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NEW BUILD: SEE QUICK GUIDE TOO! NEW BUILD: ARMLS, HOW DO I FIND THEM IN ARMLS? Q: I am a newly licensed sales agent, and have my first buyer looking for a home. He is interested in a new build, and I am taking him to one that he wants to go see. My question is, how do I find new build developments? MLS only shows resales, so I'm hoping there's a better way to find new build developments. That way we don't have to drive around until we find one. I want to know if there's a way to find new build developments for all builders in all areas. A: On ARMLS, you could add the search field "To be built" to your search criteria to locate new builds. Or, on your ARMLS dashboard, click on the menu and scroll down to the Products Category. There you will find the following: Products AgentSquared - Instant IDX Website Use the New Homes RL Brown or New Homes-NHS Pro for your new build search. Their websites are separate from ARMLS. Jeff.
NEW BUILD, COMPENSATION: CASE STUDY, 11/23/2019: I also reached out to DB at agents request: (email) Hello Michael, I have a cash Buyer coming into town Friday from Chicago, as I am leaving for NAR's Annual conference in San Francisco to present. https://www.conference.realtor/event/high-performance-homes-workshop/ Both the Buyer and her daughter who lives in Scottsdale are here and not working on Friday. Would it be possible to pre-register Karen Galvan as one time courtesy please? They are going to be driving the communities they are most interested in this weekend while I'm away. No stairs - ground floor and/or elevator access required. Thanks for sending me the inventory and telling me about #2047 @ $322,170. Thanks, MC. MORE: (email) Thank you for sending me the info on the community for my Buyer Karen Galvan on Wednesday last week. I forwarded it to her and she came by yesterday. I explained I need to be with her on first visit to any builder but it was too tempting to go in when it was open to the public. She told me she'd like to make an offer to purchase your model unit after I sent her on a driving tour of 10 homes yesterday with her daughter. I am still in San Francisco returning late tonight to Phoenix and wanted to know where we are on this? I was not able to accompany her on the first visit, per my initial email but I have been working with her over 1.5 years, known her my entire life, and will be representing her in any transaction. Can you please give us the courtesy of representing her in my absence yesterday? I believe you had said you would check with your broker when we spoke on the phone Wed. Can you please allow this one-time courtesy since I did send her to your community? I have to present at a conference in 3 hours and there was no way I could be there yesterday. RESPONSE FROM BUILDER DB: As an experience Realtor and licensed instructor you know the broker/agent to be entitled to a commission needs to accompany the client to the sales office on their initial visit and register them. The mere act of just knowing your client and not coming in the first visit and registering them is not Procuring Cause to earn a commission. Procuring Cause is when a broker/agent takes a client and walks through the door and creates an unbroken chain of events that leads to the purchase of a property. Homes by Towne will not be paying a commission on this unit. Michael DuEll DB Towne Brokerage Services NOTE: I called builder at Melisa’s request. He repeated what he already said in his email. NEW BUILD ISSUES: COMPENSATION: WHAT IF I DON’T HAVE A BUILDER REGISTRATION FORM? (COMPENSATION AGREEMENT): I have worked as a new home sales associate as well as a resale Realtor and I can tell you the answer is, it depends. Inexperienced buyers often do not understand the etiquette involved between home builders and Realtors. And sometimes the Realtor is not familiar with each particular builder's requirements. Some builders are very specific about the Realtor being at the first visit or at least coaching the buyer to present the Realtors business card at the first visit. As a sales person, I and my partners ALWAYS asked visitors if they were working with a Realtor. If so, we would get the Realtor's name and make contact after the visit. I was often able to convince management to honor the Realtor if information was provided at the time of first visit. However, there were times when a visitor was not working with a Realtor on the first visit and then obtained the advise of a Realtor after the fact. If the home builder is short on sales and needs to make quota, they will sometimes be more flexible. However, if the builder has a pipeline of interested buyers, they may not budge. Bottom line, it is better for all parties to be up front and ask the right questions during the beginning of the process. As a Realtor, I always ask if my potential buyer is or has been working with another Realtor or builder. As another agent posted, there are expiration dates on builder registration cards and that is something that you would need to discuss. NEW BUILD: How does it work?: (also see paperwork process below): X, First the file you set up with HomeSmart will be the "new build" sale file, make sure you check new build as file type at the beginning of your file set up as new