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Old 06-22-2012, 02:22 PM
 
Location: NJ
17,579 posts, read 38,295,421 times
Reputation: 16098

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Quote:
Originally Posted by blazerj View Post
It's kind of a black box. We are building a custom home and are using a realtor, who represents us and the builder. She is the builder's realtor (not sales agent, as she has multiple listings on the MLS for resale homes).

Having 1 person for all parties to speak to is a huge plus and I think she helped us get a nice deal. More importantly, she'll help us with details (which colors, finishings... to pick from a potential resale prospective). If she wouldn't have offered this help, I would have found a buyer's realtor.

The one thing that you will never know is would the builder have negotiated more with a buyer's agent. I don't know, honestly. At the end of the day, we wanted someone who would help us through the process and the builder's realtor, who represents us as well is doing that.
Red flags are going off here. You say she represents you, yet you say she is the builder's realtor. Something doesn't sound right here.
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Old 06-22-2012, 02:31 PM
 
Location: Central Texas
19,879 posts, read 36,385,911 times
Reputation: 21308
If she is the builder's agent, then she is, by law, required to represent the fiduciary interests of the builder, NOT you. Anything she does to help you that goes against those interests (such as negotiating a better deal for you rather than the builder, etc.) would be a violation of the law and could possibly lose her her license (never mind the job with the builder). Just make sure you keep that in mind.
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Old 06-22-2012, 02:35 PM
 
Location: Salem, OR
13,740 posts, read 31,556,293 times
Reputation: 12105
Quote:
Originally Posted by Midpack View Post
I truly have nothing whatsoever against realtors and I've worked through realtors before, but I don't understand why one would use a realtor vs dealing directly with a builder when buying new construction (as I recently saw on a House Hunters episode). We want a much more energy efficient home than standard or code minimums, so we'll probably have to buy new. Realtors deserve to get paid for their efforts, but I don't understand the value they'd provide for the increased cost - it's there whether it's readily apparent or not.

What am I missing?
Some people are totally comfortable and perfectly capable of negotiating out things on their own so you might not be missing anything.
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Old 06-22-2012, 03:19 PM
 
Location: Columbia, SC
8,844 posts, read 17,440,566 times
Reputation: 6194
Quote:
Originally Posted by Midpack View Post
Me too, after a career of it, I also enjoy "the dance" and getting the best deal I can. And I appreciate that both sides have to meet, but three "sides" is going to be more expensive for a knowledgeable, willing buyer all else being equal.
No, most builders pay commission out of a marketing budget so they generally don't care if you're represented or not if you're going a stock home. If you're custom building on your own land that may be different. Builders and sellers agents generally love buyers that think they know real estate and represent themselves. If I had a nickel for every time I've "I don't think I need an agent" from people that had no clue...

Perhaps you are the exception, I have no idea. Perhaps things will go will. People usually don't know they need an agent unless something goes wrong.
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Old 06-25-2012, 08:20 AM
 
Location: Chicagoland
1,540 posts, read 1,447,625 times
Reputation: 1386
Quote:
Originally Posted by Brandon Hoffman View Post
No, most builders pay commission out of a marketing budget so they generally don't care if you're represented or not if you're going a stock home.
All falls to the bottom line no matter what expense category you name it, so I'm not sure I follow the thinking.

But please don't misunderstand my question, I'd never buy a resale home without a realtor, and don't begrudge realtors their fees. Just questioning the value added for new development/construction (not custom) for a buyer who was willing/able to negotiate for him/herself. Thanks...
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Old 06-25-2012, 09:24 AM
 
315 posts, read 594,621 times
Reputation: 262
Quote:
Originally Posted by Midpack View Post
All falls to the bottom line no matter what expense category you name it, so I'm not sure I follow the thinking.
I think that you are assuming that you'll be able to get an additional 3% off if you don't use the realtor. It doesn't work that way.

I'm having a house built right now, I've purchased homes in the past, and I understand the process (I'm an MBA and project manager). However, I see value in having a realtor. There have been several times I've been able to simply ask my realtor to fix something and it has saved me time from dealing with it myself. You may see no value in having a realtor, and that's fine. You may want to be more involved than others, and there is nothing wrong with that. It seems you enjoy the process, so go for it on your own and have fun.
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Old 06-25-2012, 09:37 AM
 
Location: Central Texas
19,879 posts, read 36,385,911 times
Reputation: 21308
Quote:
Originally Posted by BriansZ View Post
I think that you are assuming that you'll be able to get an additional 3% off if you don't use the realtor. It doesn't work that way.

I'm having a house built right now, I've purchased homes in the past, and I understand the process (I'm an MBA and project manager). However, I see value in having a realtor. There have been several times I've been able to simply ask my realtor to fix something and it has saved me time from dealing with it myself. You may see no value in having a realtor, and that's fine. You may want to be more involved than others, and there is nothing wrong with that. It seems you enjoy the process, so go for it on your own and have fun.
Bingo. Most builders understand that if they do this, they'll get a reputation for it, and that real estate agents will be discouraged from bringing their buyers to that builder. So, as you say, "It all falls to the bottom line," but not in quite the way that you think it will.

