Tuesday, December 30, 2008

New Home Buyers Beware & Be Aware

Often when we brokers get the chance to work with new home buyers who buy a house to be built for them by a production builder, we see a standard set of issues arise. The most important mistake we see in the market, over and over again, is that buyers do not realize that if they do not use a licensed agent or broker to represent their sole interests, they are on their own essentially because everyone on the builder side, sales counselors included (who are not licensed in the state of Texas), they all work for the builder and in the builder's interest.

That is not to say that buyers cannot have a wonderful and satisfying experience with home builders, however the process is fraught with complexities and potential problems that an experienced agent or broker can help avoid.

Sometimes potential buyers who do their homework may find complaints about a builder somewhere online. While this is important information, it should not be conclusive.

I like to take a look at the buyer complaints on record and analyze them. It doesn't entirely surprise me to find online complaints about any major builder because one of two things might be happening, or both, particularly with production builders who cater to first-time or inexperienced buyers:

i) the builder may be a bum builder and perhaps takes advantage of its mostly first-time buyers, and/or

ii) I've found that many first-time buyers are not accustomed to the process, and if they are not properly advised by an independent agent or broker representing the buyer's sole interests, then buyers can be disillusioned by basically standard operating procedures by builders. Most new buyers do not use an agent to represent them, only because they don't know to do so, and the sales counselors work exclusively for the builders. So any conflicts are generally settled in favor of the builder, much to the frustration of the buyers.

New buyers therefore can easily be misled. A common example is during the build process, the buyers may make a request of the sales counselor, such as to change their carpet choice for instance, and the sales counselor will tell them "no problem." The clients think there's no charge but then later come to find out that there could be a "change fee" or a charge for removing existing carpet and/or an upgrade charge.

This is standard procedure in general, but the mismatched expectations and poor communication on the part of the sales counselor / superintendent can leave many people raw. Sometimes weather delays also incense people.

Structural problems however are always inexcusable, such as faulty workmanship, plumbing problems, etc. But most of those things are covered under the standard builder warranty, headaches though they are. (An independent inspection prior to closing can help alleviate any major problems - something else a buyer agent/broker can facilitate.)

Another important part of buyer due diligence is to drive the new neighborhood and see how many homes are already being lived in by former buyers. The more there are, and the longer the neighborhood has been under development, the better the indications are.

Also, it's always advisable for potential buyers to stop and talk with residents in any neighborhood they're considering while being careful not to put too much importance on any particular resident with whom they speak.

But bottom line: a) buyers should not do anything that makes them uncomfortable, but b) remember that an experienced agent or broker can represent buyer interests exclusively and will be the buyer representative with the builder, and that agent or broker, if experienced and reliable, should be able to interfere with most potential problems when building a new home.