Right now, most of the newly constructed homes for sale in Billings are priced from $184,900 to almost $800,000. Last year when we looked at new construction, the entry-level price was almost twice what it is today. That $184,900 ought to look pretty good to anyone on a tight budget.
If you’ve never lived in a brand new home, think of it like buying a new car, only on steroids. It smells better than a previously owned home, of course, but everything – from the baseboards to the ceiling light fixtures – is brand new.
It’s enough to make anyone starry-eyed but wait – there’s a reality check you need to experience so we may as well get that out of the way right here. It starts with the two most important players in the new construction purchase process.
The builder’s listing agent
If you’ve ever toured a new home community, you probably felt like you were in an amusement park queue – rope lines herding you to the builder’s office. You typically can’t even view the model homes until you enter the office and speak with the person inside.
That person is a real estate agent, hired by the builder to help him or her sell the homes. Let’s call her “she” for expedience. She’ll probably show you a mock-up of the community that shows which lots are sold and which remain for sale. She’ll tell you all about the community and the homes under construction. Finally, you’ll get to go see the model homes.
The goal of these homes is to make you fall in love. From the landscaping outside to the carefully staged interior, the builder’s goal with these model homes is to light a fire under you and make you want to buy a home, NOW. And, you just might do that.
Thrown into the throes of house lust it’s easy to want to get the process going as quickly as possible. So, you return to the office to chat with the agent. She’ll ask you if you’re working with an agent and if you say no, she’ll put on the full-court press to get you to allow her to handle your purchase.
Easy, right? You won’t have to hunt down a Billings real estate agent to help you because here’s one, right in front of you. She seems nice enough and you really, really want to get started.
One thing you may be overlooking however, is that this woman is the BUILDER’S real estate agent. She, first and foremost, represents his interests. Sure, it’s legal for her to represent both sides, but that doesn’t mean it’s a smart move, and here’s why.
Real estate agents owe a responsibility to their clients. One of these duties is “disclosure.” The agent must disclose any information she or he receives that will benefit the client in negotiations.
So, if she is representing both of you, she might know things about the builder’s willingness to negotiate that she won’t share with you as your own agent would. Therefore, she is truly not representing either side in a manner that is beneficial to them.
The services of a buyers’ agent are free for the buyer as the seller, or in this case the builder, pays the commissions. Why not find your own representation? So, when the builder’s agent asks if you’re working with another agent, say yes.
The preferred lender
The key to selling homes in bulk is to provide homebuyers with everything they need to get the process started immediately. If they leave the community to find an agent or a lender, they may just change their minds along the way.
So, to hook the buyer when their motivation is at its highest level, builders also offer mortgage solutions with a “preferred” lender. Sometimes this lender and the builder are affiliated.
Unlike working with the builder’s real estate agent, there are both advantages and disadvantages to working with the lender. Working with a lender that is familiar with the development could make for a smoother process. In addition, builders often offer incentives if you agree to use their lenders.
The bottom line is that it’s vital that you shop around and compare interest rates and settlement charges from several lenders before deciding on which one you’ll go with.
It’s a bit more complicated when you buy a new home and I’m happy to help answer any questions you may have.