Home Buying in 02452>Question Details

our_first_ho…, Home Buyer in 02452

Do we need an agent to buy a new construction home?

Asked by our_first_home, 02452 Fri May 20, 2011

We are looking to buy a new construction in a suburb of Boston, MA in a huge development. From their past sales records on MLS we have seen that they have not offered much discount on the list price, however there is no way for us to know if that price included high end upgrades into it. The price of the house is say $500k for instance, we feel that we can ask for the builder to include 2.5% of upgrades into the final price and also negotiate for further discount. Instead of paying this 2.5% to an agent, we feel that we can use that for our upgrades. But are we missing something here? So at the end of the day of for a 500k house, we can get $17,500 in upgrades and I basically use the 2.5% of the agent commission 1% discount for myself!
Alternately, I will be paying the 2.5% to the agent and will have to pay for the upgrades from my pocket. The former sounds more attractive, however is there anything else we are missing or should consider other than the financial aspect?

Help the community by answering this question:



the seller pays any commissions......

You and many other "buyer agents" should not go around misrepresenting facts. In today's real estate envirionment it is nice that the listing agent is offering compensation to a buyers agent and or facilitator. But there is no law that says he/she has to. Nor is the fee that may be offered necessarily acceptable to you the buyers agent who may want to seek fair compensation for your services the sameway any other professional would expect.

The seller wants to net 300000 and is willing to pay x% to the listing broker and offering y% to the selling broker. If you did not take your fee would your buyer be paying less for the property 300k less y%???? Of course or on the other hand if there were 2 equal competing offers the one without the selling agent should win as the seller will net the y%

You are entiled to your y% as you are a professional and your client should be happy to pay it, but be professional and tell the buyers the truth as it adverserly effects the rest of us professionals.
Web Reference: http://www.LouisWolfson.net
2 votes Thank Flag Link Mon May 23, 2011
You should have a buyers agent. The seller has (presumably) made an agreement with a listing agent that includes commission. That commission will be paid to the agent regardless of whether or not you have a buyer agent representing you. If you have no agent, the seller's agent gets to keep the entire commission. If you are represented, the seller's agent will be splitting the commission with your agent.
A lot of people make this assumption, and it is not correct. In addition, having someone on your side to protect your interests is the reason to have an agent..
I am a buyers agent and would be happy to help you submit an offer, negotiate, get through inspection, and close the deal. I might even be able to negotiate some upgrades for you!
Happy buying!
2 votes Thank Flag Link Fri May 20, 2011
In my experience, there's no value added by taking an agent to a new construction. The new construction process is set up for "off the street buyers" The prices are established and dictated by the market. Especially here in Clarksburg where the houses practically sell themselves and there are waiting lists for lots. With that said, what specifically can an agent do for me? We took an agent to the new construction, she got her name on the list and collected her comission- that's literally IT! And I really don't blame her because there was nothing for her to do. So for me, someone who has bought a new construction, I would take my chances without one. You may be able to get more from the builder on your own because you are saving them thousands in comissions. If not, you can always find a willing realtor later. My advice would be: see what you can get from the builders without an agent BEFORE you sign anything. If they won't play, go get an agent you like, make a cash incentive deal with them before you BEFORE you sign anything (1 percent or so) and move forward with the willing party. It sounds shady, but as a home buyer you have to realize that the ball is in YOUR court and NOBODY gets paid unless you buy so you've got to make the system work for you. In the end, you're the one that has to pay the mortgage- not them! So take care of yourself... Once again, I'm not a real estate agent, just an EXPERIENCED student of the game
1 vote Thank Flag Link Tue Nov 26, 2013
You are missing that the agent negotiates all along the way.
Saving you way more money then his commission.
1 vote Thank Flag Link Mon Jul 15, 2013
The age old premise here is equal representation for both sides: Seller Agent for the Seller and Buyer Agent for the Buyer.In NY State an agent must up front disclose who they are working for in WRITING. Why would a buyer settle for anything less than FULL representation on one of the largest decisions of their life.. A builders agent is often a highly skilled negotiator and/or agent working with the BEST INTEREST of the Seller/ Builder in mind. As with most Residential Real Estate listings, the Seller or the Builder/Owner UP FRONT, agrees to pay a commission to a Buyer Agent. If one goes direct to the Sellers Agent,understand, that agent stands to take both sides of the commission perhaps while still acting on behalf of the seller/builder/owner. Might I suggest interviewing agents that will have your best interest at heart.
0 votes Thank Flag Link Fri Feb 28, 2014
I think it's worth the 1/2 commission (pd. by the builder) to have a Buyer's agent in your court for the purchase and process of a new build. The paperwork and process can be overwhelming-the process should be enjoyable and more stree-free than work. You need to consider the builder and local reputation as well certainly.

0 votes Thank Flag Link Thu Feb 16, 2012
I know I am late on this topic. But I was thinking the same thing.

I found myself a new construction house. I did my research on the location and the builder (Centex). I set up the appointment to go over there and look at the property. I checked the prices, the cost of upgrades, looked at the comparables (other houses that were built and sold in last few months). I know about home inspection, builder’s warranty, and after a little more research, I am pretty sure I can come up with a checklist for the closing. I know about getting everything in writing. Now all these, I guess, a buyers agent would do and may be more. But then again, at the same time, they all seem doable for any smart homebuyer as well.
Buyer’s agents are the trained people who know how the business works. So having someone like that is definitely a benefit.
After reading all the responses here, it seemed that the agents are promoting themselves and their profession, which is totally understandable. But at the end of the day, you can try and treat your flu with a flu medicine. Will it work? You can't tell, until you actually try. Do you actually have something more serious then a flu, you wouldn't know that either. ... I'd really like to know how our_first_home's situation turned out.
0 votes Thank Flag Link Thu Feb 16, 2012
The buyers agent looks out for your best interest, dont be mislead. Get someone on your side! It costs you nothing, the seller pays any commisions......
0 votes Thank Flag Link Mon May 23, 2011
Is it common for the seller's agent to tell you something that could save their client money? Absolutely!

