This entry was posted on Thursday, July 19th, 2007 at 6:59 am and is filed under Agents & Brokers, Home Buying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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July 19, 2007
1. Builders will sometimes use non-standard forms and contracts. If you’ve decided to buy a home without an agent, you should be careful before signing ANYTHING.
Prior to purchasing you should sit down and look over all forms, including the general state-approved forms. Make sure you’re comfortable with the language and wording of it all. If you’re not, you should decide on an attorney, agent, or builder’s agent to help you through the process.
2. If you find a builder and decide to use the builder’s agent as both your buying agent and their selling agent, keep in mind that the agent will have primary fiduciary obligations to the seller. That means you as the buyer, will most likely not get the best deal.
3. Use an attorney to look over contracts. Whether you have an agent or not, you can get in serious trouble if you don’t carefully contract the builder to build exactly what you want by a specific date. No one wants their home’s construction to be delayed three years, or worse, never be finished. An agent is NOT a lawyer.
4. Agents get paid off commission. As a result, most agents will act in their own best interests and not yours. This can be a serious risk, as the agent may not bother even looking over contracts and could get you a bad to terrible deal in an effort to secure a quick and easy commission.
5. Coming to the transaction with no agent should give you better bargaining power, especially with a builder. The advertised price for the home should generally includes a potential commission for an agent. This means builders can and should lower the price if you’re able to work without an agent. They should not increase the list price if they find you’re using one however.
Good luck on the purchase. A good agent can save you thousands, but a bad one can leave you with an unfinished home!
read comments (3)
August 6th, 2007 at 1:48 pm
Here’s item #6. Even though it is new construction make sure that the quality of the construction is thoroughly checked. If the building is not built or has not been finished, find someone to regularly check it out while it is being built. At the point that the house is complete and you are ready to buy, have it inspected again and make sure that everything is working properly. The plus to using a licensed inspector is that they should have an insurance policy that covers them for Errors and Omissions. Make sure they have it! The minus to a licensed inspector is that it is unlikely that they will catch everything that could possibly be wrong.
August 7th, 2007 at 9:35 am
Good point Dan, one issue I’ve heard about time and again is that of construction companies “cheaping” out on materials, particularly to buyers who don’t have a contract guaranteeing a certain quality of workmanship.
August 16th, 2007 at 6:14 pm
I’ve been doing some web surfing and have been appalled at the number of people having construction defects on their new homes. Although one would think that a warranty would be helpful, it sure didn’t help those people very much. I would still want anyone to have a warranty and to check out existing homes by the builder they’ve chosen. It seems that part of the problem is that binding arbitration is called for in the contracts and it leaves the builder with the upper hand. I read that some bills have been filed in the U.S. Congress that says that you can’t sign a binding arbitration agreement prior to knowing that there is a problem. That’s for any consumer issue, whether it is housing, credit cards or whatever.