Home Buying in 80918>Question Details

1st Time Buy…, Home Buyer in Colorado

Realtor won't submit offer

Asked by 1st Time Buyer, Colorado Tue Jan 29, 2008

I went to make an offer on a new home today and the realtor/broker working their wouldn't submit my offer. He told me the builder would probably consider giving extra incentive (ie. fence, landscape etc.) but not discount on the price. I took my business elsewhere (5 other new home builders in the same area any ways).
I just want to know...
-Can a realtor refuse to submit an (reasonable or lowball) offer? (Price was lowered to $233k ... I offered $200k)
-What kind of incentives do realtors get when working for new home builder? (I did not bring a realtor).
-Should I bring a realtor next time I look at new homes? Pros? Cons?

1st time buyer

Help the community by answering this question:


Welcome to real estate 101 ... cut the middleman out, find who the actual builder is, make an appointment and sit down with them and see what can be done ....

You'd be amazed on how many agents are just sitting around right now because they're not aggressive negotiators, they've been living off the past 7 years - and those days are over.

I won't speak for Colorado, but builders right now are offering 6/10% incentives to agents on homes in California and 5 other states just to move their standing inventory ...... No matter what, just make sure you have a grip on a quality real estate attorney and he should look at "everything".

2 votes Thank Flag Link Wed Jan 30, 2008
The job of an agent or realtor (one and the same just one has more of a code of ethics to follow and pays dues) is to make any and all reasonable offers to the principals involved. it can be done either verbal or written but its there duty to convey the information unless otherwise already known ahead of time they wont accept and offer of what you are offering which may be the case. You can go directly to that builder if you want and submit your offer or find another agent. Incentives vary builder to builder for all parties involved. Since this is your first time buying I think an experience agent would be a good idea.

Redds Reaty and Mortgage
No bank qualifying homes
1 vote Thank Flag Link Wed Jan 30, 2008
I see you are a Colorado buyer. If you are purchasing a condo in the moutian resort area (at that price it could not be a home), please keep in mind our market does not reflect the rest of the country. Buiness is good and sales are up inour community! If you find something you like, act quickly and make it a competitive bid. With that being said I have sold & bought several homes without the use of a realtor, but a real estate attorney instead. All instances I saved money on both the buying and selling end. However recently I purchased a property and used a realtor. She haggled so well on my behalf, there is no way I would have paid what I did without her help! If you are a first time buyer it would be silly not to use a realtor. There are so many other issues besides money, for example... did you look at easements on the property (wouldn't it be bad to have a neighbors driveway go through your yard one year later?), was everything done using proper permits, are there liens on the property, do you have the time to carefully inspect property history, do you know about the builders rep (alot of realtors know through the grapevine that builder A cuts corners - how would you know?), did your home inspector do a good job and cover all the aspects of inspection he/she should have? This is basic stuff the realtor will help you with. Do yourself a favor, go interview three realtors, choose the one you feel comfortable with and have them help you. When you become more market savy then use a lawyer! Congrats on your first home, this is a great time to jump in and build equity for your future!
1 vote Thank Flag Link Wed Jan 30, 2008
I just want to reiterate what has been said to save REALTORS reputations. There is a very good chance the person you call a REALTOR was actually a NON-licensed SALESPERSON who works for the builder. In CO builders salespersons need not be licensed and in the event you buy a new build without your own representation (buyer agent) you will sign documentation acknowledging you chose to have NO representation (essentially). Let there be no doubt the builders salesperson treats you as a customer and has zero loyalties to protecting your interest. The builder hired them to sell their homes not help you make a solid investment.
Absolutely, use your own buyer broker in ANY transaction.
Now, in defense of builders sales rep, they know what the builder wants to net and are there to protect the builders needs and wants at all times. Not all builders will or can negotiate what you want for various profit reasons. Find a reputable buyer broker and they will find the builders that WILL negotiate.
Good luck,
Susan Walker
1 vote Thank Flag Link Wed Jan 30, 2008
Hello First Time,
There are ways to go about saving money on a new build. Savvy agents know them. Many agents don't. Negotiation is a good skill to have and many people should use a third party to negotiate for them. But negotiating is just part of the home buying experience.

Staying on top of all the things you need to do in a purchase of a dirt-start of inventory home is reason enough to engage an agent. Many agents do not have the experience and knowledge to guide you. Others are too busy.

I've worked builders and I've worked deals with agents. Some are worth that commission. Others, not.

