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Can Purchasing a New Home without an Agent Hurt You?

In today’s Phoenix real estate market there seems to be a few driving factors to why home buyers seek new construction opposed to an existing home:

1.       Limited selection of existing homes to choose from.

2.       Outdated features in existing homes and lack of energy efficient features.

3.       Increased selection of new homes within the city without a commute.

4.       Smoother offer/purchase process without bidding competition.

As new construction continues to make a comeback from the downturn of the market I have also noticed a vast majority of home buyers taking on the huge venture of purchasing a new home alone without representation of a Realtor.  I have heard from buyers a few reasons why.  Let explore some of those reasons and some of the inherent benefits of having representation of a Realtor when purchasing a new home.

“I will get a better deal by not having an agent”. 

Many buyers believe that the builder will offer a “better deal” or price by not having an agent by saving the commission paid to their Realtor for representation. This simply is not true.  I can share with you from my experience as a new homes sales agent and my good standing relationship with many top builders here in the valley the price of a home does not change nor does the builder offer any additional price incentives by purchasing without a Realtor.  In fact builders seek out Realtors partnership in helping sell their homes.  Realtors bring educated, qualified buyers with the shared goal of servicing the buyer’s needs. 

“I don’t need a Realtor; the sales person does all the work”.

This statement is partially true.  The onsite sales agent does write the contract and facilitates all paper work for the purchase. The onsite sale agent also has full knowledge of the building process and features of the home.  Home buyers need to be clear on who represents who. The onsite sales agent represents the builder and the builder’s best interest. It’s actually written in all new home purchase agreements.   Yes, it is the builders’ interest to sell you the home however the builder is not there to protect your interest or to ensure you have full knowledge of how the terms impact you or your personal goals in the investment.   Having a Realtor present while reviewing and signing the builders purchase contract ensures you aware of the terms from a buyers perspective not just the builders .  A Realtor is there to be objective in keeping your family and investment goals a priority, both short and long term.

Now let’s look at some of the benefits to a buyer in using a Realtor.  These benefits are shared with you base on myself and my colleagues 1^st hand experience in partnering with a buyer who choose otherwise.

What is included…what is not?

-          When you walk through a model home it is showcased with beautiful furniture, options and luminous lighting.  Models are designed to speak to your emotional side of purchasing a new home.  Smells new and clean.  You can visualize living in the home and sharing happy memories with friends and family. The colors and design lead us down a warm fuzzy path with feelings of joy.   It’s important to understand in order to mimic the models you will need to add additional cost to the base price of the home.  This can be done within your budget partnering with a Realtor who is knowledgeable of interior cost, current trends, and enhancements that will pay off if ever to sell in the future.  The onsite agent’s objective is not to overwhelm you with the details, keeping your emotions high by what you see.  Many buyers have complete sticker shock when they finally get to the “what comes with the house” stage and often miscalculate their budget. This can lead to a huge disappointment and the buyer not getting what they expected.  I make sure prior to purchasing the new home the buyer knows exactly what comes with the base price of the home and an estimated cost of any upgrades the buyer may potentially want to purchase.  I attend the design center appointments when designing the home to ensure sound purchases are being made, tips on how to save money installing some features after the home is built, and keeping the buyer current with what is popular and sustaining.  As a buyer you don’t want to make a choice that will later hinder you selling your home or cost you more in the long run.

Your Agent is like an Insurance Policy

-          Communication with your Realtor is key.  We are here to keep buyers educated, informed and remove a bulk of the stress in one of the most important decisions of a person’s life.  Example: Young buyers purchase a new home.  Halfway through the building process they decide to ignore the agents attempt to discuss updates on financing and preparation to close.   In the interim the buyer decided to purchase a new car because they were under the impression their credit would not be pulled again.  WRONG!  Not only did the buyer almost lose their home, it took another month and a half to save the purchase costing the buyer a much higher interest rate.  Thankfully the agents rapport with the builder and additional tools helped assist in saving the buyers home. 

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      Home Builders seek to keep a longstanding relationship with agents and their brokerages.  When disagreements and problems develop the builder is more apt to come to a mutual agreement not only to keep the home buyer happy but to preserve the Realtor /Builder relationship and avoid mediation or legal proceedings backed by an attorney.

If you or a friend are considering purchasing a new home and have not partnered with a Realtor, I suggest scheduling a meet and greet over coffee to discuss your home buying goals and how a Realtor can assist. 480-233-3102

All You Need to Know About Using FHA Financing to Purchase a Home in Phoenix Arizona

From Start to Finish, All You Need to Know About Using FHA to Purchase a Home in Phoenix Arizona

Finding The Home

When searching for a home that will be financed through FHA a buyer needs to be aware that not all sellers will accept FHA financing.  Reason being there are a few additional requirements of the seller regarding the condition of the home and seller paid fees.  When a seller accepts a contract with FHA financing they should be aware of the commitment to abide by the regulatory standards of a government secured loan.  These additional requirements come as an added benefit to the buyer by increasing the level of quality the seller will deliver to the buyer in the homes condition.  If a buyer is looking to purchase a major fixer upper or a home sold “as is” needs to discuss at length with his Mortgage Broker and Realtor what will be the best way to structure their loan and strategize the purchase.  Hold-backs and buyer contributions are allowed but limited.

Making an Offer

When making an offer on an FHA loan you want to make sure your offer is in line with a professionally assessed fair market value.  Making an offer over fair market value can hinder the purchase of the home and ultimately cause financing to fall through. Making a higher offer is tempting as a “sweetener” when the buyer is requesting a seller contribution towards closing cost.   The appraiser will make an assessment of the value of the home based on the fair market value and the condition of recent sales of like homes compared to the home being appraised.  In the event the appraised value is below the sales price of the home FHA will not fund the loan leaving hard decisions to be made by both the buyer and the seller as to what to do with this differential. 

Seller's Property Disclosure Statement

The "Seller's Property Disclosure Statement" offers the buyer and their Realtor 1^st opportunity to identify any potential damage to the property that would be of concern to Fannie Mae in the financing of the home such as water damage, wood infesting pest, or an occurrence that has affected the structure of the home. Any repairs as such, it is best if done professionally with receipts.  Documentation of the repair and receipts can be provided to underwriting to show proper remediation of the damage.   When there is water damage and the repair was made, however visually you can still see where the damage happened, the seller should be advised to make the cosmetic repair immediately.  The seller making the repair at this stage of the purchase alleviates the hassle of the Appraiser making a notation of a required repair on the appraisal report that could potentially delay the closing or even worse…prevent closing all together.

Buyer Inspection Notice Seller's Response

When financing with FHA it is important when the buyer is making their request for repairs based on the inspection, appraisal and termite report and any other investigations the buyer has made, to focus on the mechanics and structural repairs.  The sooner any potential red flags that can hinder FHA from securing the loan be found and fixed the better.  You want to make sure the seller repairs any evidence of water intrusion or leaks, exposed electrical or non-working, non- working appliances or potential susceptibility of wood eating pest.   These types of repairs must be made in order to close with FHA financing.

To discuss how your financing options in purchasing a home, FHA vs Conventional down payment assistance programs and how I can will set you up for success in the purchase of your home contact me today, Kalencia Sanders 480-233-3102.