New construction & change of agent? (attorney, real estate, appraiser)

[sierraAZ]

I was wondering if anybody's had experience with this. I'd decided to use a RE agent in the process of buying new construction thinking he'd be better at possible negotiations. There really wasn't any other reason for having him involved (I knew about the subdivision; just took him with me), but since I'm not the one paying for it, it seemed like a good idea at the time. To make the long story short... the agent in question is pretty much sabotaging me and appears to be working not for me, but for the builder. I guess people were right when they warned me not to use an appraiser who's done too much work with a particular builder. The same apparently goes for RE agents.

Since I feel my best interests are better represented without him present, I'm planning to inform him that I no longer need his "services." I was going to say that I'm willing to sign any additional paperwork needed for his commission because at this point I really don't think I need an agent (and don't need the hassle of trying to be revengeful money-wise), but on second thought figured that something may go wrong and I may want to just change horses midstream. Have no idea how this works, though. Is it possible at all? At what point of time are they being paid? At the time of signing the contract or at closing? Obviously, the builder wouldn't pay 2 agents. If I get a new one, the original one would not be paid, I'd imagine... unless he already was... I haven't signed any contract with him. Does he have any legal recourse? Could he potentially sue me? It's a tricky situation - supposedly he performed some services for me, but he's being paid by the builder, not me. What are your thoughts on that one?

[sablebaby]

If you have signed the contract with the builder then you're screwed. Even though the RE agent gets paid AT closing, it doesn't matter. You went into the contract with him and the builder and you cannot pull him out of the deal. He wants to get paid. Yes, he can sue you. I think the only way out is if you dropped the whole deal and went with another builder, and even then you will lose money with the current builder, or worse even since you are in a contract with the builder.

Even though he's being paid by the builder it doesn't matter, it's the same if you found a resale and he did the work, he gets paid by the seller.

What exactly is he doing to make you think he sabotaging the deal?

[johnrex62]

He is going to be paid if you buy the house regardless of any contracts you have or have not signed. He was present as your representative at your meetings with the builder and as such as earned a commission from the builder if he sells you anything. If the builder tried to cut him out or include another agent, the builder would face very difficult times trying to sell anything through that office ever again. The builder would not like to gain the reputation that he screws over realtors.

Since you did not pay the agent the commission out of your pocket or sign a buyers agent agreement with him, he DOES represent the builder and not you. His only obligation to you is to ensure you are made aware of any obvious problems and to not use any information you provide to your detriment. There is still an obligation on his part to share that information with the builder since he is in fact the builder's agent at this point.

He is not sabotaging the deal, you did that when you brought him in and shared private information with him.

[sablebaby]

Originally Posted by johnrex62

He is going to be paid if you buy the house regardless of any contracts you have or have not signed. He was present as your representative at your meetings with the builder and as such as earned a commission from the builder if he sells you anything. If the builder tried to cut him out or include another agent, the builder would face very difficult times trying to sell anything through that office ever again. The builder would not like to gain the reputation that he screws over realtors.

Since you did not pay the agent the commission out of your pocket or sign a buyers agent agreement with him, he DOES represent the builder and not you. His only obligation to you is to ensure you are made aware of any obvious problems and to not use any information you provide to your detriment. There is still an obligation on his part to share that information with the builder since he is in fact the builder's agent at this point.

He is not sabotaging the deal, you did that when you brought him in and shared private information with him.

I don't agree with this. Maybe things are different in Texas. I used to be a RE agent in AZ and this was not my understanding.

A buyers agent is representing the buyer, no matter what. They always get paid by the seller (or seller's agent). I don't believe he will be paid if the deal doesn't go through, that's not the case in a resale. If a house doesn't get sold, then no one gets paid. He is representing the buyer and it doesn't matter if this person signed an agreement, it's already implied as he has done work for the buyer.

Agents do not get paid unless a house is sold!

[Ponderosa]

Sounds like you may be in a pickle if you have already signed. If you can get out of it, why get another agent? I can't see any point in having a real estate agent on a new sale. Sounds like easy money for the agent to me. You drive around and look at models. Very different than resale where an agent can find homes, arrange tours, recommend financing, get appraisals. With new none of this is needed. If the builder has to pay 6% finders fee or more to an agent, why would they be willing to negotiate more? Doesn't make sense unless you are from out of town and really clueless about where you want to live. Fire the agent and do your own haggling.

