Patty Manzi’s Tri-Valley Real Estate Blog

I’m often asked the question:  Why should I use a real estate agent to purchase a brand new home?

The advantages of having an agent help you purchase a newly constructed home are the same as those for purchasing a resale home…..knowledge of the market, help in finding the perfect home quickly, expertise in contract writing/negotiation, and closing assistance.  The builder has a professional representative watching our for his needs, and you need the same expert representation.

Buying a new home is a little more difficult and time-consuming that buying resale.  A real estate agent can professionally guide you through this process.  A real estate agent has experience working with builders, and can help you research loan programs that will best suit you.  A real estate agent  can also guide you through the  new home warranties and builders purchase contracts. 

It is very important that your interests be professionally represented when you are entering into a contract for a semi-custom, or build-to-suit home.  These transactions are complex and the contract details must be exact in order to protect you and to ensure you get exactly the home you want!

Is there any advantage to not using an Agent to purchase an brand new home?  NO!

Think of planning a trip around the world without the help of a travel agent, or buying insurance for your car without an insurance agent.  What if you were the  executive of a major corporation involved in a legal dispute, would you represent yourself in court?  If you depend on people in the service industry for travel needs, insurance claims for a car accident, or handling legal affairs, then why would you want to represent yourself in the most expensive and probably the most important purchase of your lifetime – your new home?

It is a common misconception that buying a home directly from the builder, without the help of an Agent, will save you money.  There is no financial advantage for you to buy directly from the builder.  Builders, for the most part, have a ’single-price’ policy, meaning you will be charged the same price whether your interests are represented by an Agent or not.  Just as in resale, the Seller pays your Agent’s fee.

REMEMBER though, the Builder requires that your Agent accompany you on your first visit to the Builder’s sales office, or they will NOT PAY your representative’s fee.

When you are considering purchasing a brand new home, there are several questions you should ask before you commit to the purchase:

• Is this a good builder?
• Does this builder have a solid reputation?
• How many years has this builder been in business?
• How does the quality of this builders product compare to that of other builders?
• What are the existing inventories of the various builders?
• How do the builders models meet your needs (floor plan, square footage, location)?
• If I should sell in a few years, what upgrades are available now that I can include to be competitive?

Your Agent will be able to help you research many of these question and it is well worth the time to do so.  Taking these precautions will help to assure you the best service and expertise in making this important decision.

Choosing the right neighborhood is almost as important as choosing the right house!  There are many factors to consider when selecting a neighborhood that is right for you.  Below are just a few of the many factors – You may think of others that are important to you.  Please write them on your ‘requirements’ list so they are not forgotten.

Neighborhoods have characteristic personalities.  Investigate to determine that the neighborhood in which you choose to look for a home matches your lifestyle and personality.

Scout out the Neighborhood! 

It is important that you scout the neighborhood in person.  You live in more than your house.  Talk to people who live in the area.  Drive through the entire area at different times of the day, morning, afternoon, evening, and late at night, go during the week as well as weekends.  Look carefully at how well other homes in the area are being maintained; are they painted, are the yards well cared for; are parked cars in good condition; etc.

Neighborhood Factors to Consider

Look for things like access to major thoroughfares, highways, and shopping.  Listen for noise created by commerce, roads, railways, public areas, schools, etc.  Smell the air for adjacent commerce or agriculture.  Check with local, civic, police, fire, and school officials to find information about the area.  Research things like soil and water.  Look at traffic patterns around the area during different times of the day and drive from the area to your place of business.  Is the neighborhood near parks, churches, recreation centers, shopping, theaters, restaurants, public transportation, schools, etc.?  Does the neighborhood belong to a Homeowners Association?

Taking the time to investigate these things before you commit to buying a home can save you some surprises and potentially some disappointments later on down the road.

When you start looking for a home you will find that there are many beautiful homes on the market.  There are a few things I suggest you do before you start looking at homes.  If you do these two simple things, it will make your home touring a more productive process.  You will not waste time looking at things you cannot afford, or that don’t suit your needs.

1. Meet with a lender and find out how much you qualify to spend on a home, and get a pre-approval!  It is very easy to get excited about features found in homes out of your price range.  Before you get your heart set on that big, tree shaded colonial on the hill, your need to pin down how much you can afford.
2. Make a list of “Required Features” vs. “Extra Features”.  For example:  Required features for you might be location, number of bedrooms, eating space, architectural style, garage, school district.  Extra features for you might be a fireplace, walk-in closet, wet bar, pool, siding, vaulted ceilings, deck, landscaping.  There are many different features in homes that range from necessary to luxury. It is easy to get caught up in the excitement of a beautiful home loaded with amenities.  It is important that you select a home that truly meets all of your requirements first and foremost!  Providing this list to your agent can help narrow down the prospective homes that you will tour.  If you are not interested in having a home with a pool, then dont waste time touring homes that do.

