Should I use a buyer's agent for new home purchase?

[Captain Bill]

Originally Posted by ch123

Get a buyer's agent that will rebate you back part of the commission. It's not too tough in today's market to find one.

Just remember that when one cuts into anyone's earnings, they also take away their incentive to work for the employer.

Many people don't realize just how much of a cut into a realtors earnings a 1% reduction is. that 1% sounds like nothing -- but it is a lot, and can mean the difference in whether or not an agent makes a profit after covering all of the marketing, advertising and overhead expenses that an agent has.

A listing agent who charges 6% and pays 3% to the buyers broker will earn 3%. If the seller asks the listing agent to take 5%, then they are actually asking him/her to reduce their earnings by 33 1/3 %.

How would this seller react if he/she went into the office one day and the boss said, I want you to do the same amount of work but I also want you to accept a 33 1/3 % pay cut?

How productive would this person be now?

The only way discount models can survive is through volume, and the volume is not there today. The other way is through fee for services. A fee is priced on each service the customer desires.

One large discount firm has already closed their doors and their clients are in limbo in the courts now (the last I read).

In this slow market, the successful agent must still market and advertise and absorbe all of the operating expenses in order to stay in business. The ones who discount will have a difficult time making it, unless they take something out of the product, in my humble opinion.

Agents are quitting the RE business every day because they cannot survive with the low volume of business. At the first of the year when most all of the Realtor fees come due, there will most likely be many many more who will quit because they can't afford to pay all the dues.

For all of those agents who have clients that had a discount, now they don't have an agent, and may have to negotiate with the broker, who owns the listing, for an agent willing to work for the discounted fee.

Builders recognize the need to offer higher commissions to agents, and that's why the majority are offering 4%, and many are offering from 6% on up to 10% to agents.

I offer a lot of services and give 110% of my efforts to my clients. I go overboard in doing things that are not required of me to make sure that my clients get the very best service. I never want to lose my incentive to go above and beyond for my clients, therefore, I don't discount my fee. I prefer to work for those who recognize good service and are willing to pay for it.

Bill

[chaz longue]

Good post, Bill -

...and you haven't even mentioned the portion the listing agency gets (in the example in your third paragraph).

It's not unusual for a RE commission to be split 6 ways:
I worked for many years for a company which had the logo of a national company on it's yard signs. Before paying me, our company would send 8 PERCENT of the 3 percent (or whatever it happened to be) to the corporate HQ. Then they'd pay me. The same was often true on the other side of the transaction...hence the commission went 6 ways before anybody paid taxes...

[chaz longue]

Can't find the edit button for some reason.

In the post above I meant

"...and you haven't even mentioned the portion the national corporation gets (in your third paragraph).

[scgraham]

Originally Posted by Mjames

My Wife and I are trying to decide if we want to use a Buyer’s agent to help us purchase our new home.

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Specifics:

--Will buy new home in a development. Home will actually need to be built.

--We will be relocating across the country and will not be available to inspect the home while its being built. We probably will be out of the country, but will be back to sign papers when needed.

--We visited the developments where we will be purchasing without a Buyer’s agent almost 6 months ago.

--We want to negotiate the best deal possible. I actually have a lot of experience negotiating contracts and supplier agreements, but not for real estate.
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What are the pros and cons of using a Buyer’s agent in our situation? Can we use a Buyer’s agent since we already visited the developments and looked at the models? If we decide to use a Buyer’s agent, how do we pick which agent to use when we are not local to the area?


If we decide not to use a Buyer’s agent, we would like to hire an inspector to inspect the home as it is being built. Any suggestions on how to locate an inspector to use during the whole building process?

The price range of the home will be somewhere between $350K and $450K.

Many thanks in advance for comments and suggestions.

Here is a good article (http://www.thinkglink.com/Builder_Wont_Recognize_Buyers_Agent.htm - broken link) about your specific situation.

The pros of using a true buyer's agent for a new home purchase are innumerable; notice that I said true buyer's agent. I am a speaking about someone who is versed on new home and new construction matters. While I agree that you don’t need an incompetent agent to buy a new home, I would, however, disagree that you don’t need a qualified buyer’s agent to maximize one’s purchase.

A home buyer can research the new home buying process to a great extent and still miss out on many beneficial opportunities to maximize the purchase. I have seen this happen.

Here's a pretty good blog.

[bentlebee]

Originally Posted by geoffandliz

Tough call. We had the same decision to make. The realtors will always argue that they can negotiate a better deal, that's their job. The buyer always thinks they got a better deal, with extra incentives without one. Who really knows the truth? I did ask the mortgage broker in her opinion, being she sees lots of deals run both ways................she said the buyer with no realtor. Now, I do think as a buyer, you need to push hard for extras. We did. We also shopped around ourselves and did all the leg work though over the course of several months. If we did not have that luxury, a realtor in the know sure would have been helpful. But in our situation, we were able to look at all the builders in a particular area, and then narrowed it down on our own.

The only thing I will definitely be doing, thanks to C-D , is getting a home inspection even on new construction. I can say that was not advised before when we built and had a buyer's agent. Did it make a difference, who knows until we sell.

Liz

I only want to add to this that since you already have been to the models the builder will claim you already as a client without a realtor and you might end up having to pay for the buyers agent your self. Most builders stopped at one point paying to buyers realtors and than when the market went down the builders gave incentives up to 11% in our area, which makes me wonder how fair and honest will a realtor be about a home if the realtor gets 11% on a new construction and 3% (6% devided by seller and buyers agent) for an excisting home....?

[Brandon Hoffman]

Originally Posted by bentlebee

I only want to add to this that since you already have been to the models the builder will claim you already as a client without a realtor and you might end up having to pay for the buyers agent your self. Most builders stopped at one point paying to buyers realtors and than when the market went down the builders gave incentives up to 11% in our area, which makes me wonder how fair and honest will a realtor be about a home if the realtor gets 11% on a new construction and 3% (6% devided by seller and buyers agent) for an excisting home....?

A lot of erroneous information in the quoted post. The builder can claim what they want, but most will pay the commission if it gets them a home sold. Especially after 6 months since the Realtor is the one who brought the client back after that amount of time. Incentives to the buyer have nothing to do with commission. Most Realtors will be honest and most will disclose the commission. I don't know of any agent that can make a buyer purchase a home they don't want.