The fact is, builders expect to pay some commission to a percent of the buyers, but they also know that the buyers with agents can very easily take their business elsewher if they are not giving them a good deal.

Yes, they may appear to through more upgrades in if you don't use an agent, but that can also be because you are overpaying and don't realize it.

I have never had a problem negotiating with a builder to get the same offer as a buyer without an agent and probably do better than most buyers.
0 votes Thank Flag Link Mon May 23, 2011
Our - first home

I would agree with you that if the builder is getting the benefit of no buyers agent. He should be more than open to some upgrades or a reduced price. Be realistic, not greedy. If he is unwilling, there are plenty of new homes available.
Web Reference: http://www.LouisWolfson.net
0 votes Thank Flag Link Mon May 23, 2011
Hello Folks, Thanks for your response on these. We actually checked with the builder's agent and he says that their contract with the builder works differently than the traditional contracts. The commission that the builder saves on the buyer's agent since we wouldn't have one, goes back to the builder and hence we can use that to perhaps offer us some concession in forms of upgrades etc. Is this common?
0 votes Thank Flag Link Mon May 23, 2011
Hello Home Buyer,

Several things need to be cleared up here.

1) All buyers should use an agent...there is a myriad of paperwork and advise that is beneficial to a buyer that they will not be given by the selling agent, because they work for the seller...not you!
2) Sale prices depend on many things...no matter what the asking price is, the selling price can be higher or lower due to interest on the property....be represented during this process
3) The selling agent's commission is not negotiable! The builder and the selling agent have a contract. If there is not a buyer's agent, then the selling agent's office receives the full commission.

Think about your transaction this way: you can ask for the moon....you will be dealing with the seller's agent and they will have no reason to give up their commission when they are performing the work of two agents: the buyer's agent and the seller's agent. You can see how the agent would not relinquish their pay....if your job's work were doubled, would you expect more compensation...my guess, you would say, yes.

Remember it will be your house, not the agent's....why should the agent pay for upgrades to your house?

Good luck, with whatever you decide to do...if you'd like to work with a buyer's agent, feel free to contact me. I am quite familiar with the towns west of Boston and around Rte. 128.

Jessica Harvey
0 votes Thank Flag Link Sat May 21, 2011
Huge developments generally scare me especially with some of the national developers. They typically charge you upgrades for moving anything. You need a good attorney that is use to dealing with new construction. I am a builder and broker as well and depending on the location of the project happy to consult with you.
0 votes Thank Flag Link Sat May 21, 2011
No. You don't need an agent to buy new construction.

However, you definitely should have one.

Your question also reflects a common misunderstanding. First, you wouldn't pay the agent anything. The builder (the seller) would. Second, while you could try negotiating with the builder ("I don't have an agent, so you'll save 2.5%. I'd like that 2.5% applied to upgrades or to a discount on the price."), it won't work. It just won't.

On the other hand, your agent may be able to negotiate a slightly better deal for you than you could yourself. Most likely, it'd be in the form of upgrades. Even if your agent isn't able to, you won't be paying a commission and you won't be paying any more for the home than if you bought it without an agent.

So: Use an agent.

Hope that helps.
0 votes Thank Flag Link Fri May 20, 2011
Don Tepper, Real Estate Pro in Burke, VA
You do not need to have an agent to buy a new home, but how will you know if you are getting a fair deal. I have yet to see a realtor that sells new homes give out a market analysis on there new purchase. I would suggest getting a realtor it is not going to cost you anymore. The seller pays the realtor cost. Best of luck.
0 votes Thank Flag Link Fri May 20, 2011
The commission for your agent should be paid by the builder and the best price you get will probably be the same whether you have an agent or not. I would be willing to bet that a good agent can probably find that best price easier than most people without agents, as you are probably only seeing a fraction of the sales in the MLS.

The price is really set by the market, not whether you have an agent or not. Buyers with agents probably have a better sense of the market than those without, so the builder can not really charge these buyers more. If they did, they would lose many sales.
0 votes Thank Flag Link Fri May 20, 2011
Positively, yes! Whether you're purchasing a 100 year old home or a brand spankin' new home, there are pitfalls that the average person may not be aware of. Even if this was your 10th home, I would recommend it...but definitely use a buyer's agent for your first home. For example, do you know to ask for a builder's warranty? Do you know to test for radon as part of your home inspection? Do you know that settlement cracks are common in the first 1-2 years so you shouldn't be worried that you purchased a lemon if that happens? Do you know to document EVERYTHING when dealing with a builder? These are just a few examples of things that your buyer's agent can help you with.

Even more compelling...buyer agent representation is FREE to you. Buyers don't always realize this...but when a seller or builder meets with an agent to list their house the commission that is agreed upon is typically split in half...with 50% going to the listing agent for their services, and the other 50% going to the buyer agent for their services. Yes, the seller pays your buyer's agent to negotiate against them! It's kind of crazy, but that's the way it works. If you don't utilize a buyer's agent, the listing agent keeps 100% of the commission. The listing agent would LOVE you if you didn't use a buyer's agent...but it's not in your best interest.

What development are you looking at? If you have other questions feel free to message me through this forum or follow the link below to my website which includes my contact info. I'm based out of Framingham but serve the entire MetroWest area.

Best of luck!

Jay Allen
Coldwell Banker
Web Reference: http://www.josiahrallen.com
0 votes Thank Flag Link Fri May 20, 2011
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