It's sort of like a FSBO. A buyer buying a FSBO thinks they'll get a better deal because the seller isn't paying an agent. The seller, on the other hand, thinks that they will get more money because they're not paying an agent. Thing is, both buyer and seller are thinking they'll get the same money. This is leaving out everything that an agent brings to the table and addresses solely the issue of the bottom line.

If a buyer doesn't have an agent, the builder is likely to see that they won't be paying a buyer's agent (plus chances are the buyer won't negotiate as good a deal for himself as an experienced agent would) and thus can keep that money for themselves, increasing their bottom line.

If you are familiar with the process and enjoy it and have the time to dedicate to it, go for it. Just don't go for it thinking that the builder's going to pay you for doing so.
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Old 06-25-2012, 09:56 AM
 
Location: Chicagoland
1,540 posts, read 1,447,625 times
Reputation: 1386
Nice post. Here's a chance for me to learn more maybe...
Quote:
Originally Posted by TexasHorseLady View Post
Bingo. Most builders understand that if they do this, they'll get a reputation for it, and that real estate agents will be discouraged from bringing their buyers to that builder. So, as you say, "It all falls to the bottom line," but not in quite the way that you think it will. That's a good point. I get it from knowledge of protecting retail from wholesale in other businesses.

It's sort of like a FSBO. A buyer buying a FSBO thinks they'll get a better deal because the seller isn't paying an agent. The seller, on the other hand, thinks that they will get more money because they're not paying an agent. Thing is, both buyer and seller are thinking they'll get the same money. This is leaving out everything that an agent brings to the table and addresses solely the issue of the bottom line. I always assumed the buyer and seller would meet in the middle and split "the same money." But I don't pretend to know, and I'll admit I'd never sell (or probably buy) a resale home FSBO.

If a buyer doesn't have an agent, the builder is likely to see that they won't be paying a buyer's agent (plus chances are the buyer won't negotiate as good a deal for himself as an experienced agent would) and thus can keep that money for themselves, increasing their bottom line. At the risk of realtors blasting me for saying this but I watch House Hunters a lot since we'll be in the market over the next year or two. I fully realize the show is staged, but it's my understanding an actual home buying transaction took place and the shows recreate the process after the fact somewhat - IOW it's not just completely made up without any factual basis. On the show at least, almost invariably it seems like realtors provide comps and some guidance, but mostly leave it to buyers to decide what to offer, counter, etc. And for the three homes I've bought, the realtors seemed to leave me to decide for the most part, they seemed very reluctant to suggest a price and reasons for same.

If you are familiar with the process and enjoy it and have the time to dedicate to it, go for it. Just don't go for it thinking that the builder's going to pay you for doing so. May be naive, but I assume they'd have to share some savings, but certainly not all and probably less than half. Of course that means the buyer has to be willing to actively negotiate (I am, but I realize many people hate negotiating) and market conditions dictate a lot I'm sure (multiple bidders, DOM, etc.). I've faced buyers markets and sellers markets over the years.
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Old 06-25-2012, 10:07 AM
 
Location: Cary, NC
31,594 posts, read 55,307,520 times
Reputation: 30150
Depending on the community, on-site agents will tell you that 70--90% of buyers come with an agent.
If they cut the price for buyers without an agent, it affects the comps for the neighborhood negatively. I.e., the one percent or less who possibly profits can hurt the builder on the other vast majority of sales.

To get the best deal from the builder without using an agent, you may need to buy a home that is not on MLS, and will not be entered into MLS as a comp, because the builder is undercutting comps if putting the house on MLS with a low price at closing.

But, I have always wondered... If the money stays the same, why are buyers told they have to register their agent with the on-site agent on their first visit? If it isn't about the money, what else is in play? Ethics? Integrity? Not promotions, because promotions are all about the money.
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Old 06-25-2012, 10:33 AM
 
Location: Lexington, SC
4,281 posts, read 10,286,407 times
Reputation: 3700
Quote:
Originally Posted by MikeJaquish View Post
Depending on the community, on-site agents will tell you that 70--90% of buyers come with an agent.
If they cut the price for buyers without an agent, it affects the comps for the neighborhood negatively. I.e., the one percent or less who possibly profits can hurt the builder on the other vast majority of sales.

To get the best deal from the builder without using an agent, you may need to buy a home that is not on MLS, and will not be entered into MLS as a comp, because the builder is undercutting comps if putting the house on MLS with a low price at closing.

But, I have always wondered... If the money stays the same, why are buyers told they have to register their agent with the on-site agent on their first visit? If it isn't about the money, what else is in play? Ethics? Integrity? Not promotions, because promotions are all about the money.



Mike

You should be telling us why. It is a practice in your business.
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