Some of the features to note when touring homes:

• Address
• Subdivision name (gated community, HOA)
• What is the home near? (mall, freeway, parks, schools)
• Garage (number of spaces, attached, detached)
• Lot (size, shape, slope, ease of access)
• Style of home
• Bedrooms & Bathrooms
• Living Room
• Fireplace (wood burning, gas, stove insert)
• Kitchen (size, condition, appliances)
• Dining Area
• Laundry area (garage, laundry room)
• Additional rooms (bonus rooms, theater rooms, sun rooms, office/den)
• Additional features (air conditioning, ceiling fans, pool, stairs, french doors, etc)
• Square footage

As you tour homes, check back to this list to make sure the home meets your requirements.  The extras should only come into play when you make your final decision between homes that meet all or most of your requirements.

Here is a brief explanation of the responsibilities of the Buyer’s Agent and Seller’s Agent in a transaction.

In California,Real Estate brokers and their sales persons are required to disclose the type of working relationship they have with the buyers and sellers in a real estate transaction.  There are several types of relationships that are available to you.  You should understand these at the time a broker provides specific assistance to you in buying or selling real estate.  Buyer’s Agent and Seller’s Agent relationships are commonly referred to as ‘agency’ relationships and carry with them legal duties and responsibilities for the broker as well as for the buyer and seller.

Buyers Agent.  A Buyer’s Agent acts solely on behalf of the buyer and owes a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer.  The agent will negotiate on behalf of, and act as an advocate for the buyer.  The buyer is legally responsible for the actions of the agent when that agent is acting within the scope of the agency.  The agent must disclose to sellers all material facts concerning the buyer’s financial ability to perform the terms of the transaction and whether the buyer intends to occupy the property, but cannot disclose to another party that the Buyer will pay a price greater than the price offered.  A separate written buyer’s agreement is available which sets forth the duties and obligations of the parties.

Sellers Agent.  A Seller’s Agent acts solely on behalf of the Seller and owes a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.  The agent will negotiate on behalf of, and act as an advocate for the Seller.  The Seller is legally responsible for the actions of the Agent when that Agent is acting within the scope of the agency.  The Agent must disclose to Buyers or Tenants all adverse material facts about the property known by the Broker.  A separate written listing agreement is required which sets forth the duties and obligations of the parties.

I was asked the other day about why someone would need to get ‘pre-approved’ for a loan before looking for a home.  Here’s why:

If you are serious about buying a home, your next step is to get a ‘pre-approval’ from a reputable Lender.  By doing this before looking at homes, you’ll save yourself time, energy, and frustration. 

The pre-approval will:

• Determine how much home you can afford:  Helps you avoid buying less home than you can afford, or being disappointed if you don’t qualify for as much as you had hoped.
• Shows what your total investment will be: You’ll know approximately how much money you’ll need for your down payment and closing costs.
• Lets you know what your monthly payment will be: You’ll have a very close estimate of what your monthly principal, interest, taxes, and insurance (PITI) will be.
• Identifies the loan programs you can qualify for:  With a wide variety of loan programs available, it is important to know which types you qualify for and which will best suit your needs.
• Strengthens your offer: Sellers may be more inclined to accept realistic offers when they know that you are serious and have taken the time to be interviewed by a lender and are pre-approved for a loan.

When you are pre-approved by a Lender, you’ll receive a Pre-Approval letter to give to your Realtor®.  This letter should state that the Lender has checked your credit, your credit score, verified your income and employment history, and your monthly debts and obligations.

Choosing Your Lender

When you buy a home, one of your primary concerns will be finding a lender who can provide the financing YOU need.  So how should you shop for a Lender?  Most real estate agents have a network of reputable professionals they can refer you to.  Calling around and asking for interest rate quotes is NOT always the best way to select a Lender.

Competitive rates are important, but when you consider the fact that most Lenders get their money from the same sources (and therefore have essentially the same rates to offer), you must look at some other factors before choosing a Lender.  You need a Lender who works with you and your real estate agent as a team and has the same goal – to get your loan approved and closed in a timely and professional manner. 

Meeting With the Lender

When you meet with the Lender you choose, be prepared to provide the following information:

1. Your residence history
2. Your employment history & income
3. All outstanding debts, loans, credit cards
4. All bank accounts – savings, checking, and investment accounts
5. Real estate you currently own
6. Personal property you own

Remember finding a Lender you can trust is just as important as finding an experienced Realtor®.  You want to make sure that your needs are going to be met professionally and represented throughout the entire process of buying your home.  Ask for, and check references.