Home Buying in 17110>Question Details

Lucy, Home Buyer in Harrisburg, PA

We are looking at buying new construction without a buyers agent, using just the agent hired by the developer.

Asked by Lucy, Harrisburg, PA Fri Apr 25, 2008

Is this unadvised? We are first time buyers and feel as if were doing this blind without help or good knowledge of the process. Can I trust the Sales Manager (who is a Realtor) to guide us through the process? We are pretty confident the price is right, as we have seen significant decrease in the prices of this development in the past year and the developer is eager to move on to new projects.

We need someone to explain the process, and make sure we have our ducks in a row, but I'm afraid letting the sales manager work with us is showing our cards.

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Answers

13
I'll just add two things to what has already been said. The onsite agent is not going to tell you if the builder is behind on paying his contractors. If that is the case and you purchase the house you may find that when you go to sell it there on leins on the property. Contractors have up to 18 months to file a lien for non payment so it may not happen till after you move in. You are going to be responsible for clearing that title before you can sell which means you may have to pay off those leins yourself. I recommend when you purchase title you get the options available to cover you for this. A little more money but yu will be better protected. The second thing is prior to being an agent my husband and I went to purchase new construction. After we had seen the property several times we decided we wanted an agent. We went to the listing office and told them we would not purchase if we were not allowed to use our own agent. They agreed. If the builder really wants to sell he will probably not fight you on this but make sure you get it in writing first or you will end up paying your agents commission. Whoever you choose as your agent will be able to help you with this. I definately recommend using an accredited buyers agent and one who is used to dealing with new construction. Good luck to you. Debbie
Web Reference: http://www.dhaleyhomes.com
2 votes Thank Flag Link Sat Apr 26, 2008
Lucy, did anyone at the builder's office explain AGENCY to you at all? The sales manager may very well be salaried, that has absolutely nothing to do with the SAC or selling agent compensation. The listing agent lists the house. Listing agents represent the seller. The selling agent is the agent who sells the house--that agent also represents the seller NOT the buyer he brings. If a selling agent comes from an outside agency they STILL represent the seller and the seller is liable for whatever misinformation they give--even if the seller has never MET the selling agent. This is why the builder you are dealing with is NOT COMPENSATING SELLING AGENTS. He is not compensating agents who bring buyers UNLESS they are BUYER AGENTS and represent the buyer. Because the buyer agent's liability ends with the buyer agent and does not extend to the seller.

I wish the NAR would spend more time on educating the public and less on telling everyone what a great time it is to buy.
1 vote Thank Flag Link Sun May 4, 2008
I see that you have been a trulia voices member since October of last year, so I presume you have been reading questions and answers for a while. Good for you!
Buyers agent would be my choice, with some of the protections that have already been suggested. As a Realtor with almost a quarter century in th real estate marketplace, I think that you have received 3 excellent responses -- now it is your decision to make.
Blessings as you buy your 1st house!!
1 vote Thank Flag Link Sat Apr 26, 2008
Lucy,

As agents in the York area (not too far from Harrisburg) I can attest that James is right on the money. A selling agent or listing agent has a fiduciary responsibility to the seller (in this case the builder) and works for them. A buyers agent will respresent you to be sure that you are getting the best possible deal. In the case that this agent is representing both parties (dual agency)... it really can get quite complicated (from an agent's point of view), as it is quite difficult to represent both parties in the same transaction without leaving someone with the better part of the deal.

James was also right about the rules builders have regarding paying commission to a buyer's agent. That agent must be with the client (you) on your first visit to the model home or community regardless of how serious you are at that point. I would recommend doing what James suggested if you happen to find an agent to represent you. However I will say that the builder may have recourse if they find out the agent has not represented you the whole way through the transaction; the builder's agent would be the "procuring cause" of the sale... not the buyer's agent that you just hired.

I look forward to any other questions you may have and I hope this helped you.

