Buying a New Home!
Whether you are buying a new home or a resale home it is always a good idea to have a licensed REALTOR® working on your behalf. A common misconception is that by having a REALTOR® represent you, the home builder will not negotiate as much because they are forced to pay a commission. Typically that is not true. Many home builders pay REALTOR® commissions out of a marketing fund, calling it a referral fee. Since it comes from this marketing fund and is not negotiated with the home sales contract, it is not directly attached to the purchase and should not effect a new home sales negotiation.
On the other hand, having an experienced REALTOR® could help save a new home buyer thousands of dollars. An experienced agent knows what incentives to ask for and where to look online to find builder's incentives that might otherwise be left out of the conversation between the new home builder's sales representative and a prospective home buyer.
Things to know when buying a new home:
1) If you are buying with your return on investment being a large factor in your decision, realize this: New home sales and prices rely largely on supply and demand principles. Have you ever driven down the street and noticed a sign that reads: "Homes from the 100's!". If you have ever responded to one of these signs by visiting the new home sales center more than likely you were in for a surprise. When you show up in the new home sales center, the sales representative will let you know that the homes were selling for that amount, but are now selling for a higher price. It's not false advertising because the homes were selling for that amount when the first few homes were being built. Example: The builder has 100 lots to build on. Initially the home builder will sell the homes for right around $100,000 to $109,900. As the homes sell the builder will implement price increases. So in a few months the same floorplan that originally sold for $105,000 is now selling for $115,000. As the builder approaches closing out (building the on the last of the 100 lots) the subdivision, it may be a year or more later, and that same floorplan may now be selling for $150,000. So, when buying a new home with return on investment as a large factor it is usually best to be one of the first buyers in the subdivision.
2) Make sure to pick a reputable builder. With the economy in a slump and new home sales down a bit from last year in the Pearland and Greater Houston real estate market, some builders are going out of business and some new builders are employing less than savory tactics to sell their homes. Beware of builders that are seller/owner financing. Some builders are offering owner financing because it gives them more opportunities to move inventory. This may be a disguise. Some builders use owner financing as a way to charge more than what average market value for their home might otherwise be. The builder may justify this by selling the fact that the buyer would not have been able to purchase if the seller would not have offered owner financing. No matter how it is justified, their is no excuse for overcharging. It is one thing to agree to pay a reasonably higher interest rate because your credit score shows that you are a higher risk, but overcharging and having someone pay a higher interest rate is unethical in my books. A licensed REALTOR® should be able to research market value and determine whether a property is overpriced or not.
3) Get it inspected. Many buyers buy new homes and never have the home inspected. An inspection done by a licensed by the state of Texas real estate inspector should cost between $250 and $400 and can save you a lot more money in the long run. Respectable builders will honor inspections and correct valid issue before closing. Even the smallest issue can become expensive over time. An inspection by a licensed Texas real estate inspector can help to prevent larger problems in the future.