build files populate with a different set of paperwork requirements versus resales. The builder will have their own contract. New home sales contracts can be somewhat complex, lengthy and are generally drafted in favor of the seller and are usually difficult to dispute. You need to make sure the buyers understand the terms, conditions and contingencies in the contract. Pay close attention to EM...will it be deposited with the title company or the builders general operating account? If the Earnest Money is deposited to the builders operating account, the EM could be at risk if the builder were to default. It doesn’t hurt to investigate the builder to ensure they are solvent. Who pays closing costs? What are the contract contingencies? (Preliminary title report, Inspections (if any), Disclosures, HOA Disclosures, Financing, Appraisal, etc). If the buyer cancels will they lose their earnest money? Under what circumstances is the buyer allowed to cancel and have their earnest money refunded? Also, Some buyers complete a new build inspection, which can be done at various stages during the construction process. Some builders schedule various inspections with the Buyer such as post slab, post framing, and post drywall to name a few. Talk to the builder sales rep and see what your clients options are. If the builder does allow inspections, recommend that your buyer take advantage of those. At closing the buyer will schedule a final walkthrough with the builder liaison and they will create a punch list of items that need to be addressed. I think they have up to 30 days after COE to complete the punch list items. The rest is usually covered by at least a one year builder warranty. If there are ongoing, lingering issues after closing, there could "possibly" be additional protections to the buyer through 1) Arizona Registrar of Contractors Recovery Fund, or 2) ADRE Real Estate Recovery Fund. Obviously if there were any issues we would advise the buyer to consult with an attorney. Hope that helps, please feel free to reach out if you have any further questions. NEW BUILD, CONTRACT: Q: Who writes the contract? Do we use the AAR Residential PC? Do I even need to be there when the contract is signed by the buyer? A: Yes, you should be there when the contract is agreed to and signed by the parties. The builder will have their own contract. I would make sure you're there when the buyer signs so you can give them a second set of eyes on it. They can be very complicated and you need to make sure that the buyers totally understand the terms and conditions. Pay close attention to EM...will it be deposited with the title company or the builders general operating account? What are the contract contingencies? (Preliminary title report, Inspections (if any), Disclosures, HOA Disclosures, Financing, Appraisal, etc). If the buyer cancels will they lose their earnest money? NEW BUILD, CONTRACT, CONTRACT ISSUES WITH BUILDER: LANGUAGE: Good morning X, I noticed that you cc'd us on the last 2-3 email exchanges with the Builder Sales Rep. As you know, new home contracts have been around a long time and in addition to being pretty one-sided, they are usually pretty iron-clad and hard to dispute. This holds true for the design process as well. Obviously, the builder can't afford to frequently install the wrong flooring (although I'm sure it happens from time to time), so they go out of their way most of the time to get the Buyer to sign off on all changes and upgrades. When you get a moment, please let me know where things stand and whether you want me to reach out to their broker. I've spoke to him a couple of times in the past, but I'm not sure what it will accomplish. Please be sure to include your name/number or an email signature. I'm guessing the Buyer has substantial earnest $ at stake so cancelling is not a option. This translates to little or no leverage unless they've got something in writing. NEW BUILD, NEW CONSTRUCTION, DEFECTS: HOME CONSTRUCTION ARTICLES, COMBS LAW GROUP: CLICK HERE NEW BUILD, DEFECTS, CONSTRUCTION DEFECTS: My new home is a lemon; By Christopher Combs, Combs Law Group, November 9, 2018: https://www.combslawgroup.com/lemon-house/ Note: A homeowner generally has eight years after construction of a new home to sue the homebuilder for construction defects, even if a homebuilder’s express warranty is only one or two years. A homeowner can also file a claim with the Registrar of Contractors for construction defects by the homebuilder within two years after construction of the home. Q: We bought a new home two years ago in West Phoenix in the flight path of Sky Harbor Airport. We have had significant electrical and plumbing problems since the first day that we purchased our new home. Our homebuilder now refuses to do anything, and said that our one-year home builder’s warranty has expired. The inspector from the Registrar of Contractor’s office was very nice, but the mechanical and electrical problems still remain. We have given up on all of the meetings and paperwork! My husband is a painting contractor, and he now wants to paint a large lemon on our roof that would be seen by every passenger flying into Sky Harbor Airport. We are not in an HOA, but I am still worried. Can we be sued by our homebuilder for painting a large lemon on