Shelley Kefauver
Web Reference: http://www.kefauverteam.com
1 vote Thank Flag Link Sat Apr 26, 2008
If you are fine with working with only the agent that represents the seller go ahead. This person has primary duty to the seller. The goal is to get the highest and best price for the seller in this transaction. The problem may be at this point that a buyers agent would not be honored. A lot of the builders in my area require that the buyers rep go with their clients at the first meeting.
A buyers agent will also look out for your interests looking forward and not just in the selections and advice on what to put in the home to get the most bang for the buck.
I have a good way around that I let the builder know that my clients will not be buying from them and have my clients follow up with an immeadiate phone call to the builder stating the same thing. You would be surprised how fast they call back to that they can register me.
Web Reference: http://www.Find1Home.com
1 vote Thank Flag Link Sat Apr 26, 2008
Not Really, I just assumed the Sales Manager was salary then.
0 votes Thank Flag Link Sat May 3, 2008
Both the SAC and BAC were on the MLS sheets the sales manager gave us. BAC was 3%.
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Do you know the reason the builder is offering a BAC and not a SAC?
0 votes Thank Flag Link Sat May 3, 2008
Both the SAC and BAC were on the MLS sheets the sales manager gave us. BAC was 3%. That is one of the only good things that my previous agent told us about, what they meant and where to find her. Though she did tell us if BAC was less than 3% we had to pay the difference. We have ended our relationship with her and are being much more successful without her.

We do know what similar houses were being sold in that development is were being sold at 20,000 more than what they are asking now. They have been on the market over a year. We know how much we want to ask, we know what other people had paid.
0 votes Thank Flag Link Sat May 3, 2008
Thank you all for your answers, one thing I did notice, is that on the MLS listing SAC is =0, so I am assuming that the sales manager isn't getting a commission. Does this factor in also?
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CUrious as to where you saw the SAC? This is usally private information to agents, AFAIK. Was there a BAC also?



We feel we did the leg work finding the house, getting the best pre-approval, we feel confident we can negotiate a good price and now we just need to orchestrate the closing. We feel if we go to the developer with "hey you have no buyer commission to pay" that is a bargaining chip to getting something thrown in for free (we understand developers rather throw stuff in than lower prices).

Any additional thoughts?
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Yes... feelings aren't facts....would you feel you'd accomplished something if the builder threw in all new appliances, at a discount cost to him no doubt, rather than have a your own agent research previous sales to see if you're really getting a good deal? I realize it's probably too late now for you to bring in an agent and have them be compensated, but I hope other buyers understand if it is in their best interest to follow the same route.
0 votes Thank Flag Link Sat May 3, 2008
We have sold a lot of new construction and have also been subdivision Agents. The Commission for a cooperating broker is built into the deal. Builders will not part with this money if the Buyer doesn't have an Agent. An Agent who really knows new construction can get you a great deal, especially in this market. They talk the same language as the builder. It's a different part of the business. Get an Agent who really understands new construction.
0 votes Thank Flag Link Sat May 3, 2008
Builders are much more amendable to offering upgrades rather than cash back, so you may find success there.

Be very careful to ensure that you are allowed to have professional, independant inspections at the pre-drywall and pre-closing stages. You also do not want to let the builder off the hook for mold (it is commonly found on framing and roof decking at the pre-drywall stage). Every builder has a different warranty - read it over and make sure that it covers all components of the home.

Many builders will offer compensation or installation of a mitigation system if you have radon. Don't let them off the hook for that either. Installation of a "passive" system that doesn't penetrate the slab AND the roof is useless to you since no mitigation contractor wants to accept responsibility for punching a hole in your roof.

Good luck!
0 votes Thank Flag Link Sun Apr 27, 2008
Thank you all for your answers, one thing I did notice, is that on the MLS listing SAC is =0, so I am assuming that the sales manager isn't getting a commission. Does this factor in also?

We have looked at the property several times, and I'm afraid there might be some issues bring in a BA at this stage, also previously when we had an agent she was useless and we have had much more success in finding homes we like on trulia and going to the SA to tour them... then fighting them off getting us to sign with them.

We feel we did the leg work finding the house, getting the best pre-approval, we feel confident we can negotiate a good price and now we just need to orchestrate the closing. We feel if we go to the developer with "hey you have no buyer commission to pay" that is a bargaining chip to getting something thrown in for free (we understand developers rather throw stuff in than lower prices).

Any additional thoughts?
0 votes Thank Flag Link Sat Apr 26, 2008
Another thing to consider is that many builders have clauses in their contracts that will not allow for inspections, disclaim reponsbility for mold or radon, or other such things that are not good for buyers.

Since your agent is paid from the proceeds of the sale (no money out of your pocket, really) there is no reason NOT to use a buyer's agent.

The advice given by James about how to get your own agent to represent you is VERY good and I would highly recommend following it.
0 votes Thank Flag Link Sat Apr 26, 2008
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