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Buying a new home? Here’s how agents help their clients navigate the process.
Is there wiggle room on pricing? What happens if something goes wrong? What concessions can they negotiate?
What’s a broker to do when a buyer says, “Out with the old and in with the new” — a new construction home, that is.
Boston might be one of America’s most historic cities, but a flurry of construction in recent years means more regional home buyers than ever are considering new-builds.
But new homes and condos can call for a different approach.
“Buyers of new construction may face a variety of scenarios through their transaction depending on the stage of construction for the home they’re buying,” said Qadra Evans, Zillow’s director of new construction industry relations and sales.
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Realtors representing buyers in the purchase of a newly constructed, move-in ready home should expect a similar process to buying an existing property, ranging from negotiating a deal to navigating inspections, financing, and appraisals up to closing day. There can be an advantage here because the home will be vacant, so there’s no need to coordinate with the seller on a move-out day, Evans added.
Ground-up or pre-sale purchases, especially those in one of the city’s new condo buildings, can be a different process. While the project or single-family home is still under construction, work with the builder to arrange walk-throughs and independent inspections, if possible. That way, buyers can get a peek at the mechanicals and wiring before the drywall goes up, and there’s potential to add customization at a time when it’s easier to, say, convert an extra bedroom into a walk-in closet.
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“Once the foundation is up and the unit is framed, I’m going to have the opportunity to walk my buyer through because, depending on the developer, you might be able to make certain changes as you go — not major changes, but smaller, subtle changes that might work better for your client,” said Zechariah Cook, a broker with Douglas Elliman.
Further, brokers noted that city inspectors do site visits of projects throughout the construction process, so walkthroughs with buyers can sometimes be more about creating punch lists of any repairs needed so their home is flawless at closing. Builders typically offer one-year limited warranties on workmanship, while new appliances and furnaces often come with their own limited warranties.
But have a discussion with the developer or builder on what costs the homeowner might still incur despite having the warranty.
“It’s really important to understand what is a workmanship issue,” said Gary Rogers, a broker and owner of RE/Max on the Charles. “Have a discussion. What is the builder willing to cover, and what happens if I find out the heat is defective five months from now? How does that work? Do you have to pay for labor?”
But an important cost factor in pre-sale and new-construction homes are builder’s agents, who partner with the developer or builder to sell units in a new development. In this situation, a buyer may notice limited wiggle room when it comes to list price.
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“The one thing that the buyer needs to understand is that the agent works for the builder,” said David Kent, a regional vice president with the National Association of Realtors. “There is no dual agency. There’s no designated agency. There is nothing. It is a single agency, and their job is to get the highest price for their seller.”
Those interviewed for this story noted there might not be much willingness to budge on the list price of a condo or home in a new development. That’s because it can have a domino effect on the price of the other properties once the sale price goes public.
Instead, builders offer other concessions like paying closing costs, free upgrades on buildouts, or covering several months of condo fees, which can run several thousands of dollars per month in some developments.
“The developer can save face with their price, because once they start coming down, they come down on all the units. It’s almost like a downward spiral,” Cook said. “They can keep the price, but we’re going to negotiate other things.”
But don’t entirely rule out wiggle room on the pricing: Thirty-one percent of builders of new-construction homes in the United States in July decreased their list prices (typically a 6 percent drop, according to the National Association of Home Builders). And roughly 61 percent offered some kind of concession, like covering closing costs.
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