[sierraAZ]

Originally Posted by Ponderosa

Sounds like you may be in a pickle if you have already signed. If you can get out of it, why get another agent? I can't see any point in having a real estate agent on a new sale. Sounds like easy money for the agent to me. You drive around and look at models. Very different than resale where an agent can find homes, arrange tours, recommend financing, get appraisals. With new none of this is needed. If the builder has to pay 6% finders fee or more to an agent, why would they be willing to negotiate more? Doesn't make sense unless you are from out of town and really clueless about where you want to live. Fire the agent and do your own haggling.

@ everybody

Thank you, guys, for chiming in.

I know it doesn't make much of a sense to have an agent, but since it's free to me... figured getting him won't hurt. And yes, he IS supposed to represent ME (there was a comment to the contrary). Don't wanna get into details because that's a local forum, but it will suffice to say that I feel my best interests are better represented without him actually... After the fact, I heard also that I was not obligated to sign the builder's contract and he could've drafted our own. Not that it matters so much, but this option was not even mentioned to me by him... This could be state-specific, though. At least I haven't heard of anybody signing any other contract but the builder's here.

From what you're all saying, it sounds like replacing the agent would be as complicated as I thought, so I'll just turn down his presence in any future talks, but will keep him on the builder's payroll... As I said, I'm better off without anybody as opposed to being with him.

Really hate the idea of dropping money in his lap not only for nothing, but for siding with them at all times. It's not even siding... he'd go ahead and answer questions I have for THEM in their favor before they even open their mouths. He basically sounds like he was hired as the builder's attorney, not as my agent. It's a whole lot easier to deal just with them. I don't mean to bash the builder at all. The builder's fine, but there are always some issues and concerns and you'd think your agent is supposed to work for you on them, not against you.

[Ponderosa]

I never thought or knew that you could execute a standard real estate contract in lieu of a builder's contract. Is so, that would probably be a better deal as the real estate contract is relatively neutral while a builders contract is likely to be very one-sided.

[sierraAZ]

Originally Posted by Ponderosa

I never thought or knew that you could execute a standard real estate contract in lieu of a builder's contract. Is so, that would probably be a better deal as the real estate contract is relatively neutral while a builders contract is likely to be very one-sided.

Me neither... I guess these opinions were coming from other states. That's why I decided it's best to ask here.

[johnrex62]

Originally Posted by sablebaby

I don't agree with this. Maybe things are different in Texas. I used to be a RE agent in AZ and this was not my understanding.

A buyers agent is representing the buyer, no matter what. They always get paid by the seller (or seller's agent). I don't believe he will be paid if the deal doesn't go through, that's not the case in a resale. If a house doesn't get sold, then no one gets paid. He is representing the buyer and it doesn't matter if this person signed an agreement, it's already implied as he has done work for the buyer.

Agents do not get paid unless a house is sold!

The key point is that this agent was not contracted to be a buyers agent. They were called by the buyer, but no contract was signed. Perhaps you are right in Arizona, but in Texas, and as far as I am aware most other states, the agent legally represents the person paying the commission unless a signed agreement states otherwise.

You are correct that no commission is earned until a house is sold. The key point here is that this is new construction contract, not an existing house. If the builder sells a house to this buyer and the agent was present during the negotiations, how do you claim the house sold was not the house negotiated for? Since the agent was present for negotiations, they technically arranged the sale. I never stated he got paid if the builder did not sell a house to them. I only stated that they get paid even if the buyer brings in another agent as a bonifide buyers agent since he is already in the deal.

[sierraAZ]

Originally Posted by johnrex62

The key point is that this agent was not contracted to be a buyers agent. They were called by the buyer, but no contract was signed. Perhaps you are right in Arizona, but in Texas, and as far as I am aware most other states, the agent legally represents the person paying the commission unless a signed agreement states otherwise.

Well, if we go by your logic, there's no reason to ever get an agent in a new construction deal (which is pretty much true anyway). As a matter of fact, I think it makes better business sense for the builders to offer half of the fee they waste on an agent as a discount to people who wouldn't use one.

As far as resales go, I've always thought it's better to get a "pure" buyer's agent, who never takes listings because any other agent may become dual (if the buyer happens to like one of their listings) and you get conflict of interest. Technically, no buyer's agent is ever paid by the buyer whether you sign a contract with them or not, or they're exclusively buyers' agents or not. Are you saying that the buyer should never expect representation...?! Don't know how it is in other states, but I'm yet to hear anybody in AZ paying out of pocket to assure the "integrity" of the agent.