Your Guide to Buying New Construction Without a Real Estate Agent

In 2022, 15% of homebuyers bought newly constructed homes. Of these buyers, 36% said they purchased new construction because they wanted to avoid home renovations and issues with plumbing and electricity.

Building a home from the ground up, or purchasing a newly constructed home with freshly painted walls, pristine floors, and brand-new plumbing and electricity appeals to new and seasoned homeowners alike. If you’re considering purchasing new construction, perhaps you’ve toyed with the idea of buying without a real estate agent.

Maybe you already have a builder in mind and you’ve found a neighborhood you love. What’s there left for a real estate agent to do?

Brad Gore, a real estate agent who has building experience and works largely in residential sales, new construction, and commercial property in greater Taney County, Missouri, advises buyers who are considering buying new construction without a Realtor® to proceed with caution.

“Without a Realtor®, or someone who knows the market and what similar new construction homes in the area are going for, you’re in a situation where you don’t have all the right information that will help you negotiate the best price for you or a price that’s market-based,” advises Gore.

In this post, we’ll share more advice from Gore about buying new construction, lay out a step-by-step plan for purchasing a newly built home, and dive into considerations of purchasing new construction without a real estate agent.

Can you purchase new construction without a real estate agent?

You can, but having an agent who has experience working with new construction homes can be a valuable asset.

A real estate agent can help you avoid many of the common pitfalls that can arise when purchasing a new construction home. They’ll have a pulse on which builders are reputable in the area, they can help negotiate fees and construction details like paint colors, trims, and appliances, and they can help you schedule an inspection and wade through real estate contracts.

It’s also standard for the seller (in this situation the builder) to pay both the builder’s agent and buyer’s agent commissions. So, if you do choose to work with an agent, you won’t typically be required to pay that agent a commission out of pocket.

What are my options if I don’t hire a real estate agent?

If you decide not to work with a real estate agent, there are three ways you can go about purchasing new construction.

Work directly with the builder’s agent

In 2021, 7% of homebuyers bought directly from a builder’s agent or builder. Keep in mind that a builder’s agent is called a ‘builder’s agent’ for a reason. They’ve been hired by the builder and are therefore going to have the builder’s best interest in mind.

Hire a real estate attorney

A real estate attorney can help you navigate the homebuying process, tie up necessary paperwork when finalizing a home sale, and clarify any gray areas in contracts. Your attorney, however, will not aid in negotiations or help you choose upgrades.

Represent yourself

When representing yourself in a real estate transaction, you’ll take charge of the homebuying process, start to finish: choosing a builder, selecting a home, finding a lender, scheduling an inspection, and navigating the closing process.

Steps to buying new construction without a real estate agent

1. Get preapproved for a mortgage

Many builders offer in-house financing options, typically with incentives. But as tempting as their financing options may be, it can pay off to shop around with other lenders before making any decisions.

There are many different ways to finance new construction, and your loan options can vary depending on the type of new construction you’re purchasing. Here’s a look at popular loan options:

• Stand-alone construction loans are used to pay for homes as they’re being built. Once a percentage of a house is completed, the lender releases funds to the builder while the borrower pays interest.
• Construction-to-permanent or CTP loans pay for a plot of land and the construction costs associated with building a new home on that land. Once the home is built, the loan switches over to a mortgage.
• Construction-only loans, as their name suggests, are used strictly to fund the building process of a new residential property. This short-term loan typically offers financing for up to a year where the borrower must then refinance into a mortgage. Once the home is built, it’s standard that the borrower pay back the loan in full.

Having an agent who’s familiar with financing new construction can really pay off. Many agents have a list of lenders they’ve worked with in the past that offer competitive rates, and they can answer any questions you have throughout the financing process.

2. Research potential builders

Before deciding to work with a builder, conduct research and an initial vetting process. Research the builder, read their testimonials, and scope out their reviews and ratings.

Many builders will post their previous work on their websites, so you can get a feel for their style and typical price range. If they’ve built a community close by, stop in for a visit so you can see the homes in person. You may even want to ask a resident of one of the properties about their experience — and keep an ear out for any red flags. What was it like working with the builder? Are they happy with the house? Would they recommend the builder to their friends and family?

If you’re still shopping around for builders, one of the best ways to get trusted recommendations is through your community. Family, friends, co-workers, you’re running buddy. You get the point. Check in with your local network. Have any friends recently posted on social media about purchasing new construction?

Once you have a builder in mind, don’t be afraid to ask about their experience.

“The first thing we tell people when they’re looking at builders is don’t ask them how long the builder has been building homes. I can say I’ve been building homes for twenty years, but what does that really tell you? Instead, ask them: ‘How many homes have you built?’” advises Gore, explaining how this question will provide more insight into the builder’s experience.

Gore says builders who build more homes may also have better pricing because they buy in bulk, and they probably have more options for customization.

3. Learn more about a builder’s quality of work

“I think it’s important – especially when buying new construction – to go in with somebody that has experience in new construction and knows what to look for,” advises Gore.