I worked for several national brand name companies, including Richmond American Homes and DR Horton over a period of 15 years. Incidentally, I've been in real estate more than 25 years. I'm happy to work with first-time buyers and repeat buyers.

PML of Longmont, CO
720 810 0683
0 votes Thank Flag Link Fri Dec 16, 2011
realtors cannot refuse to submit offers. simple as that. however, you should be working with a buyer's agent in the first place
0 votes Thank Flag Link Wed Dec 14, 2011
You should always have an agent representing you,.. even with a new build. There are no discounts given for going to the builder directly,.. the negotiated price will be the same as if you had a Realtor in your corner,.. in fact,.. with our company we offer additional incentives over and above those offered by the builder.

That being said; There are numerous items to discuss as they relate to your post,...

1.) On a regular listing,.. ALL offers MUST be presented,.. however,.. the salesperson sitting at the model,.. is likely NOT a Realtor. The builder is allowed to represent themselves on their own inventory utilizing their own salespeople.

2.) If the model being looked at is a spec home,.. and the builder sells it for $200,000,.. that home will be used in all subsequent appraisals on the same or similar homes in the development. This will affect the builders ability to sell other homes at the $233K offered as they will not appraise for the $233 due to the home you are interested in selling for less.

3.) Sometimes a Realtor will receive an, "Incentive" to sell a new home,.. but these times are few and far between. The agent is offered a commission for the sale of the home,.. but more often than not,... the commission,.. based on the base price of the home will be all that is received.

4.) In order to be represented by an agent,.. most New Home Builders will require that the agent accompany you on the first visit. It is unlikely that the builder you have been talking to would at this point honor your agency agreement even if you signed one prior to contract, as you not only visited and signed in at the builders,... but got as far as negotiations.

5.) The best advice I can give you is to find an agent who is willing to work for you,.. sign an agency agreement with that agent and then let the agent go to work on your behalf,... it costs you nothing to have an agent in your corner and all you have to lose is the stress of the negotiation. These Buyers Agents are trained in negotiating and in the market and there is NO incentive not to use one,.. Period,...

Call me if you would like,.. I would be happy to discuss it with you further,.. without obligation. :-)
Web Reference: http://www.springsnet.net
0 votes Thank Flag Link Mon Mar 22, 2010
It is my understanding that unless the seller hasn't given instructions on what offers they are interested in the agent is required to follow those guidelines otherwise the agents must present all offers.
0 votes Thank Flag Link Mon Mar 22, 2010
Wow- Matt...Amazing Truly!

RE: 2- My question to you would be... have you ever heard of commission paid on the net to seller? Might want to reconsider your stance on that one- you never know where seller stands on this subject :) so no assumptions k-. We like you have a job- ours is sales yours may be different- still the same...still a job.

RE 3: A REALTOR can refuse to work with anyone- anytime of the day, week, month or year. I am very sorry to inform you that you are in complete left field with that one Matt White. If an agent of the seller is instructed to NOT review or entertain offers under a certain amount and only offer incentives to reach their in house value (seller's wants/needs) then how is it exactly that anyone can call fowl in this circumstance? It would be like if you were selling your house and were in Europe vacation and didn't have phone access during Colorado or Utah's hours and an offer came in below your list price- the buyer only gave you 6 hours to respond- you as the seller would advise your agent to take offers that meet your guidelines/bottom line. So in essence who hold the reigns - the agent - buyer or seller? None the less the moral of the story is that you truly have a chip on your shoulder and need to look at this 1st time buyers true question. It isn't to beat up buyers agents, sellers agents, sellers or builders. Obviously he is looking for the best deal and is shopping- which all here should encourage. He is taking advantage of the market and he should-everyone is.

To answer your question about incentives. Some builders offer a higher commission or a standard, perhaps if you sell 5 of their houses in a year you can get a gift certificate or air fare. Just depends. Some banks (foreclosures) bonus brokers and offer higher commissions. Some sellers offer bonuses or increased commissions. You have to understand that this shouldn't be a concern to you as it is a marketing expense to the seller. Paying the correct price for a home in a bad market should ! True agent consultation and representation is a good idea- but the beauty of it- it's your choice.

Lastly, prior to offering a price on a new build- research the comps. It will serve you well.

