A Common Misconception and Some Untruths About New Construction Home Buying

Buyers often believe that they do not need the services of an agent if they are looking for a new home versus a previously owned home (resale). This is a common misconception, and for the buyer, this can be dangerous. Here are some points to keep in mind:

Point 1 – New home (builders) agents do not have to be, and most are not, licensed RealtorsÒ, as such, they are not governed by the same code of ethics, practices and conduct that RealtorsÒ must adhere to. They do not have a license to lose.

Point 2 - New home contracts are most always written on a builder’s own contract. They differ widely from builder to builder and are not the standard Texas forms. It is important for a buyer to be represented by a RealtorÒ who understands and is familiar with the common provisions of a home buying contract in order to protect the buyer.

Point 3 – Builder's agents represent, and work for, the builder NOT the buyer. In a resale transaction usually one RealtorÒ represents the seller and another RealtorÒ represents the buyer. This levels the playing field and provides sound advice to both parties. In a new home transaction, if a buyer decides to ‘go it alone’ there will be one person supposedly representing both parties. That is not a good business practice. Even lawyers, who are highly trained, will not represent themselves or both parties.

Point 4 – Let’s say a buyer is out browsing alone, without their Counties Homes agent. The first question that builder’s agents ask when a buyer walks in the door unaccompanied by an agent often is “Are you represented by an agent”. (The reason this is asked is further explained in the following point.) A buyer has a few options here. If they say NO they will register the buyers name and contact information, as not being represented by an agent and later on will not allow an agent to be part of the transaction; in other words the buyer is on their own at that point. If the buyer says YES, even though the agent is not with them, most will usually register the buyer’s agent information with the buyer’s info and the Counties Homes agent can then represent them in the transaction. For safety sake - ask first, but it is always better to have your Counties Homes agent with you in person.

Point 5 – Commission. Many builder’s agents use the gimmick of telling unsuspecting buyers that if they do not have a RealtorÒ representing them, they can get a better price for the home. Be wary of this trick; they are trying to buy your rights of representation and will often try to give the buyer a token discount, which they would have given anyway, had the buyer been represented by a Counties Homes agent. If a buyer does not think this is a gimmick, try asking for the 3% commission rebate in cash at closing and see what happens. Builders have a 3% buyer’s agent commission either built in to the price of a home, or in their marketing budget. They do this in order to compete with resale homes and to entice RealtorsÒ to bring their clients to the builder’s properties. It costs a buyer nothing to be represented by a qualified Counties Homes agent. 

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