STOP: Do Not Enter Construction Zone!
It happens to the best of real estate buyers -- in the heat of the moment, excited and curious and not understanding the rules of the game, buyers limit their negotiating power by alienating their only advocate -- their real estate agent. New construction and new housing developments offer pitfalls for unwary consumers.
The photo at the left represent new construction and new conversion sites. Such development projects typically have model units and will require that buyers sign in before viewing the units.
The photo at the right is a real estate sign that helps identify resale properties.
It is very important that buyers do not attend any open houses or any new construction or new conversion sites without their agent in tow. Many developers and their agents see unattended buyers as "free game" and they will not pay a professional fee to a buyer agent who does not accompany the buyers on an initial tour of the property. Buyers risk the chance of entering a real estate transaction without representation and therefore without protection of their interests.
Why do I need an agent? Developers want buyers who arrive alone, unrepresented. Most buyers are unfamiliar with protocol and are more likely to forfeit any rights they have without knowing it. A perfect example of this is a developer’s sales contract, typically 80 pages or more and written to protect the developer's interests by his attorneys. By contrast, in resale sales in Chicago, REALTORS use a standard contract issued by the Chicago Assn. of REALTORS that is four pages long and written by neutral parties.
Most buyers falsely assume that because a property is new it will not have anything wrong with it. Inspectors and tradesmen conclusively agree that properties are not built with the same standards or quality as homes built in the past, mostly due to the escalating costs of materials and labor. Developers are in business to make money, and keeping costs low is the name of the game.
New construction and new conversion sales also differ greatly in terms of overall purchase procedures, such as attorney review and when to conduct an inspection (developers often prefer that buyers waive a home inspection). Other ways that a buyer makes himself vulnerable include negotiations of incentives and upgrades, protection of buyer’s earnest money, deadlines, negotiating appraisals, protection of buyer’s financing, negotiating inspection issues in addition to creating and executing punch lists, final walk-through inspections, and much, much more.
So if having an agent costs a buyer nothing and saves saves him much while protecting his interests, doesn’t it make sense not to jeopardize that?
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Negotiating Tip 112: Misconceptions
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