Just a thought- look at some foreclosures in some new construction areas- now we are talking deals. Need to know how- contact me. Did I just do my job? Sorry- have some issues with it truly I am working on them :)

Sarah Solomon
Coldwell Banker
0 votes Thank Flag Link Thu Dec 3, 2009
Hi 1st time;

I understand your issue's and wanted to be able to address a few of them.

1.) The "Builder" Hires salespeople, these people by in large are NOT Realtor's. They may not even be Licensed Real Estate Agents. Because they are working for a builder, they are an employee of the builder. They are not necessarily "required" to prepare or submit any offer.

2.) Yes,.. working with a Realtor is especially a good idea when purchasing a home,.. however please know that we are not all created equal,.. there are "Seller's Agents" hired to work on behalf of the Seller, "Transaction Brokers", hired to work on behalf of the transaction alone,.. and "Buyers Agents", Hired to work on behalf of the Purchaser.

3.) Unlike Matt's opinion in refernce 2,.. not all Realtor's are out to get you. Typically when I represent a Buyer,.. I don't even know what I am being paid till closing. Not because the information isn't available,.. but because it simply isn't relevant to what I do,.. My job as a Buyers Agent is to ensure that you,.. the buyer get the best deal for the most house that is available,.. in fact,.. on New Homes I even buy the Purchaser $1,000 in free upgrades to the home. It is true that not all agents are like me but there HAS to be trust between the client and his Realtor,.. just as there has to be trust between a patient and his doctor or a client and their attorney.

4.) Yes,.. next time you want to look at new homes,.. have a Realtor accompany you,.. especially on that first visit. They will weed through the red tape and the BS and will demand a better deal for you from the Builder and in this market,.. the builders are ready to deal.

All that being stated,... the builders are often hesitant to drop price on an individual home,.. because it will effect the appraisal values of the remainder of the homes that they build of the same model. You will get the best deal on the last model in a subdivision than you will be able to obtain on the first,.. dependant upon the market of course.

Have more questions?

Call Me
Web Reference: http://www.springsnet.net
0 votes Thank Flag Link Wed Dec 2, 2009
I am not a real estate pro. I know several people who are that have advised me. I have been looking at buying a home now for 6 weeks and have learned a lot of the BS that goes on in real estate dealings, enough to give you some advice on this point.

1. If you are a buyer, USE A REALTOR. The seller pays the fees, not you. Make sure s/he's a good one too by learning about their history from their broker. A good realtor that knows you're serious and not stupid will cut through all sorts of red tape for you and make sure you don't get fooled. They are motivated like you are because if the deal closes, they get lots of money.
2. Never trust a realtor. They are all full of it and just want money, just like any salesman. Verify anything they sell you on independently. Don't let them convince you to pay more for a property if you don't want to. The higher the closing cost, the higher the commission for both agents (listing and buying).
3. Realtors legally MUST submit ANY offer you make. Don't let them tell you otherwise. Be stern and take no crap from them.

It is possible the person you spoke with isn't a realtor, in the which case they do not have any legal obligation to submit your offer. If they are a realtor, tell them you'd be happy to speak with their broker if they're not submitting the offer. They'll shape up really fast.
0 votes Thank Flag Link Mon Mar 9, 2009

The agent was probably a paid employee and knew clearly what his employer would accept. We are relatively certain the agent was under the direction to in no way negotiate the prices.

There is a big advantage of having a real estate professional accompany you when you meet with a builder. Agents know the development, have access to sales information, and are aware of the types of incentives and discounts that have been used by the developer.

By going in alone, you are putting yourself at a huge disadvantage. They love to see unaccompanied first time buyers come in. Keep in mind also that building sales reps have one thing in mind....sell. A real estate professional that is working with you should be committed to helping you to find the best property at the best price.

IMPORTANT: beware that an angle that is played is to get you to commit to their financing program. "If you use our financing company, we'll do this for you Mr. Buyer....what do you think?" An agent that is working with you can help you see the best course for you.

Do you really thing the builder's agent has your best interests in mind?

Good luck,
The "Eckler Team"
Michael Saunders & Company
0 votes Thank Flag Link Mon Oct 6, 2008
There are no cons...use a Realtor when you are meeting with the builder's representative or purchasing period. If you would like further information please contact my team and I at 719-265-9203. The services of a Realtor will not cost you. The only way you are to feel comfortable about an transaction is your Realtor acknowledgment.
0 votes Thank Flag Link Sun Oct 5, 2008
1st Time - Sounds like the person helping you was "working for the Seller" so if that person was following the Seller's guidance, he/she has no obligation to help you write up an offer that the Seller will not accept or even consider.

