Buying a new home? Here’s how agents help their clients navigate the process.

Real estate

Is there any room for maneuver on pricing? What happens if something goes wrong? What concessions can they negotiate?

By Cameron Sperance – Boston.com correspondent

September 25, 2024 | 8:23 a.m.

What’s a broker to do when a buyer says, “Out with the old and in with the new” — in the case of a new home, of course.

Boston may be one of America’s most historic cities, but a surge in construction in recent years means more regional home buyers are considering new builds.

But new homes and condos may require a different approach.

“New construction buyers may face a variety of scenarios during their transaction depending on the stage of construction of the home they are purchasing,” said Qadra Evans, director of new construction relationships and sales at Zillow.

Real estate agents representing buyers in the purchase of a newly constructed, move-in-ready home should expect a process similar to that of buying an existing property, from negotiating a deal to handling inspections, financing and appraisals all the way to closing day. This can be an advantage because the home will be vacant, so there’s no need to coordinate with the seller on moving day, Evans added.

Buying a new or pre-sale home, especially in one of the city’s new condominiums, can be a different process. While the project or single-family home is still under construction, work with the builder to arrange independent walk-throughs and inspections, if possible. That way, buyers can preview mechanicals and wiring before drywall goes up, and there’s an opportunity to add customizations at a time when it’s easier to—say, convert an extra bedroom into a walk-in closet.

“Once the foundation is laid and the unit is framed, I’ll have the opportunity to walk my buyer through the process, because depending on the developer, you may be able to make some changes as you go along — not major changes, but smaller, subtle changes that might work better for your client,” said Zechariah Cook, a broker with Douglas Elliman.

Additionally, brokers noted that city inspectors conduct site visits to projects throughout the construction process, so walkthroughs with buyers can sometimes consist more of creating lists of repairs needed to ensure their home is spotless at closing. Builders typically offer one-year limited warranties on workmanship, while new appliances and furnaces often come with their own limited warranties.

But discuss with the developer or builder what costs the owner might still incur despite the warranty.

“It’s very important to understand what a quality issue is,” said Gary Rogers, broker and owner of RE/Max on the Charles. “Have a discussion. What is the builder willing to cover and what happens if I find out the heater is defective in five months? How does it work? Will you have to pay for labor?”

But a major cost factor in pre-sale and new construction homes is the builder’s agents, who partner with the developer or builder to sell units in a new project. In this situation, a buyer may find that they have limited wiggle room when it comes to the list price.

“The buyer has to understand that the agent works for the builder,” said David Kent, regional vice president of the National Association of Realtors. “There’s no dual agency. There’s no designated agency. There’s nothing. It’s a single agency, whose job is to get the highest price for the seller.”

People interviewed for this article noted that there may not be much appetite to change the list price of a condo or home in a new development. That’s because it can have a domino effect on the price of other properties once the sale price is made public.

Instead, builders offer other concessions like paying closing costs, free improvements during development or covering several months of condo fees, which can amount to several thousand dollars per month in some developments.

“The developer can save face with his price, because once it starts going down, he goes down on all the units. It’s almost like a downward spiral,” Cook said. “He can keep the price, but we’re going to negotiate other things.”

But there’s room to maneuver on pricing: 31% of new-home builders in the U.S. cut their list prices in July (typically a 6% drop, according to the National Association of Home Builders). And about 61% offered some form of concession, such as covering closing costs.

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