A real estate agent who’s worked with local builders before will know which ones build quality homes. Asking the following questions can help you identify a first-rate builder:

• Does the builder use quality materials?
• Does the builder use quality labor?
• Are they building to code?
• What kind of code is the builder following?
• What kind of code inspections are conducted in the area they are building in?

“Every city and even every municipality down to the county and sometimes even up to the state have building codes. You need to know what those codes are and if the builder followed those codes and had the right inspections done,” says Gore.

4. Find a community/neighborhood you love

Before purchasing a new home, sit down and take a hard look at your non-negotiables. Is a shorter commute time to work at the top of the list? How about proximity to local amenities? Do you want a home in the country? Or, would you prefer to be within walking distance of a local market?

Research each community and find out which one aligns with your priorities. Look up walkability scores, local school ratings, and map out the average commute time from where your home would be to your work — at multiple times of the day (especially rush hour).

Also, do some digging into the location of the community and its history. Have there been natural disasters there in the past? Flooding? Mudslides in the area?

To learn more about an area’s natural disaster history, enter any zip code on Flash.org, the Federal Alliance for Safe Home’s website.

A local real estate agent who’s worked in the area for years will likely know of any potential dangers, or of any past natural disasters that have rattled a neighborhood.

If buying new construction without a Realtor®, these valuable resources can help you assess potential natural disaster threats for an area:

• Flood maps: The Federal Emergency Management (FEMA) offers a tool that can be used to predict the likelihood of flooding in your area and maps out flood zones for insurance purposes.
• Wildfires: Use the U.S. Department of Agriculture and U.S. Forest Service’s Wildfire Risk Community tool to gauge the wildfire risk for a community.
• Climate change: Climatecheck.org provides an instant risk assessment on how climate change might impact your home.

5. Negotiate the purchase agreement

As a buyer, you can negotiate any part of a builder purchase agreement/contract, advises Gore. The most common components of a builder purchase agreement that are negotiated on new builds include financing, the build itself, the price of a lot, and upgrades to the house.

“If there’s something that you don’t like, you should try to negotiate,” says Gore. “And if you can’t get around it, that just may not be the house for you.”

6. Choose a home style

When looking at new construction, you’ll want to decide between a fully custom home, a semi-custom home, or a spec home.

How much control do you want over your home’s design? If you aren’t in a hurry to move, maybe building a fully custom home from the floor up is for you. If you’re looking for a less expensive, move-in ready option, a spec home that’s already built might be the better fit.

The middle ground is the semi-custom home, where a builder has a collection of different floor plans with varying interior and exterior styles that buyers can choose from.

Do you prefer an open-concept layout? Do you want a kitchen with an island? Would you like a designated home office space? Where a real estate agent will pull a selection of homes that fit your criteria, whether purchasing a new construction home or an older home, the task is now yours to decide which home layout best meets your needs.

7. Choose your lot

If you’re able to choose between multiple lot locations for your new build, take a moment to weigh the pros and cons of one lot versus another. A real estate agent will ask questions to help you whittle down the options and choose the right lot that aligns with your vision. If buying alone, you’ll need to evaluate each lot meticulously.

When choosing a lot to build a new home, Gore suggests buyers consider the following:

Slope and grade

The lot you pick can depend on the type of home you want to build. If the lot is relatively flat, this will make it more appropriate for a single-level slab home. If there’s a large downward slope, then the lot may be great for building a home with a basement.

If a lot is near the bottom of a fairly large slope, or surrounded by other flat lots, this could cause drainage and flooding concerns because there’s no way for the water to flow away from the house.

Location

“As you get further back in a subdivision, from, say, exits from the subdivision that are easily accessible to main roads, the lots are typically worth a little bit less,” explains Gore, saying this is something for buyers to be mindful of. Also, is the lot close to a busy street that has traffic 24/7?

What’s nearby?

If the lot is close to electric power substations, water treatment facilities, or water runoff and retention ponds, then the property may be cheaper, but also less desirable.

Size

Pay close attention to the size of the lot, especially if you have a particular floor plan and square footage requirement.

“Every municipality, and even sometimes down to the subdivision will have requirements for how big of a home you can put on a certain size lot,” explains Gore. Ensure the lot is large enough to accommodate what you want to do with it.

Other questions/considerations for choosing a lot

• Would you rather be on a corner that may offer a bigger yard, or at the end of a cul-de-sac that will likely have less traffic?
• Are there any areas of the yard that collect standing water after heavy rain?
• Are there homes already built next to the lot? Or, is the neighborhood incomplete and you’d be living in a construction zone for a while?
• Which direction does the sun rise/set? If you’re building a deck or a front porch and want to watch sunsets, this could impact your decision.

8. Choose standard finishes and upgrades

When you’re building a home, it’s easy to get swept up in all the fancy features you want it to have. But if you’re working on a budget, choosing your upgrades wisely will cut down on unnecessary costs.

