5 Things Real Estate Agents Should Know About New Construction Projects

4/17/2019 5 Things Real Estate Agents Should Know About New Construction Projects
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5 Things Real Estate Agents Should Know

About New Construction Projects
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Any experienced real estate agents will say selling a new construction project is way
different from selling an existing one. It can be exciting for both the buyer and the
real estate agent when they close the deal for a new home. After all, the buyer will
be the first to live in it or use it for their intended purpose. However, selling new
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construction is challenging and requires patience and perseverance from the real
estate agent.
Here is what real estate agents need to know about selling new construction
projects.
1. Selling new construction is an

entirely different process.
The process for selling new construction is distinct from a resale transaction. There
are extra steps that are unique to this type of sale.
One of the first things real estate agents should take note of is the builder contract.
They have the responsibility to outline the
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including the deadline for the buyer’s ability to terminate without forfeiture of
deposit money.
Real estate agents also need to ask the builder about all the inclusions, financing
options, and incentives that can be offered to secure the deal. They also need to
know which features are in the basic home and which are the upgrades. Agents also
need to analyze information shown in soil surveys, blueprints, and floor plans to
lead the potential buyer into an informed decision.
2. Buyers need a real estate agent for a

reason.
For buyers, purchasing new construction can be intimidating. Often, they will deal
with the builder’s own sales agent. The buyers, in turn, need their own agent who
will look after their best interests. Without one, they will be exposing themselves to
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a lot of risks with what is usually their most significant investment.
Most buyers wonder if they can use the services of a real estate agent when buying
new construction in the first place. Thus, it is the agent’s responsibility to inform
buyers why they need a representative for this transaction. Agents are there to
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ensure that buyers know vital details that can be easily overlooked or forgotten. It is
also the real estate agent’s job to ensure that custom features and upgrades are
installed as agreed upon.
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3. The builder’s contract requires close

analysis.
As agents get more experience in new construction projects, they may notice that
the process is easier than resale transactions. There won’t be a lot of negotiations
over earnest money, deadlines, and post-inspection repairs. The key here is to
analyze the wording of the builder’s contract.
More often than not, these builder contracts may contain verbiage that favors the
builder. It is good practice to ask the builder’s sales person to get a copy of the
contract immediately. Knowing the contract by heart will help agents explain its
contents in simple terms to the buyers instead of just reading it on the spot. Pay
attention to the deadlines and terms that buyers should be aware of.
For example, the agent should inform clients that builders will not change the
materials and structural features when construction has started. Builders cannot
deviate from the initial plans they submitted to obtain the building permit. There
may also be terms regarding defects found during a walk-through. Most builder
contracts would not let the client terminate the contract but, rather, let them fix the
issue before the turnover.
4. Financing can be tricky for new

construction projects.
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Financing can be tricky for new construction deals compared to resale transactions.
Dealing with an unfinished home that can take months before it’s ready poses a
significant risk. If a buyer barely qualifies to purchase a home at the time of the
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contract, then they may not be able to buy it when mortgage rates increase.
Mortgage lenders usually cannot lock in an interest rate for more than 90 days in
advance.
It is the real estate agent’s job to help clients make wise decisions when it comes to
financing. If the client’s debt-to-income ratios barely qualify, the agent should
suggest an alternative home that they can afford.
5. Real estate agents should not back

down from the challenge.
Since selling a new construction project is different from the typical resale
transaction, rookie real estate agents may be afraid of stepping into this new
territory. However, they should take on this challenge as it can be satisfying and
fulfilling. Not only do agents find buyersCAREER
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agents with additional inventory in times of low resale home transactions. As long
as real estate agents exercise due diligence in researching builders and visiting
model homes, selling new construction properties can be rewarding.
About the author: Chris Woodard is the Co-Founder of Handle, where they build
software that helps construction businesses get paid faster by automating the
collection process of unpaid construction invoices.
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4/17/2019 5 Things Real Estate Agents Should Know About New Construction Projects

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