Reaching Your Hand Into the Hornet’s Nest

September 19, 2006 |

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You know my opinion of dual-agency.  I have espoused it more than once.   

One time at which agency relationships are of paramount importance is when a customer is interested in new construction.  There are numerous new construction developments in our area, and even more builders.  Many of these builders encourage the public to visit their model homes or area offices to get more information about the homes.  What many customers don’t realize is that the person sitting in that model home or office is working for the builder, ONLY for the builder.  While that person most certainly would like you to buy a home from their builder, they have absolutely no obligation to the prospective purchaser aside from fairness and honesty.  Let me tell you, there is a lot more to buying a new construction home than "fairness and honesty", not to mention the fact that everyone’s definition of "fairness and honesty" can be different. 

Agents and REALTORS know about the agency dilemma that is presented for the customer by new construction representatives.  That is why we are trained to ask what the situation is with regard to buyer representation before we start engaging a builder’s representative.  As Jim Duncan pointed out, some builder’s version of buyer representation is actually dual representation.  This is a situation that you definitely want to avoid.

One of the very first selling clients that I had, unbeknown to me, went to a builder’s model and signed a contract to buy a home with the agent that represented the builder.  They had told me that they were renting and not really looking for a home at that time, but that the home was too good for them to pass up. I was glad that they found such a great home, and I asked them if they were using any representation.  They didn’t know.  I found out that the builder’s agent had written the contract for them, but they were treated as non-clients.  This is perfectly legal, and perfectly normal, as well.  This meant that they were completely on their own throughout the entire process. Unfortunately for them, they weren’t all that happy about it.  I still see them regularly, and they are happy with their new home, but they wish that they had know that they could have had representation through the process.

As a personal rule of thumb, I wouldn’t buy a home from any builder that won’t allow me to have my own representation.  As a matter of advice, you probably shouldn’t either.  And for those builders who do allow true buyer representation, why not take advantage of it?  If a builder allows customers to have their own representation, then the compensation for that agent or REALTOR is included in the price of the home.  You, as the buyer, are going to pay for it, so take advantage of it.  Not to mention the fact that if you do choose a buyer’s agent, you can have that agent seek out all the information that you want when you are busy doing other things.  That way, you can spend your free time making important decisions about the homes and neighborhoods, instead of having to first travel all over the place to compile the information.  A good buyer’s agent will be able to procure for you information on all the new construction that may interest you faster and more efficiently than you can do it yourself.  I know that we keep information on numerous new construction developments and builders on hand for just that purpose. 

Buying new construction is just as daunting a process as buying a resale home, perhaps even more so.  Don’t fall into the dual agency trap set by many builders.  Make sure you take advantage of the expertise of a buyer’s agent to help you through the process.  This is even more important now in the Charlottesville area, as there is a lot more negotiating going on in the purchase of new construction.  As little as a year ago, most builders would not negotiate at all when it came to price or terms of a contract, or upgrades.  That is not necessarily the case any more.  Wouldn’t you rather approach those negotiations with someone who has market knowledge and expertise that you can leverage to your advantage?

New construction can be a hornet’s nest sometimes; but it doesn’t have to be all bad. Using a buyer’s agent to assist you through the process can prevent a lot of stings.

Posted by Daniel | Filed Under Buying, Dual Agency 

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