Real estate agents often have a good idea of what styles, trends, and features to consider based on their buyer’s preferences. They also have direct insight into what upgrades will help increase a home’s resale value. If you are buying new construction without an agent, you will have to weigh the options yourself to determine which upgrades are worth the cost.

Here are a few examples of home upgrades that have been proven to have a high return on investment:

• A finished basement
• Decks and patios
• Installing an outdoor fire pit or fireplace
• A large, modern kitchen
• Walk-in showers
• Installing smart features

9. Shop around for homeowners insurance

In 2022, homeowners insurance costs an average of $1,899 annually, but this cost can vary widely depending on where you live, the size of your home, and other factors.

The good news is homeowners insurance tends to be a bit cheaper for new construction. Typically, homeowners insurance for new construction homes costs under $100 per month because insurers view newer homes as lower risk.

To ensure you’re getting the best price and the best coverage, request quotes from a few different homeowners insurance companies if you can. Some may even offer discounts for new construction.

Another option is to look into bundling your home and auto insurance together as many companies offer bundling discounts.

10. Get a home inspection

Having an inspection completed is just as important on new construction as it is on existing homes, advises Gore.

“With new construction, you’re typically not looking for big major issues — those issues shouldn’t be there. You’re just looking for the small things that maybe got missed. It’s better to do the inspection, find the problems upfront, get them fixed, and then you don’t have to worry about it.”

Even if an inspection only turns up small items, such as a missing faceplate on one of the electrical outlets or a minor plumbing leak, Gore urges buyers to get an inspection on any new construction home and have any issues fixed before closing on the property.

Gore also suggests making sure the water and plumbing are turned on, testing them out ahead of time, looking closely for issues with light fixtures, and making sure all the appliances are in working order.

Get Your Home Inspection Checklist!

Download your free home inspection checklist.

• Email*

11. Advocate for yourself after inspections

One of the benefits of having a real estate agent is that they can be your greatest advocate throughout your homebuying process. Without an agent, you’ll be in charge of making sure your concerns are addressed with your builder.

If the home inspection turns up red flags, these issues should be handled before moving into the home. Don’t rely on your warranty after the fact, instead, get any problems that are uncovered during the inspection taken care of ahead of time.

“If you don’t find those issues for, say, two, three, or four years, it’s something you’re going to have to fix,” warns Gore.

12. Final walkthrough

Following the inspection, and once any home issues have been remedied, the next step is to complete a final walkthrough of your new construction home.

This is your final chance to manifest the sharp eyes of an agent and inspect the home from top to bottom, ensuring all necessary repairs have been completed and the house is in tip-top shape. A final walkthrough should be completed on both the exterior and interior of the house.

Not sure where to begin? This 23-point checklist for your new construction walkthrough will ensure you’re keeping an eye out for any potential defaults.

13. Closing time

Gore says the most common issue buyers are currently facing with purchasing new construction is delays caused by the delivery of materials.

“That can cause delays in closing which then dominoes down the line. It could affect the closing of another home for a buyer, it could affect their interest rate if their interest rate lock expires, which could then change the terms of their loan, maybe in a negative fashion.”

When working with an agent, they’re the ones who are keeping everything moving properly timeline-wise. They keep tabs on closing timelines, communicate with the builder, and follow up with lenders to ensure that financing is on track. When buying new construction without an agent, ensuring all components of your home sale are moving together is up to you.

You’ll also be in charge of thoroughly reading through any final documents at the closing table. If you have any questions, you can always turn to your lender and the escrow officer to help clear things up.

Bottom line: Should you consider buying new construction without a real estate agent?

Before choosing to purchase new construction without an agent, make sure you’re ready to take on the challenge and wear many different hats. You’re no longer just a home buyer, you’re also a negotiator, inspector, interior designer, and researcher — just to name a few.

Be prepared to navigate negotiations, builder timelines, warranties, upgrades, and financing. If any part of the process gets tricky, have a network of professionals you can reach out to for guidance.

“As Realtors®, we do this every day. We’ve seen a hundred different contracts with lots of different terms and we’ve negotiated those terms, and if you haven’t done that before and you’re not real familiar with it, I hate to say it, but the best advice I can give you is sit in that office and read every word, every page, and make sure you understand it,” says Gore.

Gore advises if you have questions about any part of a contract, hire an agent or an attorney to review with you because once you sign a contract, you’re committed. You can’t simply walk away for reasons not specified in the contract or there could be consequences such as forfeiting your earnest money deposit.

“As a buyer, it benefits you greatly to have a negotiator that’s always on your side. The builder is not on your side. The builder is there to make a profit. That’s his goal. So, hire someone to be on your side and someone that’s going to negotiate only on your behalf,” advises Gore.

Find a Buyer's Agent To Navigate the Homebuying Process

Buying a home is a challenging endeavor, make it easier by partnering with an expert buyer’s agent.

Find a Buyer's Agent

Header Image Source: (Sandy Millar / Unsplash)