our roof? A: Probably not. You have a constitutionally-protected First Amendment right of free speech. You have the right to stand in front of your house and yell “lemon,” so you also should have the right to paint a large lemon on the roof of your home. You should check, however, to see if any federal aviation regulations apply, e.g., regulations prohibiting signs or any other activities on the ground that would distract the attention of pilots. NEW BUILD, EARNEST MONEY: Q: Can the new home builder mandate the earnest deposit be made to the builders general account.? Can the buyer insist it be deposited with the title company? A: You can certainly try to negotiate that, but often times the Earnest Money is deposited to the builders operating account and that creates risk for the buyer if the builder were to default. Your buyer should be aware of that when they sign the builders purchase contract. I also recommend further investigation to make sure the builder is solvent. There could "possibly" be additional protection to the buyer through 1) Arizona Registrar of Contractors Recovery Fund, or 2) ADRE Real Estate Recovery Fund. Obviously if there were any issues we would advise the buyer to consult with an attorney. NEW BUILD: FILE NOTE: FYI: In the future when you have a New Build file, please be sure to enter all new construction properties under the New Build designation for property type. There are different documents that are required for this type of file. Thank you. NEW BUILD INSPECTIONS: Q: I have a question regarding new builds and the inspection period and BINSR. I have a my first new build buyer and I would like to know when the inspection takes place? Is it still during the 10 days following contract signing? The townhouse won't be done till September so right now there's not a whole lot to inspect. A: New build contracts are different than our AAR Residential Purchase Contract. Look over the contract and discuss with your builder sales rep. Some people do a new build inspection, it can be done at various stages during the construction process. Talk to the builder rep and see what your clients options are. NEW BUILD, LICENSED, IS BUILDER LICENSED? CAN’T SELL FOR 1 YEAR! https://www.combslawgroup.com/taking-recourse-against-builder-without-license/ NEW BUILD, PARTNERSHIP, GET A WRITTEN AGREEMENT WITH YOUR PARTNER/NEIGHBOR! AZ REPUBLIC ARTICLE: HERE March 29, 2020 by Chris Combs “In every business relationship, and especially in a business relationship between family members, friends or neighbors, you should at least have basic documentation.” NEW BUILD PROCESS, PAPERWORK: Q: I am the in the process of purchasing a new condo in Chandler. DR Horton will not start building the condo for 9 to12 months. The builder purchase contract has been signed and pending the builder broker sign off. When do I need to start submitting the required documents for this transaction? A: The file needs to be set up and documents uploaded within 5 days of contract execution. This holds true for all files, ie, listings, resale, new builds, etc. For new builds, builders are notorious for returning the signed contract past our required time frame, in that case you should upload all other documents in your possession, even the contract without the builders signature if you have that. You can upload the final signed copy once they return that to you. Also be prepared to submit the "late paperwork" form explaining why the contract is being submitted late (if that is the case) as you just received the final signed version from the builder...or something like that. NEW BUILD: PUNCH LIST, ITEMS NOT COMPLETED: 12/23/2019--Q: My son is purchasing a Richmond American home in Gilbert. He is having his own three step inspections. Richmond American has scheduled their “guided tour” inspection prior to the final walk through on 12/23/19. This is so the buyer can point out items to be repairs. The problem is many items are not finished. Fixtures are not installed and the master bath shower which is very upgraded is not finished. The price of the home is over $400,000. The buyer’s inspector could not perform his second inspection because none of the faucets, etc. were installed yet. I think Richmond American is just wanting the property closed by the end of the year and they are rushing to push it through with the promise they will finish items after the close. Their sales rep/agent is trying to say this is normal and they will have everything finished by the close. There have been many mistakes and it has become hard to trust that is what will happen. The COE and final walk through is 12/30/19 . I am not sure what I can do if anything to try and postpone the close so these items can be finished. I understand it is a challenge with a new build. Any advice on this situation would be appreciated. A: Hey, X, As you know, the new build contract and process is quite different than resale. Most builders schedule a few preliminary walk-throughs with the Buyer - post slab, post framing, and post drywall to name a few. It's common to conduct a final preliminary walk through prior to closing to establish a punch-list of items that will be taken care of within 30 days after closing. The rest is usually covered by at least a one year builder warranty. Hope that helps!
