Do You Need a Real Estate Agent for New Construction?

There’s nothing quite like a brand-new home. New construction means the house is turnkey ready, with fresh paint and carpets, new appliances, and never-been-used showers. Buying a new build is exciting. Buyers get to choose the upgrades and finishes to put a personal stamp on the space. But do you need a real estate agent for new construction? If you want the best deal, then the answer is a resounding “yes.”

Considering a New Build?

Today’s real estate market is a little bonkers. Low inventory and a shift away from urban living have created an incredibly competitive market. It’s not uncommon for buyers to be outbid multiple times, particularly first-time buyers or buyers hoping to purchase more affordable homes.

After losing one bid after another, many buyers are tired of playing the game. While new construction may cost more per square foot than a pre-owned home, it’s a sure thing. No more putting in an offer and waiting anxiously to hear from the sellers.

There are pros and cons to purchasing a new build (you can read more about those here). But in the end, new construction can mean fewer headaches and certainly less heartache than yet another rejection.

Is Having an Agent a Requirement for a New Build?

You do not need to hire your own agent when purchasing a new construction home. You can certainly go to the builder without an agent and negotiate the deal yourself. However, there are many advantages to bringing your own agent.

Do you need a real estate agent for new construction? While it’s not a requirement, it is a good idea to have an agent who represents your interests.

Who Pays Your Agent When Buying a New Build?

If you think you can’t afford a real estate agent when buying new construction, think again. The seller always pays realtor fees. In the case of a new build, the seller is the builder. So, the builder will pay your agent’s commission, meaning it doesn’t cost you an extra penny to hire your own agent.

Plus, hiring an agent can save you money in the long run. Your agent will work to negotiate the home price, include upgrades at little or no additional cost, and suggest other cost-saving measures to help you get the best possible deal.

Can’t I Use the Builder’s Agent?

When purchasing a new construction home, you can work directly with the builder’s agent. They can help you determine how much you can afford, where to get approved for a loan, and walk you through any upgrades or features you want to include in the home.

So, why hire your own real estate agent? It all comes down to obligation. The builder’s agent is hired by the builder. While neither the builder nor the builder’s agent want you to have a bad experience, at the end of the day, they’re both looking out for the builder’s best interests. Sure, they may negotiate a few add-ins to keep you happy, but they aren’t going to go above and beyond to give you the best deal.

Why Do You Need a Real Estate Agent for New Construction?

The builder’s agent has a fiduciary duty to protect the interest of their client—the builder. That said, if it comes down to fighting for you or erring on the side of their client, the builder will always win. That’s why hiring your own agent is the better option.

One thing to keep in mind: some builders require buyers to disclose their use of an outside agent from the beginning. If you try to hire a realtor mid-build, some builders will not pay commission to your agent. Therefore, it’s best to talk with a real estate agent before starting your home search.

Experience and Knowledge

An experienced and knowledgeable real estate agent is worth their weight in gold. They’ve seen it all, from the wonderful to the tragic. This breadth of knowledge is invaluable when purchasing a new home. Your agent can advise you on a wide range of topics to consider, including:

• Which home builders and areas represent the best overall value.
• Amenities to look for when buying a new build.
• Hidden costs associated with buying a new construction home.
• How to research lenders to ensure you get the best rate.
• What to consider for upgrades—and what makes the most sense for your family.
• What upgrades and add-ons to consider for eventual resale value.

Having an experienced real estate professional by your side can help you make informed decisions during all phases of the home construction process.

Negotiating with the Builder

Once you’ve finally chosen a neighborhood and a floor plan, it’s time to negotiate the contract with the builder. Your agent can facilitate the negotiation process to get you the best possible deal.

This is where hiring your agent can save you thousands by either negotiating a lower cost, getting the builder to throw in upgrades and other features at no additional cost, or both.

Your agent can also decode the legal language in the builder’s contract. Remember, the builder is in the business of making money. And while there is nothing wrong with that, the contracts sometimes include outrageous clauses that protect the builder’s bottom line. These clauses could leave the buyer without many options if problems arise during construction.

An experienced agent can help you understand the contract and negotiate changes where needed. For instance, some builders include escalation clauses in their contracts with buyers. This clause essentially allows the builder to increase the home’s overall price due to supply or labor shortages, increased supply prices, or other extenuating circumstances. Last year, during the extreme supply shortage, lumber prices skyrocketed. Many builders turned to escalation clauses, passing those increases on to the buyer. In some cases, buyers ended up paying tens of thousands of dollars more than they agreed upon upfront.

Your agent can work with the builder to negotiate the terms of your contract, including items like escalation clauses, expected down payments, or your right to cancel the contract due to unreasonable delays.

Final Walkthrough Guidance

Before you close on your new home, the builder will allow you to walk through your property to ensure everything is working correctly. Your real estate agent will accompany you to this walkthrough.

Having another set of eyes and ears—and experienced ones at that—can help spot any issues that need to be addressed before closing. Your agent knows what to look for in a walkthrough and can advise you if any problems arise.

Someone Representing Your Interests

As we stated above, the builder has their own real estate agents. You are welcome to work with their agent, foregoing your own. But remember: the builder pays their agent. Therefore, the builder’s primary goal is to protect their interests and bottom line.

Hiring your own agent means you’ll have someone representing your interests—and only your interests. You will have a representative making sure you get the best quality home at the best possible price.

Potential Problems for Real Estate Agents and New Construction

While hiring your own agent has many advantages when building a new home, the highly competitive market is shifting the landscape for buyers’ agents. Some home builders are capitalizing on the hot market by drastically cutting or even eliminating commissions for outside real estate agents.

Luckily, most of the nation’s largest builders are keeping their commission structures for outside agents, meaning buyers can still retain representation.

Do buyers need a real estate agent for new construction? Tell us your thoughts in the comments below.