BreakThru Realty

Do You Need Your Own Agent When Buying From a Builder?

Reviewed by Tyson E. Sam, Founder and Broker of Record, BreakThru Realty, Florida License 3565210

The Short Answer

You are not required to have one, but the sales representative in the model home works for the builder, and the contract was written by the builder's lawyers. Your own agent reviews that contract, compares the community with resales and other builders, negotiates upgrades, closing costs and timing, and watches the deposits and the construction schedule. Most builders expect to see your agent on your first visit, so bring them or name them before you register.

Who the Sales Office Represents

The builder. The representative is friendly, knowledgeable and paid to sell that community at the builder's price and terms. In Florida they may also be a licensed agent acting for the seller. Nothing they tell you about resale value, the neighbourhood or the competition is advice given on your behalf, and the contract they hand you protects the builder first.

What Your Agent Does for You

Compares the new home with resales nearby and with other builders on price per square foot, lot, finishes and association costs. Reads the contract for the deposit schedule, the completion date and what happens if it slips, the builder's right to change materials, the warranty and the arbitration clause, and sends it to your attorney for the legal review. Negotiates the things builders do negotiate: upgrades, closing cost credits, rate buy-downs through the builder's lender, lot premiums and timing. And tracks the build so the walk-throughs and the closing happen on terms you agreed to.

Register Your Agent First

Most builders will only pay a buyer's agent who registered with the buyer before or at the first visit, and some will refuse to add one later. If you tour a model on a Sunday on your own, say at the door that you are working with an agent and give their name. It costs you nothing and keeps your options open.

Deposits, Delays and Preconstruction Condos

Preconstruction condo contracts in Florida commonly call for deposits paid in stages as construction reaches milestones, with rules on how much of the deposit must be held in escrow and how much the developer may use for construction. Completion dates move; the contract says what rights you have when they do, and often they are limited. Read the deposit schedule and the delay provisions with your attorney before you sign, and know that the buyer's cancellation period for a new condo differs from a resale. The new condo developments page lists the projects and their stage.

Incentives Against Resale Negotiation

Builders rarely cut the base price, because it would reset the comparable sales for every lot still unsold. They do offer upgrades, closing costs, rate buy-downs and lot premiums, especially on standing inventory and at the end of a quarter. A resale seller negotiates on price directly. Compare the two on total cost over the years you plan to own, with the association costs and the insurance on each. Consult a mortgage lender about the builder's lender incentive against an outside loan.

What to Review in the Contract

The purchase price and what it includes, the deposit schedule and escrow terms, the estimated completion and the outside date, the builder's right to substitute materials, the warranty and what it excludes, the association documents and budget, the closing cost allocation and the arbitration or dispute clause. Your agent flags what is unusual; your Florida real estate attorney advises on the legal terms.

Talk It Through With a Broker

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Do You Need Your Own Agent When Buying From a Builder?: Questions

Do I need my own agent when buying from a builder?
You are not required to have one, but the sales representative in the model home works for the builder, and the contract was written by the builder's lawyers. Your own agent reviews that contract, compares the community with resales and other builders, negotiates upgrades, closing costs and timing, and watches the deposits and the construction schedule. Most builders expect to see your agent on your first visit, so bring them or name them before you register.
Does using my own agent cost me more on a new home?
Usually no. Most builders pay a cooperating buyer's agent from their marketing budget and do not raise the price when you bring one, which is why they ask you to register the agent at the first visit. How your agent is paid is set out in your buyer agreement.
Can I negotiate the price of a new construction home?
Sometimes on standing inventory, rarely on a home to be built. Builders prefer to negotiate upgrades, closing costs and financing incentives so that the recorded price stays high for the rest of the community.
What happens if the builder is late?
What the contract says. Many builder contracts give the builder a long outside date and limit your remedies, so read the completion and delay terms with your attorney before you sign.

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