NEW BUILD: STATUTE OF LIMITATIONS: Statute of limitations regarding liability of sellers and brokers: ARIZONA REPUBLIC ARTICLE: NOVEMBER 29, 2020 CHRIS COMBS Note: A new home buyer has eight years after completion of the new home to file a claim against a homebuilder for a construction defect. A.R.S. §12-552. Even a subsequent buyer of the new home has up to eight years after completion of the home to bring a claim against the homebuilder for a construction defect, if the subsequent buyer had a home inspection which failed to discover the construction defect. https://combslawgroup.com/statute-of-limitations-regarding-liability-of-sellers-and-brokers/ NEW BUILD, TAXES, BE CAREFUL: Q: I wanted to clarify something about taxes for 2018. The COE was at the end of July. The updated tax bill was not in at the time for 2018. Therefore the title company prorated the taxes from the 2017 tax amount which was $470. The new tax bill came and it is $3943. Is the new owner responsible for the updated tax amount? Is the new owner responsible for the full year at the new amount even though they didn't own it until July of 2018? A: Yes, the new owner is responsible. This situation occurs frequently with new construction. The prior tax bill is for a vacant lot. The updated tax bill will include the improvements. Educating the client on this is the responsibility of the 1) lender, 2) builder, 3) title company, and 4) real estate agent (not necessarily in that order). The reality is that the builder is not going to reduce their price or give the buyer a credit to offset future taxes levied against the property. The lender, however, should be concerned as a borrowers ratios still need to fall within acceptable guidelines. NEW BUILD WARRANTIES: (ALSO SEE REGISTRAR OF CONTRACTORS): Q: Is it true that homebuilders must provide 2 year home warranties on the homes they build? So if the buyer has questions, then they go to the builder for warranty or repair issues? A: There is no “one fits all” answer to your question. The Arizona Registrar of Contractors regulates home builders, you would need to check with them regarding any specific builder warranty requirements or questions concerning that. Be aware that laws have changed, you should check with them to make sure you gave up to date information. Also, be aware that some builders do offer more comprehensive and longer term warranties than others, you will need to reach out to the builder sales representative to find out what that specific builder offers. NEW BUILD: Q: I have a couple questions about a spec / new build cash purchase . Does buyer still need to do an inspection of his own or does builder pay ? Also its a cash purchase , we should be able to close right after inspection period correct ? Appraisal is recommended but optional correct ? Thanks in advance, A: You need to get with the sales rep for the new build, they will write the contract. New build contracts are different than our AAR Residential Purchase Contract. Look over the contract and discuss with your builder sales rep. Some people do a new build inspection, usually it can be done at various stages during the construction process. Talk to the builder rep and see what your clients options are. If they do allow an inspection, recommend that your buyer take advantage of that. If not, you will do a walkthrough with the builder liaison and they will create a punch list of items that need to be addressed. I think they have up to 30 days after COE to complete the punch list items. Let us know, Jeff.
CASE STUDY: BUILDER KEEPS TALKING TO MY BUYER CLIENT WITHOUT MY PERMISSION! I’M A WHINEYBIATCH! FYI, I also wanted to let you know I rec'd a call from our agent DebbiexEnglish, she is unhappy that a builder is continually going "around" her to communicate with her buyer client, she was talking about filing a complaint with ADRE, AAR, etc. I tried to calm her down and talk her through it...the reality is that it is common for builders to communicate directly with buyers and often times the agent is not involved in the entire process other than client registration on the first visit and maybe attend the closing...I suggested she remind the builder rep to please keep her in the loop, she said she has done that 15 times already without the desired result. She feels it is making her look bad in front of her buyer clients.... Anyway, she was not happy and I'm afraid I did not give her a very good response or the response she wanted so I ended up giving her your office # and email if she wants to reach out to you directly. Yeah, that is very common, Builders are going to do that. She shouldn't take it personally. She should communicate with the Buyer that the Builder is going to do that and they (the Buyers) should expect to loop her in the conversation. Rich. AGENTS ARE VITAL TO NEW HOME BUYERS: https://magazine.realtor/sales-and-marketing/relationship-management/article/2018/04/you-re-even-more-vital-to-new-home https://magazine.realtor/daily-news/2020/08/18/builders-and-agents-necessary-allies
