Realtor role on new home build

shiltsyJanuary 5, 2014

We have a realtor that we know and trust, but not sure how critical they are in the (1) lot purchase and (2) new home build process. I don't want to sound stingy, but it seems like we may want to avoid commissions on the buying side of these transactions and give ourselves a little more negotiating leverage (especially with the lot purchase).

We'll use our realtor on the sell side, which obviously makes sense.

Is my thinking flawed here?

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A realtor has zero to do with a home build unless you use them to buy a "package" from a builder. If you buy the lot, sure. But, the build itself is entirely between you and the bank and whatever builder that you choose.

    Bookmark   January 5, 2014 at 11:41AM
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It depends a bit on what type of builder it is. Based on the fact you indicated a lot purchase, I'm guessing it's a custom or semi-custom builder. We've built two semi-custom/custom homes. The first time we had a Realtor that received a commission from the builder on the lot and the entire house purchase. Honestly, he added no value and merely collected a check. Second time we had to use an agent to purchase the lot, but the agent received no commission on the build. The lot was owned privately, not builder owned.

Based on my experience, unless the lot is listed with an agent and is not owned by the builder, I would skip the agent. This is assuming you've purchased a home previously and are willing to educate yourself on building contracts. When it comes to building an agent adds little/no value.

FYI-I was previously an agent. Most agents know little/nothing about home building. I was able to add value for one client as I had built three houses by that time. This was with a national builder for a large house. It made no difference in price if I was paid as it was considered a marketing expense. I helped them prioritize upgrades, and it was a relative.

    Bookmark   January 5, 2014 at 1:16PM
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I don't think, as the buyer, you need to worry about realtor's fees. That is the seller's/builder's responsibility. So, yeah, I think the thought process is flawed? (Unless I am the one who is confused.)

I have an agent/friend who represents a handful of local builders. Builders aren't always salesman and it is normal here for agents to represent many of the builders (to find potential clients.) I used her during my last build, and she was indispensable (in negotiating items on my behalf, making sure I didn't overlook certain things and answering every question.) With that said, perhaps I had a special situation since I knew her previously. There are certainly more agents who do not commonly work with builders and wouldn't be as useful...

    Bookmark   January 5, 2014 at 1:59PM
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lolauren - I understand the seller pays the realtor fees, but my thought process was that by saving the builder those commissions it's just one less fee the builder has to account for in the overall price.

Thanks for all the feedback!

    Bookmark   January 5, 2014 at 2:39PM
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rrah.....are you saying the realtor actually made a commission on a house that wasn't even built yet?

    Bookmark   January 5, 2014 at 10:33PM
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I have friends that used a realtor to help them with the purchase of a home from a tract builder. I tried to convince them not to do so (unsuccessfully), because the realtor makes a commission from the sale......... without the realtor, YOU have more leverage and ability to negotiate price.

    Bookmark   January 6, 2014 at 12:15AM
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