Understanding Agency in New Home Sales — What Every Arizona Buyer and Agent Should Know
Many professionals assume that new home sales are the simplest transactions in our business. What could possibly go wrong with a shiny new build and a smiling site agent? Quite a bit, actually.
Over the years, I’ve seen problems arise from confusion about agency relationships—misunderstandings among builders, buyers, and even real estate agents—tangled with questions of representation, profit, and disclosure.
What’s Really Being Sold in a New Home?
Most buyers think they’re buying a house. In truth, real estate is primarily about the land and its appurtenances. Depending on structure, a builder may be selling something closer to personal property, a future interest, or even an equitable share. Like co-ops (where the buyer technically purchases a share of a corporation rather than real property), these nuances are often ignored—until there’s a dispute.
Top 5 Agency Issues in New Home Purchases
5) Buyers Think the Site Agent Represents Them
Even when the builder’s contract states that the site agent represents the builder only, buyers rarely read or fully grasp that clause. Legally and ethically, agents have a duty not to allow confusion about representation. Allowing buyers to believe they have representation when they do not is risky and may draw scrutiny from regulators.
4) Builders See the Buyer’s Agent as a Problem
Especially in a seller’s market, builders sometimes view buyer’s agents as obstacles. Yet a competent buyer’s broker reduces risk for everyone by explaining the builder’s contract, clarifying obligations, and managing expectations. A professional buyer’s agent isn’t an adversary—they’re insurance against misunderstanding.
3) Site Agents Forget They Represent Only the Builder
When sales are slow, or when site agents build friendly relationships with buyers, boundaries can blur. Over-promising or implying advocacy for the buyer can expose both the builder and the agent to liability if things go wrong. No matter how warm the relationship becomes, the site agent’s loyalty remains with the builder.
2) Buyers Don’t Understand the Difference Between Agents
First-time buyers are common in new construction. Many don’t understand that the site agent and their buyer’s agent have opposite fiduciary duties. If a buyer shares confidential financial or negotiation details with the builder’s rep, they may lose critical leverage later in the process.
1) Buyer’s Agents Don’t Fulfill Their Fiduciary Duties
Too many agents think their job ends once their client registers at the new home site. In reality, a true fiduciary should review and explain the builder’s contract, negotiate terms and timelines, stay in communication throughout construction, attend inspections and walkthroughs, and act as a buffer between builder and buyer when needed.
Raising the Standard of Care
As the market becomes more balanced, demand for new homes will grow. Agents who understand new construction contracts, builder incentives, and agency boundaries will stand out and deliver real value.
About the Author
John Mijac is the Managing Broker of 1912 Realty in Tucson, Arizona. He focuses on brokerage leadership, compliance, contract management, and agent development. John writes and teaches extensively on agency, ethics, and professional standards in Arizona real estate.