The Afzali Group
Mobile: (510) 648-8001
Fax: (510) 795-7187
Mustafa.Afzali@CBNorcal.com

Want to Buy a New Home?

Dual Agency a Catch-22?

 

Most Realtors® will jump at the opportunity to double their commission by wearing both the sellers agent and buyers agent hat simultaneously, oftentimes without considering the disadvantages to consumers. Dual agency comes with many consequences that buyers need to consider before purchasing directly from the builder’s agent. No matter how fiduciary relationships are phrased, in dual agency relationships, agents are required to provide a lesser level of service. Ask yourself this question: If an agent does not disclose to the buyer that the builder will take less money for a home, is the builder’s agent taking action detrimental to the best interests and rights of the buyer?

 

Broker Services Cost Buyers Nothing!

  • In order to maintain the integrity of a subdivision, builders will set a minimum sales price for a specific time period. Therefore, the builder will not add the commission earned by a broker to the sales price. The question remains; where does the funds to compensate the buyers agent derive from? Simple; the builder’s pocket. It’s all a numbers game! With the aid of brokers, the project will sell out much quicker. In the corporate world, time = money!
  • Typically, the builder’s agent earns a fixed salary, benefits, and a commission related to the number of homes they sell in a given period. Their earnings grow appreciably when brokers are motivated to bring qualified buyers to their subdivision.
  • The purchase contracts for new homes are different then traditional resale transactions; a broker is trained to handle volumes of paperwork.
  • Broker compensation for new construction purchases are usually higher than traditional re-sale transactions. This difference can possibly result in a rebate to the buyer.

7 Tips for Purchasing New Construction

  1. BROKER MUST BE PRESENT WITH BUYERS DURING THEIR FIRST VISIT TO THE SALES OFFICE & MODEL HOME TOUR! Failure to comply with this rule will result in the waiver of the buyers rights to representation and negotiation by a broker.
  2. Prices advertised by builders are not set in stone. Brokers train and exercise their negotiation skills on a daily basis. Their services also include market and neighborhood expertise.
  3. Incentives must be in writing. Make clear whether incentives will be honored if you do not use the builder’s preferred lender. Also, keep in mind that property taxes are based upon the purchase price of the home; it may be a sound financial idea to use the incentives to pay down the purchase price of the home versus inflated upgrades.
  4. Be cautious using the builder’s preferred lender. These lenders will often reward the builder with a referral fee outside of escrow, which is recovered by charging buyers additional points or a higher interest rate.
  5. Expect delays. Homes are rarely ready for occupancy on the date the builder promises. Brokers can minimize stress, loss of time, and your hard earned money by coordinating close of escrow.
  6. Read the CC&R’s carefully. Search the covenants for a private transfer tax (PTT).
  7. Order a home inspection. Many consumers spend tens of thousands of dollars for upgrades marked up 300%+ by the builder, but refuse to spend $400 for a private home inspection. The builder’s sub-contractors are most easily accessible for repairs after close of escrow. Keep in mind that most builders will not agree to an inspection until after close of escrow even though you are paying for it.

 

Exclusively for my clients, I have a comprehensive list of current and upcoming new home communities in Alameda, Contra Costa, Santa Clara, San Mateo, & San Francisco Counties! Please fill out this contact form completely to find out how you can get your hands on this exclusive list. This document includes the location of each community, building type, price range, builder, and direct link to the neighborhood's website which typically includes interactive floor plans, virtual tours, and much much more!