during my first visit, so they won't pay the real estate agent if i want one to represent me.
I am signing my purchase contract in few days without a real estate agent. I am not getting any upgrades and only buying a base house. That is where I heard buyers getting into trouble. Do I need a real estate agent for buying a new home with zero upgrades. The price looks about right for that area.
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No, you don't need an agent. But, keep in mind, the sales agent that represents the builder works for him, not you. If you do not understand what the documents mean, have a real estate att. look at them during the 5 day period you have to back out.
By buying a base house, you eliminate alot of the extra paperwork and additional decisions. If the house is already built, all the less issues you will have. If it's not, then there will be a time period between the time you sign and the time you take the keys. Here is where it gets sticky. Suppose you agree to buy the house, to be built, for 300K. Now, suppose during this time, the (builders) price drops, or the values drop in the hood below what you agreed to purchase it for. Will the builder lower the price to you as well? Will the builder adj the price down upon completion if the values drop? The trend is that they will, it's come up more than once in these times, but ask for assurance that they will in fact do that.
I know that on the condos in Las Vegas they are trying to ask for more deposit money with the fuel expense as the logic.
This is a good question.
What we have discovered is it depends on the builder and how educated you are as a buyer. If you are very educated and know what you are doing, then more than likely you can do it on your own. Some builders do have enough money allocated for the buying and selling real estate agent. For example, there is one builder in our community who will pay the extra amount to the selling real estate agent. The client tried to get more of a discount or incentive by not using a real estate agent and the builder would not do it. The builder was going to give the full commission to the selling real estate agent. In that situation, a person should hire a real estate agent and have someone work for them. Some other builders may allow a price cut or more incentives if you do not have a real estate agent working for you. Please do be cautious as you go this route. They may inform you that you are getting a deal but you really are not.
Do your homework before you sign anything. We have so many housing tracts up here in No Cal with about a 30% (I may be being generous) foreclosure rate. The new houses are still selling for an astronomical amount of money while there are 1 year old houses selling for half the price. No amount of "free" upgrades are worth a 300K+ price increase.
I purchase a home directly from the builder in Southern CA. Love the home and love the Builders agent. The home I purchase was also a base home with very few upgrades because I really couldn't afford anymore at the time of purchase. The biggest problem with most new homes is that you are required to finish your exterior landscaping within 6 months of purchase.
So make sure read the contract regarding this requirement. Otherwise you could face a penalty from the HOA.
So things to really think about with a builder purchase. Since builders are ready to deal it might make sense to have purchase the upgrades becuase you might get a great price in today's market. But be careful for with the exterior landscaping requirement. Better yet - have the builder build it into the price.
My wife and I over paid for the work we did and it cost us more down the road then it should have cost. If I had to do it over again I would have built the exterior landscaping into the price.
Good Luck with the new purchase - in your case there is no need to pay out of pocket for a realtor. But it might be helpful to call around to the local agents and see if they would be willing to take a look at it for you. Realtors provide a great service but I am not so sure this case it would be necessary.
I did not take a real estate with me during my first visit, so they won't pay the real estate agent if i want one to represent me.
That statement makes me very uncomfortable. I know that I'm not responding directly to the question that you asked, but I guess I wouldn't be happy about someone trying to limit my ability to have the representation that I wanted. Bottom line is that you haven't signed anything yet, so you should still feel free to seek out whatever representation you need to feel comfortable with moving forward. Maybe talk to some buy side agents in your area and let them give you some feedback on how the compensation could be structured if you decided to use them for the transaction.
Mikal - that's the way builders work. If an agent doesn't go with the buyer on the first visit, the builders don't pay commission. It doesn't matter if they sign an agreement or not, once the buyer is in their system, that's it. The commission would have to be paid out of the buyer's pocket.
That's really why I suggested speaking with someone local, and taking their lead on how they could be paid. For instance, OK, the builder won't pay my agent so I need to pay them out of the buyers end. So now what I'm willing to pay is minus that amount.
Personally, I don't particularly care how someone "works", I don't give a rats ass about the "way it's done", I don't care that "this is how it's always been done". When it's my money, I'm going to operate within the boundaries established by law. Yes, this attitude leads me to be shut out of many situations. That's my cross to bear.
Of course, with the market being like it is, the buyer could demand they bring in their own agent or they will walk.
And Marci, I have to apologise for my terse little paragraph. Just in case you took it as being directed towards yourself - it wasn't, it's just one of my little hot buttons. ;)
No, I understand what you are saying. I was working with clients for over a year when they decided to buy new. Just because she filled out a form on the net before we went in, they refused to pay my commission. It was a hot market then, so their attitude was, well they can always back out. Jergoffs. Guess who they are calling now? I told them to KMLWA. ;)
Is the home already built? If not, I do NOT recommend doing it w/o an agent. Here are the reasons. Do you get your FULL deposit back if they are not timely (How late can they finish your house)? Can they substitute your 'base' materials to a cheaper material (custom door, oak cabinets, tile floors)? What happens if they go bankrupt? Yes, Shae is big, but even the big fall.
Next, lets talk about your home's price. If it falls $30K by the time the home is built, do you still want it? With home prices falling EVERY DAY, even for a regular house the price will be lower than your purchase price by the time you reach the end of escrow. That's why they are doing appraisals WITHIN DAYS of your purchase agreement.
For these reasons, I would personally wait until the house is COMPLETELY built.
I could also discuss the interest rates... they are rising and you can only lock them in for 60 days. What will they be by the time the house is built you can only guess. Will you be able to afford the payment at 7%?
