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Buying New Construction? Be Very Careful!

By
Real Estate Agent with RE/MAX DFW Associates

I have worked in my market for over 20 years now and I am still amazed how often builders will sell lots/homes to buyers in locations that I know will not do well at resale time down the road.  I have heard in some cases they will charge lot premiums for lots that are bigger even though they back up to commercial buildings or busier roads.

For example, I just came from the local Home Depot and noticed a new neighborhood being built that backs right up to the Home Depot and the Fry's Electronic Superstore on one side and backs to a road that will eventually become very busy as there are more apartments and homes scheduled to be built sometime in the near future. 

Couple this with the fact that this neighborhood is about a block off of a major Interstate and you can just wonder for yourself why anyone would want to live there.  One of our companies offices is located right by this Interstate and the "roar" from this highway in so loud you can not talk to your clients outside the front door.  If you spend anytime in your backyard in these new homes, you will not be able to escape the noise from this Interstate.  Now the area is very convenient for ease in and out of the area, and that may be the reason people are willing to pony up the premium for new construction, when if they just did their homewoerk, they could find some very nice pre-owned homes within a few blocks or just a mile away on the market now, that will do better at resale time.

The wildest part of this story is that people have put down lot deposits on these lots before there were any homes being built there.  There are already some resales in the area in the first phases of this area and if you are paying attention, you will find they are having trouble selling those homes even though they are very new.

Just be careful out there. Remember the builders represent themselves when you meet with them and they can tell you its a great location but do your own homework.  A call to a seasoned Realtor that works the area might be very interesting to you.  It's pretty easy for the agent to pull comparable sales information for you for nearby areas.  May be the best call you ever made.

We know a lot of buyers think they are saving some money by not hiring a Realtor and feel the builder will give them a better "deal" if they do not have an agent representing them.  Actually, even if a builder is giving you a "deal", you might not be getting the deal you think you are.

Be careful.  You are spending a lot of money for your new home.  Do your reseach first before you hand over that check.

Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

So true...resale value is so important, and something so few people even consider.

Mar 08, 2011 03:55 AM
Michele Hansen
Bangerter Brothers Realty - South Jordan, UT
Realtor, ABR

Wow is that the truth!! I have represented builders over the years and of course the buyer on a new build. Always amazed how the agent at the builder will ALWAYS state "if you do not have an agent we can give you a better price". 9 times out of 10 this is not the truth. What they are really saying is "I have sat at this model for months and I do not want to split any commissions. I want the whole thing myself." I understand this but builders usually always pay their agent a full 3% regardless if a buyer agent is involved or not. The home price reflects the buyer agent commission and they do not "drop the price" just because they came in without representation.

Mar 08, 2011 04:06 AM