Buying New? Don't Dive in Alone.

By Allan Lengel
Washington Post Staff Writer
Saturday, March 29, 2008

Stop right there!

Don't even think about visiting a model home by yourself and signing in -- at least not if you want to be represented later by a real estate agent.

It's just one of many things that make buying a newly built home different -- and sometimes trickier -- than purchasing an existing one, even at a time when builders are slashing prices to reduce inventory.

Once you sign that list, many builders won't pay a commission to the agent, figuring they have already lured you in. So if you still want an agent to guide you in such things as negotiating price and extras, you would have to pay the commission yourself.

"If you don't bring an agent in the beginning, they won't honor that agent after that," said Jennifer Walker, a real estate agent with McEnearney Associates in Alexandria. "I think there's things that an agent is able to guide a buyer through that they would not know on their own."

To make the most of a new-home purchase, shoppers need to come armed with knowledge.

That might mean reading up on a builder. Is he solvent? Are his homes sound? Does he back his product?

Or it could mean hiring a real estate agent for guidance or a lawyer to review the contract and to add consumer-friendly clauses.

Remember, agents and lawyers say: Just because builders have salespeople at the model homes, offer ready-to-sign contracts and can arrange a mortgage, that doesn't necessarily mean they're looking out for your best interests.

"Everyone working on the site is working for the builder," said Robyn Burdett, an agent with Re/Max Allegiance in Fairfax. "There's not one single person there who's working for the buyer."

Then again, there's the other side.

First off, said Bruce Labovitz, chief financial officer of Comstock Homebuilding of Reston, not every builder automatically blocks an agent after someone signs in at the model home.

Plus, he said: "The consumer has the right to vote with their feet. They're certainly welcome to shop elsewhere. Nothing compels them to buy without representation."

He said: "We don't discourage you from bringing an agent, but you can certainly still get a fair deal if you don't. It's purely up to the customer."

James C. "Beau" Brincefield Jr., an Alexandria real estate lawyer, said it can't hurt a prospective buyer to hire a lawyer to scrutinize the builder's contract.

"Every builder contract in the Washington metro area that I have seen is very one-sided," he said. "The builders' contracts take away from the purchaser every right and remedy the homeowner would want to have."

If a salesperson makes a promise, like a flower garden or a completion date for the home, he said, get it in writing.

"If it's not in writing, it's not enforceable," he said.

When it comes to deposits, Brincefield said, whenever possible, put them in an escrow account outside the builder's control in case the company runs into financial difficulties. Troubled builders have been known to use the deposits without delivering the home.

It might sound self-serving, but Brincefield, like many other real estate lawyers, insists, "When you sign a builder's contract, you're taking a much bigger risk than you realize unless you've had a knowledgeable real estate attorney review the contract with you."

He said, "I've been in the practice of real estate law for over 40 years, and I never had anyone come to my office and say, 'I'm so glad I didn't have an attorney when I bought a house.' "

Debbie Wicker, a real estate agent with Re/Max Allegiance in Ashburn, said customers in this down market shouldn't be afraid to negotiate for more extras and a better price.

"Builders are hungry right now," she said. "They're doing everything they can to play 'let's make a deal.' " She added that some of the best deals are on "spec homes," or those built speculatively, without a buyer lined up in advance.

"Spec homes are really ready to go, and builders are really motivated to get them off their hands," she said.

Some builders have their own mortgage company and push buyers to use it.

Maxine Schwartzman, an agent with Long & Foster in Bethesda, said it's a good idea to shop around for a mortgage instead of quickly settling on the builder's lender.

"What you have to tell the builder is 'I'll use your lender if you will match the best offer,' " she said.

Schwartzman said some buyers make the mistake of assuming that because a house is new, it doesn't need an inspection.

New homes are often more flawed than ones for resale, she said, because many problems in existing homes have already been addressed.

Phillip Carls, a local housing inspector, recommended three inspections: one right after the foundation is installed, another before the drywall goes up and a final one.

He said he often finds plenty of flaws in the final inspection.

"We find anywhere from five to eight legal-pad pages of things not done or not done correctly," he said.

Some are simple, he said, but others can be more complex, such as a major leak or a clogged sewer.

"People think a new house doesn't need an inspection, but it definitely does," he said.