I would echo the comments you have received about using an agent, especially the first time you purchase - there are plenty of minefields and if I ever got out of the business, even with all of my experience, I would use a full time, active, experienced Realtor to represent me simply because they are doing this every day and consequently stay more current on aspects that can benefit me through the transaction.

A couple of points that worth mentioning or emphasizing:
1) The builders rarely discount the base price because they have other homes to be sold in the same neighborhood and know that they need the future appraisals to come in at the same price or higher - that said, there are other terms/benefits you probably can negotiate to obtain a better deal than what has been offered.

2) The on-site sales people tend to be helpful and want to make the sale but typically have been given guidance by the builder about what to accept - they are probably earning more money when they make a sale versus not making a sale but they also know when it is a waste of time to write up an offer that will not occur - as Charles indicated, there may be avenues that the builder is less concerned about that still get you value - a good negotiator will help you find a winning strategy to getting the home if that is what you want.

3) Just because the national media tells us that home prices are falling doesn't mean that every neighborhood has home prices falling - I am currently helping a Buyer who is bidding on, and in a multiple offer scenario - my guess is the winning bidder for my client's situation will pay more than list price so all neighborhoods do not have prices falling. Doesn't sound like that is the scenario for the home you are interested in but just because "the price was lowered", doesn't mean the current price is not a reasonable price for the home. If I was the agent for the builder, and believed that the current list price was fair based upon comparables, and could sell within a short period of time (for example 30 days) for at, or close to, list price, then I would recommend to the Seller (my client) to wait for a better price. I realize a bird in the hand versus two in the bush. However, a good on-site sales person knows what every other home in the neighborhood sold for, knows what upgrades went into every home, and knows what the Buyers who come to the community are looking for and what the home you are interested in is likely to sell for - if you don't have that information, you are at a disadvantage when trying to negotiate the purchase.

4) My sense is you are looking for good value - experience tells me that unless the builder is doing a "close-out", the best "value" for a Buyer is frequently the re-sale in the same neighborhood - the home is frequently almost brand new, the landscaping may be complete, air conditioning may have been installed, and there may be window coverings - these are items that a lot of the new builders do not include in Colorado (although some are now adding as incentives) and will cost you a lot of money if you buy a new home - I would definitely look at the resales in the same neighborhood.

I have lived in Colorado for most of my life and love living here; I hope you have the same experience. Best of luck in your search.
0 votes Thank Flag Link Thu Jan 31, 2008
The onsite realtors that work for builders are nothing more than licensed salesmen. They work for the builder and have no obligations to you as a buyer. The treatment your offer recieved was less than professional, but was most likely at the direction of the builder.
0 votes Thank Flag Link Thu Jan 31, 2008
What is making you want to offer $33K below asking, that would be my first question? Is the property located in a special taxing district i.e. are taxes expected to raise significantly. Is it a Metro District. Did you review the appraisals and see that homes were selling for much less than what the builder is asking? Yes of coarse you NEED a REALTOR. Is the price of $233k include using the builders lender to obtain this price?
0 votes Thank Flag Link Wed Jan 30, 2008
I should add, I worked for builders in both Colorado and New York.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Wed Jan 30, 2008
Because the salespeople of a builder are "employees" of the builder, they are exempt from the rules governing Realtors. We were permitted and expected to prepare and present the contract to buyers, and were given parameters in which to work (which often included, in a good market, "no offers"). There is no legal requirement to be licensed, however many builders require it for the purpose of knowledge. Consider it comparable to working in a retail environment- it's the same thing, only the product is a house.
Hope this helps with any confusion. Many real estate people like new home sales because if often offers full benefits- and no personal liability. Know, too, that on-site people are often frustrated when someone wants a house, but the builder won't look at an offer- the fighting that I often underwent behind the scenes would astonish you.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Wed Jan 30, 2008
It's quite possible that the person representing the builder is not a Realtor. Most of the builder’s sales reps even if they have a license are required to make it inactive. Often times these folks will have directions from their sales manager about what type of offers to submit and what to reject.

I would urge you for your sake to have representation any time when working with a builder. Keep in mind that even if you find a pleasant, knowledgeable salesperson they represent the builder’s interest not yours and will make you sign a form stating such.

