When you buy a new house, do you need the services of an
experienced real estate agent?
The answer is yes, and here’s why.
When you buy an existing house, what you see is what you get for
the asking price. When you buy an as-yet-unbuilt house, what you
see in the builder’s furnished model is not what you get for the
advertised base price.
That’s because a furnished model is filled with beguiling
features that enhance the basic house. The to-die-for kitchen,
the four-foot extension that makes the family room feel so
spacious, the classy Brazilian cherry hardwood floors, and the
bay windows that give character to the front rooms and look
swell from the street are all optional upgrades. When their cost
is added in, the seemingly affordable $400,000 advertised base
price quickly balloons out to $500,000, far more than you can
When you check out a more affordable version of the model — a
nearly completed house down the street that has only $30,000
worth of upgrades — it’s not the same house that has become the
stuff of your dreams.
Had you been working with an experienced real estate agent, you
would have avoided such a disheartening experience, because the
agent would have directed you to new construction that fit your
budget in the area where you want to live. As you toured models
together, the agent would have helped you distinguish the
upgrades from the basic house and pointed out the options that
are prudent choices, said David Zadareky, the broker/owner of
Re/Max Evolution in Alexandria.
Though option choices never come up in a resale transaction,
they are central in a new-home purchase because the basic house
is almost always very spare, Zadareky said. The challenge is to
keep option choices to an affordable limit, which he caps at 15
to 20 percent of the base price. If your total budget is
$400,000, as in the example above, you should be looking at
houses that are base-priced about 15 to 20 percent lower, or
about $320,000. That would give you $80,000 for options, an
amount that would seem to cover everything you might want, but,
in fact, will not go very far. “If you’re not careful, the final
sticker price that you are trying to keep at $400,000 will
quickly balloon up to $440,000 or even $480,000,” he said.
When choosing specific options, Zadareky advises his buyers to
get features that will be difficult or costly to add later; in
our earlier example, this would be the four-foot family room
extension and the bay windows on the front. The to-die-for
kitchen and the hardwood flooring can be future remodeling
projects, and some options should be nixed outright because they
will not translate into a better resale price. “No one will pay
extra for a fireplace in the master bedroom,” he said.
In addition to helping buyers negotiate the purchase, Zadareky
said he nudges them to budget for the cost of new-home ownership
— a concern a builder’s agent is unlikely to mention. For
example, once you move in, you’ll realize that you’ll have to
purchase window treatments because the neighbors will be closer
than you realized.
And he raises critical issues that do not occur to most buyers,
such as finding out what is planned for the acreage adjacent to
the community where they want to buy.
Why don’t most new-home buyers use real estate agents to help
them navigate a brand-new house purchase?
It requires planning ahead, and most new-home purchases begin
spontaneously when the buyers chance upon a “Grand Opening” for
a new-home development and stop to take a look. When asked to
“register” by the model sales agent, they fill out a card with
their name and contact information. Should the buyers then
decide to bring an agent on board, the builder will demand that
the buyer pay the agent’s fee, usually 2 to 3 percent of the
base price. (For the $320,000 house noted above, the fee would
be $6,400 to $9,600.)
To get the real estate agent’s help and have the builder pay the
agent’s fee, the agent must register the buyers on their initial
visit. But if you visit the model and decline to register, you
should be able to return later with an agent in tow, Zadareky