4 Things to know before buying new construction in Erie CO.

1) Exercise your right to bring a buyer's agent.

You'll almost always benefit from an experienced professional in your corner.  An experienced buyer's agent knows all the right questions to ask the builder, on topics like contingencies, crucial deadlines, and warranty coverage. Quality agents are also adept at interpreting the provided engineering reports and soil surveys, to help ensure that you pick a lot that is less likely to develop foundation problems, down the road.   An agent will also make sure that you understand your contractual rights with the builder. The Colorado Real Estate Commission requires that all agents use an approved, standardized contract when selling re-sale homes. This approved contract, is written by the State's attorneys to heavily favor the rights of the buyers. However, builders are not required to use this standardized contract. Instead, they have lobbied the legislature for the right to use their own contracts. These proprietary contracts are skewed to heavily favor the rights of the builder, with little regard for the buyers rights. Furthermore, most builder contracts are well over 50 pages long. Most are loaded with "legalese" and seemingly endless pages of complex construction terminology. To most buyers, these contracts might as well be written in Greek. A good agent, will make sure you understand exactly what you're signing.

2) Contrary to popular misconception... you won't get a better deal by engaging the builders directly, without an agent.

Builders add an additional 3% into the price of every home they sell, in the event that there's an agent to pay.  In Erie (and many other parts of Colorado too), the builders simply can't build homes fast enough to keep up with the present demand.  Therefore, they currently have no need to discount their prices for anyone. They realize that if you won't pay full price for it, the next person through their door will. Of course there are some exceptions to every rule. There are certain circumstances were an agent can help you "work" the builder for better pricing, lot placement, landscaping, or incentives. A good agent will recognize these instances, and make sure you're in a position to capitalize on them if they present themselves. Bottom line, the price you pay a builder entitles you to bring representation. You're essentially paying for an agent, whether you choose to bring one or not... so its foolish not to.

3) Builders can be somewhat ruthless, and they won't hesitate to keep your earnest money.

Earnest money on a typical re-sale home in Colorado usually averages around 1% of the purchase price, or about $4,500 on a typical re-sale home in the Erie area. However builders on the other hand, typically require a much larger deposit of around $10,000-$15,000. Additionally, some builders may require additional deposits of 50% of the cost of your upgrades in their design center. So, many buyers end up with $30,000 to $50,000 of their hard earned savings being held by (and exposed to) the builder prior to closing. This is where the builder-slanted language in their proprietary contracts really comes into play. Much of that language in their purchase contract revolves around their recourse, in the event that the buyer fails to close on the home. The majority of this builder slanted language, grants the builder to right to keep all of your deposit money if the deal gets derailed and fails to close for some reason. However, the contract will also contain a few clauses that grant the buyer the ability to back out of the deal with a full return of their earnest money. Of course the builder's salesperson won't always point these out, because they are more likely to lose a sale if the buyer knows their rights. Once again, an agent in your corner will make sure you fully understand all of these rights. An agent will work hard to make sure your earnest money is at as little risk, as possible.

4. Be careful about filling out the builder's "Info card" if you visit the model homes.

Even though the builders pack an extra 3% into the price of every home, they'll still do everything in their power to avoid paying it, whenever they possibly can. This is why they push so hard for everyone visiting their models, to fill out that pesky little white information card. Those info cards allow them to track the first time anyone visits their sales office. If you fill out that card, but don't check the box stating that you have an agent, they will never let you come back with an agent again. This is understandable, because they offer agents commission for bringing them buyers that otherwise might not have considered looking at new-construction. They don't want to pay an agent that didn't actually play a part in bringing them a customer. Several times a year, we speak with buyers that toured a model several months earlier in the year, when they were just in the early, curious phase. They innocently filled out the builders card without declaring an agent, and now that they are serious and ready to buy... the builder won't pay their agent because they didn't check the box declaring an agent. So, the lesson here is that you should simply politely decline to fill out their card, or check the Realtor/Agent box on the card if you do fill one out. Even if you are far from getting serious, checking the "represented by an agent" box on the card can save you a huge headache when you are finally ready to take the plunge on that new home!