New Construction Sales are Sizzling this Summer – Don’t Get Burned Buying without a Realtor.
The summer season is shaping up to be a hot one – and I’m not just talking about the weather! Sales of newly built homes jumped an astounding 55%, year over year, in June according to a national monthly survey conducted by John Burns Real Estate Consulting (JBRC), marking the highest annual pace in this real estate sector since the housing boom in 2005.
In “The Light: The New American Homebuyer,” JBRC explores this recent trend as our economy emerges from the COVID-19 pandemic. JBRC found that low mortgage rates and a shortage of resale inventory coupled with buyer preferences for modern, spacious, technology-rich homes ready for the demands of both at home work and schooling fueled this demand. What’s more, not only are potential buyers more serious than ever to purchase a new home, they are impatient. Builder clients reported to JBRC that their conversion rates of buyers who show up ready to buy (they’ve done their research online and are pre-qualified) are at an all-time high, with many of these buyers wanting move-in ready inventory over to-be-built homes.
This trend can be seen in our local market as well. Looking at single-family new construction homes in the Charlotte MLS market, closed sales were up 22.3% in June 2020 compared to June 2019.
As our economy and life return to normal, it is exciting to see so much action in the new home construction market. Here in the greater Charlotte area, new construction projects are just about everywhere you turn and can be a great option for a purchase, especially with inventory levels down a whopping 46.7% compared to this time last year. But don’t let the smell of fresh paint, shiny finishes, and an eagerness to move in ASAP get the best of you. With decked out model homes and smiling sales agents, you may think a buyer’s agent is not needed. However, purchasing a new construction property can be just as complex as the standard resale home, and having an experienced and knowledgeable buyer’s agent working on your behalf will be invaluable.
Read along for all the benefits of having an Exclusive Buyer’s Agent when Purchasing New Construction, then give me call. I can’t wait to help you purchase your new home!
Benefits of Working with a Buyer’s Agent in New Construction
Sales agents manning model homes work for and have a fiduciary responsibility to the builder.
Just like a listing agent of a traditional resale that represents the seller, they can be a good source of knowledge on the property, but sales agents fully represent the builder in the transaction. Their job is to sell the builder’s homes at the highest price.
Your buyer’s agent represents you in the sale and is advocating for your best interests.
Some of the ways in which your agent will have your back include:
- Compare and evaluate builders’ reputations and history of their construction quality and service
- Provide information about the neighborhood/community (How long is constructed expected? More building phases in the future? Commercial or other building projects planned for the immediate area?)
- Help you make sense of new construction paperwork and builder-specific contracts
- Assist in finding the best financing for you (compared to going with the builder’s preferred lender)
- Prepare comparable market analyses of the neighborhood to determine if the homes are priced appropriately. With the increase demand and rising sales, new home builders are at the luxury to raise prices. But are prices really in line with the market value? Your Realtor should research this information and be prepared to negotiate on your behalf.
- Provide insight into the value of all those shiny upgrades. It’s easy to be teased by the beauty of the decked-out model home. According to HomeLight.com, add-ons and upgrades can yield the highest profit of margin for builders. Upgrades including lighting, crown molding, and hardware (knobs and pulls) don’t offer much value to the home but are highly profitable to the builder.
- Communicate with the builder at all stages of the building and due diligence process.
- Recommend vendors such as an attorney, home inspector, homeowner’s insurance, title insurance, etc.
There’s no cost to you!
When purchasing a home, there is a misconception that buyers can save money by not working with an agent. In most real estate transactions, the home seller generally pays the full commission for the services of both their own listing agent and the buyer’s agent. (This article on Realtor.com offers a great explanation of real estate commissions)
With new construction developers, listing contracts are in place that specifies the commission paid by the builder. If a buyer purchases a new construction home without agent representation, the commission structure nor home price does not change. Instead, the sales agents – who, remember, work for the seller – will receive both sides of the commission.