Technically, you do not need a Realtor to buy a newly built home but I hope after reading this you will not consider buying without at least consulting a Realtor first.
In any Purchase (New or Re-Sale) a Realtor helps you with your Financing, Needs and Wants, the Home Search, Viewing Homes, Making an Offer and guides you through closing. (For more in depth download Steven’s Buyers Guide.pdf here)
In Ontario, the only people legally allow to trade in Real Estate are Realtors through a Brokerage. There are two important exceptions : Firstly an owner call sell their own property and, secondly, Builders (who can hire a non-Realtor to act as a Sales Representative). This means the person representing the builder might not be bound by the code of ethics that a Realtor must follow.
A Realtor must be honest, not misrepresent or withhold information which may impact on the sale of the property. Most builders do not have Realtors as their sales representatives. In that case, the sales representative is not bound by the Real Estate and Business Brokers Act. Even if the builder does hire a Realtor to be their sales representative, the purchasers do not sign buyer representation agreements which means that this Realtor would only represent the interests of the builder.
Most home purchasers think that if they don’t use their own Realtor when buying a home they can reduce the purchase price. Usually, that isn’t the case as most large builders will claim they never lower their prices. Since it has been proven that builders who work with Buyer’s Realtors sell faster and for more money than those that do not. Many builders will co-operate with a Buyer’s Realtor. Which means the builder pays the commission to the Buyer’s agent. Which in turn means that a buyer will not pay for the benefit of having their interests protected.
As Your New Home Realtor I can:
- Negotiate concessions on the Sale,
- Help select the property (location, size and style)
- Suggest which features (and extras) will add value and which won’t
- Identify which extras can be done afterwards possession (usually for 1/3 of the cost) and which cannot
- Identify which features will hurt the resale of your home
- Find out information that the average purchaser cannot such as previous sale amounts
- Compare the builders product with current properties for sale (sometimes a resale home can be a better value than the one being sold by the builder)
- Provide unbiased information about the builder
- Assist you with the Home Warranty Program
- Provide access to specialists in the type of property you are considering (condo Lawyer vs House Lawyer)
- Assist in arranging financing though my network of banking specialist
- Assist in finding local trades to perform work after possession is taken
- Be a third party and sounding board for questions
- Provide you with local information on schools, businesses, possible future development that may affect your home etc.
In my community, Builders tend not negotiate a price reduction on their homes. They do change the amount of “Extras” offered at their decor centre. One week they may offer $15,000 and another nothing. Sometimes one builder may provide the purchaser with the best value and other times different builders offer the best value. Depending on the builder, you can sometimes get “free extras” if negotiated as part of the deal (not at their decor centre).
Location is still important even in sub-divisions. Realtors know what is in the development plan and have insight into local communities and problems.
This is just the tip of the iceberg but in short, you do not need a Realtor when Buying from a Builder though why wouldn’t you? If you have any questions, call me direct anytime at 1-855-737-8383.
A related topic I’ve also written on is “Do I need a Tarion Warranty If I Build a New House?” can be read here: http://wp.me/p1czLw-uf
Pingback: Do I need a Tarion Warranty If I Build a New House? « Ask Realtor® Steven Silva
Since I’ve written this article I’ve come across several buyers who, had they spoken to me first before buying new, would have saved thousands of dollars. Lawyers must review the buyer agreement but they look at it from a different perspective than I do. There are implications that a lawyer might not take into consideration. Before you sign, you should have your agreement reviewed by a lawyer and a Realtor that understands new construction.