My old landlord wanted us to buy his house on land contract to be purchased in 2 years. I said I simply cannot buy a house for today's price with tomorrow's interest rate. Hubby agreed.
By the way, the above messages about materials and timeliness are TRUE. The basic new home contracts are designed to give the builder time and leanensy (sp) towards them, not you. My parents had bought a new house, waited 6 mos for it to be built, and the builder TRIED to be late and TRIED to substitute materials. My parents also bought at a time when interest rates were falling, not rising, so they ended up with a great deal. Buying a new home now would naturally put you at a disadvantage.
Actually Marci, that's a good point - it makes me think that my "hard ass" attitude to RE transactions is partially due to the "worm having turned" so to speak - backlash from the recent past. I really do tend to be much more civilized and fair when negotiating for other types of goods and services. I guess I'm not alone these days in this respect.
I have at least one sell side transaction coming up pretty soon, so it may be my turn to suffer from the backlash. Yikes!
The role of Real Estate agent is to help, advise, consult, guide, and satisfy your needs and wants. They know the market and what cost how much, where, and where. They'll do CMA-Comparable Market Analysis and will negotiate on your behave. Do you know your market price?
satisfy your needs and wants
Yeh Baby! THAT'S what I'm TALKIN bout!
Read this article before you do anything. Builders seem to only want buyers’ agents to be salespeople; but, a good buyer’s agent is much more than that.
I wouldnt use an agent on principal so they cant make their ridiculous commission. The buyer doesnt have to pay for the realtor I am told. Yet, the commissioin is simply built into the price of the house and the seller pays it . So the buyer pays for it all in the end. I think using a buying agent is a joke. A waste of money.
The builders telling you they won't pay for an agent! Yikes, RUN the other way.
I'm often amazed by the number of folks willing to go without representation. I can't think of anyone who would try surgery or practicing law without training, why real estate? Obviously our USELESS reputation is from fellow agents who STINK! Most of my knowledge about real estate comes from EXPERIENCE, including making mistakes, dealing with shady real estate investors, BUILDERS, and scammers of all sorts. If you choose to represent yourself, what your deciding is that real estate experience isn't that necessary. Do you really think that's true? Put another way, I tore my ACL skiing this winter, and there's not a chance in HE_ _! I'd have let a new DOC work on me. No, I shopped around for someone who had years of experience because I knew I would benefit.
Here's another way to look at it. Think about our legal system, its adversarial right? (I'm a former US AIr Force prosecutor and officer, still have a law license but am inactive now) Home sales are very similar, there are two sides and they battle it out. The builders agent has FIDUCIARY responsibilities to his or her clients, not you. THey have a DUTY to get the BEST DEAL for their clients, not you! You must have representation to protect your interests (MONEY) or be able to personally negotiate these issues. If you don't have a comprehensive understanding of contracts and most importantly market values, then you absolutely need an agent.
As you may be able to tell, my blood is BOILING right now. I WISH I worked in CA so I could have a sit down with that builder and that agent....Tell those jokers to take a hike!
Get an agent, let them work out the details - including their commission being paid.
I would advise anyone who buys a home to use an agent or Real Estate Attorney. When you buy new construction you are not being represented. The on site agent represents the builder not you. If you are financing through the mortgage company that the builder uses, I would definitely want someone to look over the contract. In new construction sometimes there are hidden fees that most buyers are unaware of.
I would take an agent with me for sure. They may say they won't pay them, but when it comes down to you buying a home or not, I think they would change their mind.
Thank You for your response!!! I am putting a $10K deposit (coming friday) on a $440K house.The house is under construction. Escrow will close in late december. Builder will provide a document which states that if the price drops or additional comps are provided then they will match it. The documents they gave me (weighs a ton) and is pretty detailed. I would assume a big builder normally will not change a 100 page document for every buyer.What are the main sticking points in their paperwork I should be looking for? I heard warranties are a big item (they said one year warranty). Should I look for other sticking points.
Eddie - builders are negotiating in most areas right now. Get an agent or an attorney to help you sift through this stuff. Make sure everything is in writing - any promises outside the written agreement will not be remembered when it is important.
I forgot to mention following. Eventhough the house would be completed by December...it can take as long as six additional months (or July 2009). I would not want to hazard a guess on interest rates. $/sq ft is about 300. Used home prices in that area range between 260 sq/ft (1980's to 1990's) to 320 sqft range (2001 or more recent). If I decide to get a buyers agent and I need 3 hours of their time, how much should I compensate him/her.
Hi Eddie! No matter what else you do, make sure there is a clause for a home inspection AND they have to correct the defects. And NO their inspector isn't good enough! You would be amazed what an inspection can reveal on a brand new home. Next do a CMA and make sure you aren't paying too much. I know you love the house; but this is business.
eddie is on the investor board, asking what he should rent this home for to make a 10% profit on his investment... I'm not in california but this is "deer in the headlights" territory. I'd take a substantial wager, that anyplace in california eddie can buy a newbuild today, will not rent for enough money to make his mortgage...Foreclosure home? maybe.... newbuild? he'd be killed in phoenix on the deal...
azrob... The house I am considering in this thread is for my primary residence. I will not rent this new home to stranger except renting out one room in the condo complex. So I can watch over the home. Also, builder stipulates that I will not lease the house for minimum of one year anyway.
Due to high prices in orange county and low rental rates, it probably won't pay out. I am considering Houston, TX for the rental property.
Have you given the builder a deposit yet? I don't know the laws where you are, but here in Florida I always suggest a third party such as the title company hold the binder. I've heard of too many people loosing binders, because the builders basically went bankrupt. In this market you never know and you can never be too careful!
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