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We recently relocated to a new state and were originally in the market for a resale home. We met with a realtor who showed us around the area and took us into about a dozen homes (We never signed any broker agreement) We also met separately with a local builder to discuss the possibility of building a new home or having him remodel an existing home for sale. After a fairly thorough search, we decided to put an offer in on an existing home for sale with the intention of remodeling it after purchase. To make a long story short, our offer was not accepted. Shortly thereafter, the builder notified us about a lot which was coming on the market in our price range. We have decided to build a new home on this lot, however, the builder has advised that he does not feel that the realtor who showed us around is entitled to a commission on this deal as he (the realtor) did not bring us to him (the builder) and did not have a role in completing this deal. I do feel like we should compensate the realtor somehow for his time in showing us around, however, the builder (and many others) have advised me that I am not obliged to "pay" the realtor a commission - I just want to do the right thing - Is it customary to compensate a realtor if/when they did not lead us to the final deal?..if so, how much?...I figured Id ask some professionals for thier advice on how to proceed...
Agents know that not all buyers will find something with them. If this were me I would send a note or e-mail to the agent letting them know that you decided to build and thank them for their time.
This is totally up to you. If the agent didn't discuss non-MLS listings with you, then they are taking the risk of not getting paid. The other option you have is to hire the agent with a buyer agency agreement and pay them whatever you agree on and let them help you with the land purchase.
Tough subject, and he isn't entitled to a commission here.
If you want to include the Realtor and you know the price of the build job play hard ball with the builder. Tell him you won't buy the lot/house unless your agent is involved and he pays him out of the sales proceeds. It is quite possible that the Realtor would serve no value to you at this point. It is also possible if any problems arise you'll be very happy to have professional representation. Some builders are fantastic and some don't do what they promise. Silverfall's suggestion is also a good one.
The lesson here for other readers is take your agent with you on builder appointments.
The builder is accomplishing three things if he convinces you not to get representation(either real estate agent or attorney). First, most builders pay the buyer agent commission so they are saving that for themselves. Second, you will be using all of his contract forms which usually favor the builder. Third, he will have representation and you won't.
Finding or showing a house is the least of what an agent does for a buyer. I earn most of my commission from the point when a house is found until close.
First, let me thank you for having the decency to think about the agent that showed you a dozen homes. It is true that you are not required to pay him anything for his time but you are looking to do the right thing.
I am surprised that the builder, knowing that you are working with a Realtor, would not want you to get representation. He certainly isn't going to look after your best interest. Unless you are well versed in the local laws, building processes and real estate procedures, you wouldn't need someone to guide you.
The builder is accomplishing three things if he convinces you not to get representation(either real estate agent or attorney). First, most builders pay the buyer agent commission so they are saving that for themselves. Second, you will be using all of his contract forms which usually favor the builder. Third, he will have representation and you won't.
Finding or showing a house is the least of what an agent does for a buyer. I earn most of my commission from the point when a house is found until close.
Quote:
Originally Posted by nsumner
First, let me thank you for having the decency to think about the agent that showed you a dozen homes. It is true that you are not required to pay him anything for his time but you are looking to do the right thing.
I am surprised that the builder, knowing that you are working with a Realtor, would not want you to get representation. He certainly isn't going to look after your best interest. Unless you are well versed in the local laws, building processes and real estate procedures, you wouldn't need someone to guide you.
Good luck with whatever you decide to do.
Naima
I agree OP that it is decent of you to recognize the work your agent did for you even if you did not take the agent with you to the developers property.
I just want to give you an example to kind of reinforce what the posters above said, as well as what a couple of others brought up. My office is dealing with a situation right now involving a builder - fortunately our clients wanted representation. There was a construction loan involved that needs to be converted to a residential loan upon completion and transferring the property into my clients name, the builder had sent our clients a building contract that was so full of loop holes that I assisted them in tightening it up - including a substantial penalty if the builder went over construction deadlines (this was after numerous emails to their now ex-attorney, the attorney had not responded so I assisted them over a weekend). If my clients would have signed the builders contract they would have no recourse whatsoever because while they are very intelligent people, they didn't used to work with attorneys for 15 years and consequently did not catch all of the loop holes the builder would have used to drag things out even longer than he has.
Even the branch manager for the bank commented she had never seen such a tight building contract before because, as Gbone said, they will want you to sign their contract. We should close this week, but the amount of man hours we've put in verifying what the builder was telling our clients (which was not true) with the bank and confirming with the attorney they are now going to retain, the number of phone calls, emails, photos showing progress, guidance etc. - well, let's just say by the time it's all said and done, and once it does close it will probably work out to about .50 cents an hour in compensation. I literally need a storage unit to put all of the emails and supporting documentation in. I'm communicating with them late at night, over weekends and have been forever - all to get the house built, deed filed and transferred into their name, as well as make sure they know the 'real story' about things - not the BS the builder was telling them.
So, there is a lot of value to having a good agent watching your back unless you are extremely experienced in RE and know what to watch out for. Everyone has talents they excel at - my clients, again, are extremely intelligent, but contracts and RE? They don't have a clue.
If you don't decide to play hard ball with the builder to compensate the agent you've been working with PLEASE hire an experienced real estate attorney (not a general practitioner - but one who specializes in RE), to make sure you sign an airtight construction and purchase contract so 'your' best interests are protected. Best of luck to you.
I agree OP that it is decent of you to recognize the work your agent did for you even if you did not take the agent with you to the developers property.
I just want to give you an example to kind of reinforce what the posters above said, as well as what a couple of others brought up. My office is dealing with a situation right now involving a builder - fortunately our clients wanted representation. There was a construction loan involved that needs to be converted to a residential loan upon completion and transferring the property into my clients name, the builder had sent our clients a building contract that was so full of loop holes that I assisted them in tightening it up - including a substantial penalty if the builder went over construction deadlines (this was after numerous emails to their now ex-attorney, the attorney had not responded so I assisted them over a weekend). If my clients would have signed the builders contract they would have no recourse whatsoever because while they are very intelligent people, they didn't used to work with attorneys for 15 years and consequently did not catch all of the loop holes the builder would have used to drag things out even longer than he has.
Even the branch manager for the bank commented she had never seen such a tight building contract before because, as Gbone said, they will want you to sign their contract. We should close this week, but the amount of man hours we've put in verifying what the builder was telling our clients (which was not true) with the bank and confirming with the attorney they are now going to retain, the number of phone calls, emails, photos showing progress, guidance etc. - well, let's just say by the time it's all said and done, and once it does close it will probably work out to about .50 cents an hour in compensation. I literally need a storage unit to put all of the emails and supporting documentation in. I'm communicating with them late at night, over weekends and have been forever - all to get the house built, deed filed and transferred into their name, as well as make sure they know the 'real story' about things - not the BS the builder was telling them.
So, there is a lot of value to having a good agent watching your back unless you are extremely experienced in RE and know what to watch out for. Everyone has talents they excel at - my clients, again, are extremely intelligent, but contracts and RE? They don't have a clue.
If you don't decide to play hard ball with the builder to compensate the agent you've been working with PLEASE hire an experienced real estate attorney (not a general practitioner - but one who specializes in RE), to make sure you sign an airtight construction and purchase contract so 'your' best interests are protected. Best of luck to you.
Well said! Sometimes it's as difficult as this, sometimes it's simply a matter of knowing when to quote the name of the regulation that's being violated by the builder's rep - neither of which most buyers are in a position to know simply because they haven't worked in the field and taken the various courses that are required to stay on top of such things, nor are they in a position to know the reputations of the builders.
Very much appreciate the time and effort you all put into the replies....very helpful...thanks again!
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