WHINEYBIATHANNAMARTINEZ 4/30/2021 5) This is all good advice to the buyer Anna. Unfortunately the builder contracts are written 100% in favor of the builder and are hard to dispute. Good luck with your closing, Jeff. 4) Yes I am aware of the terms of the contract but my concern was the sales rep indicated an inspection could be done at the NHO (New Home Orientation) but it was never indicated that only a substandard inspection may be completed thereby leading buyer to believe they would have the opportunity to inspect all conditions of the property by a neutral party before accepting the home. They understand that it’s the builders property and that they still have to comply with city standards and building regulations but since they had some concerns of the property they wanted another opinion before accepting it. I explained that they still needed to accept the property and they would have the routes as you indicated. I also recommended that they have an inspection upon getting the keys and at 11 months which is a month prior to some of their warranties expiring. At least with the builders warranty they can still request items unreasonable to be addressed. I also suggested that their inspector not doing anything that violates their Builder warranty such as walk on the roof and that the first rain should be a good indicator whether this is a problem or not. I recommended they verify with the builder anything that would void the warranty by an inspector after closing. If there is anything wrong with this recommendation though please let me know since They are presently going to follow this. Thanks, Anna. 3) Below are two screenshots from the builder sales contract regarding inspections. There is no provision to allow any inspection(s) above and beyond what the sales rep is offering as outlined in his email earlier today. Some builders schedule various inspections with the Buyer such as post slab, post framing, and post drywall to name a few, but that is at the sole discretion of the builder. If the builder does allow inspections we recommend that buyers take advantage of those, but the inspection(s) must be conducted within builder guidelines. At closing the buyer will schedule a final walkthrough with the builder liaison and they will create a punch list of items that need to be addressed. If there are ongoing, lingering issues after closing, there could "possibly" be additional protections to the buyer through 1) Arizona Registrar of Contractors Recovery Fund, or 2) ADRE Real Estate Recovery Fund. Obviously if there were any issues we would advise the buyer to consult with an attorney. (2 sections from builder contract, re inspections). Good luck, let me know how it turns out. Jeff.
2) HELLO, KB Homes is denying the buyers a thorough inspection. Due to this the inspector selected by the buyer denied moving forward with an inspection due to the following reason: This is too restrictive and does not allow for a proper home inspection per AZ Bureau of Technical Registration standards. We must conduct all inspections per standards according to our license and insurance requirements. I have attached the Arizona State Standards to this email. Without being able to operate equipment and inspect roof and attic areas, this is not a "home inspection" per standards. The buyers are concerned about the response KB homes came back with: please see below response of KB sales rep Edward Lankeit. It seems KB homes is making several practices that don’t allow buyers the standard protocols to protect their rights to proper discovery. Have you experienced this before with any other deals? What is your recommendations?
1) (EMAIL FROM BUILDER): I received the attached response from the home inspector at Big Brother Inspections. For the reason stated it appears the inspector is not willing to move forward with the inspection with the parameters set by KB Home. (with hundreds of closings and numerous third party inspections - this is the first response of it’s kind that I have received). There are several options to consider if you would like to have a third party inspection –
Request the inspector at Big Brother Inspections conduct the inspection within the set parameters. Choose an inspector/company that will conduct the inspection within the set parameters. Considering the home has been inspected numerous times during the build time, most of my customers (myself included) choose to have an inspection at their 11 month review just prior to some of the initial warranty expirations. Keep in mind that if there is an issue that needs to be addressed after closing, your home has extensive warranties. |
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Yes, the AAR purchase contract should not necessarily be used for a new build as it doesn't cover ROC requirements, warranties, etc. Generally, the builder has their own new build contract, but if they do not, there are real estate attorneys that have drafted them for use. Of course, by using an attorney it will cost the parties, but the best solution as opposed to the resale contract.
My concern about a builder using the AAR contract is that the builder may not be disclosing per Arizona Revised Statutes.
Please go to this link to see Revised Statutes for Builders: https://www.azleg.gov/viewdocument/?docName=http://www.azleg.gov/ars/32/01158.htm
Let us know if you need referrals for real estate attorneys. See list of attorneys below. You should be the source of the source, not the source. Buyers should be advised as indicated and preferably in writing as well. As I mentioned, be sure to send questions to broker@hsmove.com as I can't always respond quickly due to meetings, etc., but our amazing team of brokers can. :)
NAR NEW BUILD PODCAST, HELPING BUYERS WITH NEW CONSTRUCTION: https://www.nar.realtor/center-for-realtor-development-podcast/helping-buyers-with-new-construction |
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NEW BUILD CASE STUDIES: |
