A Guide to Representing Buyers in New Construction

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1. Research and find a reputable licensed and insured builder with a good history and experience.

   • Find out the addresses of some of their most recent builds and ask if they can be toured or if there are current projects that they are working on that can be shown.

2. Find out how you as an agent are being compensated. This may not be black and white so make sure to get this in writing. Is it on the package minus upgrades or the total cost to build?

3. Ask what builder requires for a deposit to start a home build:

   • A builder will want to see some commitment from the client with 10-20% down to start. 

   • What part of the deposit is non refundable as the builder begins a new construction “custom” home.

   • This should all be stated and negotiated on the first initial offer between client, builder and agent. 

4. Define the desirable area to build.

   • Does your client want a stand alone lot or to be part of a development?

   • If part of a development;

     • Is the road public or private?

     • Is there an HOA? 

       • If so, how much and what does it cover?

       • Ask for a copy of the recorded Association agreement and if the association has been formed and whether any meetings have taken place

     • Are there covenants? 

       • If so, Ask for a copy of the recorded covenants and review with your client to ensure the regulations don’t interfere with your buyer’s plans.

5. Choose the best lot possible to build:

   • Due due diligence to ensure the lot is buildable

     • Has a percolation test been done? If not, who is paying for this to be done. This should be a condition of your offer on the lot. If a test has been done, request copy of perc test

     • Is there a possibility of needing a wetlands certificate

     • Are all necessary utilities available at the lot

     • Does the lot have a large enough building envelope for the house plan your buyer has in mind

6. Help the buyer understand that this will be a much longer process than the one for an existing house.  

   • Typically 4-6 months from the time we break ground. 

   • Make sure within the contract there is a completion date set

7. From the builder find out what is part of their standard spec and what is extra  to be ready to explain to your client

   • Request a copy of the spec sheet, this should be an all inclusive list that shows a buyer what the house will include from site work all the way to finish landscaping

8. Learn how to read blueprints and understand site design and materials and methods of construction

9. Work with buyer to review the details of the new construction contract  

10. Assist the client with negotiations, by knowing what areas may be negotiable with the builder like:

    • Location

    • Cost of the land

    • Size of the home

    • Cost of the building materials

    • Labor cost

    • Real estate market condition

    • Negotiating closing costs

11. Advise the client toward smart upgrade choices to get the most value for the money

12. Work with an architect and structural engineer

13. Shop around for lenders to not get attracted by builder’s lender’s incentives

    • Ask what type of loan will be needed for the build. 

      • Some builders will finance the build and the buyer will just get a regular end loan as they would on an existing home

      • Some builders will need you to get a construction loan, not all lenders offer these so make sure you understand the difference and who offers these locally

14. Give option of hiring your own home inspector that will inspect the house. Keep in mind that the town will be signing off along the way so this can be redundant but might be necessary for peace of mind of the buyer. 

15. Find out what is under the warranty for the new construction and advise your client about that.

    • Most builds come with a one year limited  warranty. Discuss with the builder what is covered and have this attached to P&S 

16. Identify and thoroughly outline all the costs involved for the clients to help avoid surprises.

17. Make a list of all upgrades and custom features, get everything in writing. Check them during the construction process, especially the final walk-through, together with the buyer to make sure everything is incorporated.  If not make a punch list of all things that need to be corrected before settlement.     

18. Make sure to give and get everything in writing to ensure that lines of communication are clear between all parties. 

Please reach out to The Greens Team , our New Construction company expert with any additional questions:

 Meghan Hess   

413-575-7865 

Realtormeghanhess@gmail.com