Why You Need a Buyer Agent When Buying a New Home
If you are considering a new home. It happens all the time. Buyers walk into a DFW area home builders model and write contracts based upon just a few happy conversations with the sales staff. Sales Reps call this sort of business "floor pops!" Yes, even in this soft economy "floor pops" are still happening. While all this may be well and good for the home builder it is the buyer who must deal with the potential fall out years down the road should the builder’s estimation of value be incorrect.
Why New Home Pricing Differs From Existing Home Pricing
New versus existing home values if measured by a scale would be somewhat tipped. Builders look at the cost of doing business through a completely different lens. Builders price their homes based upon "margins" versus intrinsic relative resale value (more about that later). These margins are based upon material, labor and overhead/administrative costs plus a profit margin and have nothing to do with resale COMP value although lower subdivision COMP values may help to lower your price and hence the builders price margin. Builders will counter higher price arguments by stating they bare warranty liability issues that extend for up to 10 years.
New Home Builders may also vary on their internal cost structures. Some builders are more frugal and so their costs are lower. Some builders simply cut corners and find lesser quality materials in order to reduce their costs while still other larger builders control their margins by negotiating volume discounts for both labor and materials. Material supply costs are also a moving target for builders and pricing pressures are increasing in 2010.
After builders understand their costs they set margin goals for their marketing and customer service staff, however like in all businesses "goals and reality" might not work out to be the same thing. Depending upon the current market conditions or supply and demand factors and the home buyer sitting on the other side of the bargaining table the same house could easily sell for a price that is quite different. So as you can see knowing the market and having your facts correct may translate into saving many thousands of additional dollars and this sort of market knowledge is generally obtained through a skilled buyer agent. Additionally with ARG you can expect a buyer cash rebate up to 3% of your new home’s sales price which again lowers your cost basis in your new home.
The Importance of Comparable Value Analysis for New Home Buyers
Comparable values are important to understand because comparable values will play an important roll in what you can sell your house for down the road. What you paid for your new home and what your current mortgage balance is will determine your "margin" numbers when you decide to sell. If this margin is too high compared to similar homes surrounding you, your home can be difficult to resell or you stand to lose money when you do sell. No matter how satisfied you were when you struck your deal with the builder, that price will forever be relegated to HISTORY the instant you pick up your new set of keys. Sure "new" is worth more to many buyers, but understanding the numbers before you buy is your defense against overpaying.
Existing Home Sales (Resales) are a Realtor Dominated Market
You might not need an agent to buy new, but the odds are you will when you resell. This means you will have to deal with a buyer agent who will come armed with a COMP report or market analysis to justify their offer. Gee, to think you could have had a buyer agent too when you bought new! Once the negotiations begin on the resale of your house all the great customer service experiences, free Cokes, smiles and handshakes from yesterday will suddenly have zero to do with your home’s eventual selling price.
Still many buyers are willing to pay up to $30K or more for a new house that might be almost identical to well appointed 1 or 2 year old preowned homes in the same neighborhood. Remember once you sign on the dotted line and move into your new house, your house is no longer NEW and if you should find yourself needing to resell 18 months later, resale COMP prices are going to be the numbers you will have to work with if you are going to be successful reselling your home.
New Home Builders are NOT all the Same
Another area that is often overlooked are complaints with the BBB. If the home builder you buy from is has an unusual number of complaints with the BBB or has repeated low quality scores with JD Powers you might be facing an uphill battle trying to resell such a home. In fact buying from the "wrong" home builder should scare the financial bejibbers out of you especially when you consider that ~95% of resold homes are sold through real estate agents who are most likely aware of who the good and poor home builders are.
Many unrepresented buyers also fail to research whether their home builder has a history of dumping their new home inventory to investors. These types of sales can lead to an unusual number of "rent" homes in new residential neighborhoods and during the past years many of these investor sold homes found their way onto the "foreclsoure" lists. Excessive rent homes and foreclousres will do nothing but lower your homes market value. Quality builders do not sell to investors and new home buyers who intend to occupy their new homes need to ask their home builder about their investor sales policy before they sign a contract.
Common Sense Advice for New Home Buyers
OK. With that said here is my best advice, If you want your best deal you will need to listen to more than what the seller has to say, you will need a knowledgeable and experienced buyer agent. Buyer Agents don’t just listen to seller talk, we ask questions and research comparable values and work to make sure you got a price that is as fair as it can possibly be. It’s called striking a bargain and it includes for both sides based upon negotiation and supporting information. Said another way if you were in a court of law and your future depended on the findings of the Court, would you simply show up unrepresented and allow the other side to call all the shots? So why show up to the most important purchase of your life unprepared and unrepresented?
We'll Help YOU work the Numbers then add up to 3% Cash Back!
Don’t find out the hard way that you paid too much. Being represented is important and when you consider the BUILDER is actually paying for you to be represented, well you can’t blame the builder if you find out later that you paid more than you could have. And even if the builder says he will take the 3% agent fee out of your transaction, how can you be sure that you are not still overpaying without access to your own buyer representative so you can see the numbers yourself. With ARG you’ll not only get experienced buyer services and market information designed to help you, you'll also get our Texas Best Buyer Cash Rebate that will put many thousands of dollars back in your pocket. Don't leave money behind and don't buy blind when cost effective agent service can be put to work for you. ARG has helped 100’s of new home buyers benefit from our services and we can help you.
If on the other hand you need us to sell your current home before you can buy new, then ARG has your money saving solutioin with our industry leading completely commission FREE new home move up. Yes, we’ll turn your largest closing cost expense into the equity you get to keep. That’s a mountain of savings of up to 6% - now that’s REAL savings.
You see, with ARG's cost effective buyer agent services you do have options available to you before you sign on the dotted line. The biggest purchase of your life should not be left to chance or a well scripted sales assoicate skillfully trained in moving you towards signing on the dotted line.
Now do the right thing, after all it is your money.
Make Savings Priority One by Becomming an ARG Client Today
Please fill out the no obligation buyer services request form below. For more immediate assistance please call us at 972-529-2394.
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