The only argument for not having a realtor is the perception that you might get a better deal without one, this is just not true. Many times it can end up being the opposite. I have relationships with many of the builders and find that I get information first and cut through a lot of the clutter. If a dispute arises somewhere in the process most builders respond better to a brokerage then to an individual party.

I have sold numerous new construction homes that my clients had no idea existed. Or in some cases did not investigate because they thought the prices were too high. I guess the point is that a professional who works the new construction market can provide a lot more value then just managing the process. If I can offer any more assistance please let me know.

0 votes Thank Flag Link Wed Jan 30, 2008

I found it very interesting that an agent can work for a builder without a license in Colorado. I am curious if that is true in other states. I certainly understand that many agents who work for builders are not Realtors, and of course, that is no surprise.

Thanks for your post.
0 votes Thank Flag Link Wed Jan 30, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
It sounds like you went to an on-site agent who works for the builder. If the builider has provided instructions, yes the agent can follow those instructions. An on-site agent may or may not be a Realtor. An on-site agent is working for the builder, not for you, the buyer.

If the builder is cooperating w/ other brokers, and you write an offer with your own buyer agent, that offer must be presented to the builder......unless that builder has provided instructions to only sumbit offers meeting a minimum criteria and your offer fails that benchmark.

I recommend that all buyers have their own representation.
0 votes Thank Flag Link Wed Jan 30, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
Each state has slightly different laws, but we're supposed to submit all offers UNLESS the seller has given other instructions. If the seller has instructed their listing agent not to bring them any offers below a certain amount, or with certain contingencies, then the agent does not have to submit the offer. Again, each state is different.

Also, by going directly to the builder, you may not have been speaking with an actual REALTOR(r). REALTORS(r) are members of the Board of REALTORS(r) and subscribe to a Code of Ethics. Many times (in my area anyway) the builders hire licensed real estate agents. They don't join the Board of REALTORS(r) or subscribe to the Code of Ethics, so the rules will vary. And sometimes, the builders just hire employees who are not licensed at all, although this is rare. If that's the case, there is no incentive to the employee, regardless of the price... not legally anyway.

One more thing. You may have been trying to negotiate with a builder who does not negotiate. Some just don't do any negotiating. They set a price and that's that. And yes, it would be in your best interests to have your own representation. That should have no bearing on how much you pay for the home.
0 votes Thank Flag Link Wed Jan 30, 2008
When you say the realtor/broker working there, are they the realtor/broker working for the BUILDER? Or, was it some type of subagency thing?

It may help you out to bring in a Realtor if you're planning on negotiating with the builder, simply because they may be able to negotiate substantial incentives/discounts, and special clauses for you. If you find a builder and you're happy with what they're offering you and you feel confident & competent about the contract you will enter with them (let me note here-- no matter what, if you have financial or legal questions you should always contact a financial person or lawyer)--- then you probably don't need a Realtor. But, by the way Builders are hurting for money, being acquired or merging with other companies, or going bankrupt-- I would be very cautious. Contracts are only written for when "the crap hits the fan". You don't need a contract when things are going good. This is where a strong Realtor will help you out.

Usually, your Realtor needs to be with you on your first visit to the new home center/model homes when you register. If they are not with you, the builder does not have to pay the Realtor any commissions. Some builders that are strapped for cash will fight tooth and nail to keep that extra X%. Some builders that are strapped for cash but don't want to be 'blacklisted' by other Realtors in the area may still honor commissions.

A Realtor can negotiate lots of things for you, and have the appropriate verbaige for your contract with the builder. You could ask for incentives like waiving lot premiums and other 'home upgrade' costs the builder normally charges extra for. You could also ask for discount points at closing... just some basic ideas. Wording and how the incentive money "works" in the contract for the things you're asking for in concessions is key.

Hope that helps. Good luck to you!
0 votes Thank Flag Link Tue Jan 29, 2008

A Realtor® should always submit your offer. However, if you were at the builders site and the on-site Realtor® knew that the builder under no circumstances will accept an offer below a certain price, then the Realtor® was probably trying to save both you and the builder time.

Real Estate Brokers often times do receive incentives when working with new homes/builders. A good Realtor® will pass that benefit along to the client.

You pay nothing to enlist the help of a Realtor® or Real Estate Broker, so the benefit is only to you.

If you would like to chat further, my cell phone is 720.495.3838. I'd be more than happy to help you out and offer you the representation you deserve.

Kelly Lynne Bailey
0 votes Thank Flag Link Tue Jan 29, 2008
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