Builder dilemma-please help!

[pink caddy]

Originally Posted by baybook

What don't you understand about it not being your money??

Same thing you said to the other poster and to me yesterday. Leave a little wiggle room for other having a different viewpoint than yours. Let's just leave it at that please.

[ncsustash]

1) It's not THEIR MONEY. It's the builders money.

Taking it out of context...yes. How the builder wants to generate business, is completely up to them. If they want to give comissions for incoming business from realtors, good for them. However, to bring a realtor in to get the commsion because "times are tough" is silly, because they would be bringing little value to the table.

Would you knowingly buy a car that has a 3% cushion built in for referrals from the body shop if you weren't referred from the body shop? Why should anyone pay more then they have to for something? The goodness of their hearts?

2) No one said it would be unfair to discount the house if the person didn't use a realtor

Re-read slowly for comprehension.

Originally Posted by ugaillini

I know this is frustrating and confusing. My husband is a custom home builder, and I asked him your question. He said that ethically the builder cannot reduce the price for the buyer because that would be penalizing everyone who uses a realtor. As other posters have said, the commission is a fee that the seller (in this case, the builder) is paying for the referral from a realtor.

3) Realtors are bound by a code of ethics. If it is illegal for them to do a kick back, they could and should lose their license.

Perhaps you should look up discount realtors.

http://www.terravistarealty.com/index.cfm

[ncsustash]

Originally Posted by ugaillini

Unfortunately, that's the problem. Technically a buyer should never be paying for a realtor. The realtor fees should always be coming from the seller. Therefore, if the builder discounted the house because the buyer did not use a realtor, in essence that would be saying that other buyers who use realtors are paying for their services (when it should be the seller paying for the realtor). That is why giving the buyer money for not using a realtor would be unethical.

You are right. The buyer should not be paying for a realtor in a typical house sale. The seller contracts with a selling agent that the selling agent would get a certain % of the selling price in return for doing the work to sell the house. If the selling agent wants to give some of that money to the buyers agent, then that would be the norm.

However, this is a builder building a house on a piece of already owned property. It should be more aligned with hiring a general contractor to build a house, because the seller and the selling agent are the same.

[baybook]

Originally Posted by ncsustash

Re-read slowly for comprehension.


Perhaps you should look up discount realtors.

Charlotte NC Discount Realtor - 1.5% Buyer's Agent Rebates - MLS Listings

You probbaly missed this, but the link you posted says

"We offer one half of this fee back to you, the buyer - it comes directly off your total cost at closing."

If it comes off at closing it is disclosed and all parties are aware. I mentioned this in an early post. This is not the same thing as a kickback or a realtor giving a client money after the closing.

I read and comprehend pretty well.

As for your point about paying more than you have to. The builder is unwilling to pass a discount on to the buyer because they aren't using a realtor. Your point is moot.

I can understand not feeling that it is "fair" but laws and regulations are usually put there for a reason. Several people have tried to explain why the practice isn't allowed. Not liking the rationale is one thing, not understanding it is another.

[pink caddy]

To answer the OP's question as to whether to pay or move on: Move on and find another builder is MY opinion. The deal has bad karma in it from the get go and since this builder is 3% chintsy at the beginning, what we he do later when it's a serious money issue.

As far as "this is his marketing money", well I hope that 3% will bring him another buyer. He had one in the palm of his hand for a measly 3% off the selling price that would have reflected itself on the HUD statement. It is no harder than that. Take 3% off the selling price, put it on the closing statement and move on with construction.

[ncsustash]

Originally Posted by baybook

You probbaly missed this, but the link you posted says

"We offer one half of this fee back to you, the buyer - it comes directly off your total cost at closing."

If it comes off at closing it is disclosed and all parties are aware. I mentioned this in an early post. This is not the same thing as a kickback or a realtor giving a client money after the closing.

I read and comprehend pretty well.

As for your point about paying more than you have to. The builder is unwilling to pass a discount on to the buyer because they aren't using a realtor. Your point is moot.

I can understand not feeling that it is "fair" but laws and regulations are usually put there for a reason. Several people have tried to explain why the practice isn't allowed. Not liking the rationale is one thing, not understanding it is another.

Well done. The reading comment was in reference that some DID say it was unfair to discount the house if the person did use a realtor.

If you really want to base your arguement on whether it is called a kick-back or refund, fine. Then the OP should find a realtor that will offer 2.95% of the 3% money back so that everyone knows it going in.

[Belmarin]

In a way I agree with the builder's stance on the issue if they have multiple homes in the community for sale. If they discount this home 3% this sets the base sales price for future sales (with or without a realtor). For example, discounted a 200K home @ 3%, would show as a sales price of 194K in the MLS.

As a realtor, I bring my client to the same builder (for the same home and amenities), where do I start negotiations? Naturally I would begin with 194K for my base point. This creates a downward spiral in the sales of their future homes. The seller (builder) can offer concessions, such as contributing to the buyer's closing costs and keep the sales price @200K, but the concessions will show on the MLS and be available to the public.

The only solution that will benefit the buyer, is to find a realtor (don't call me) that will contribute a percentage of their commission to the buyer. They can contribute a portion of their commission to the buyer's closing costs, pay for a home inspection (highly recommended even if new construction), etc. This contribution is going to contribute to out of pocket expenses for the buyer and in MHO is as valuable as a discounted sales price.

Actually I wish the new auto dealerships had to report their sales figures an a particular make and model. This way I could walk into a dealership and start negotiations based on the lowest sale on record.