Builders usually welcome the real estate agent and will pay their fee if the agent is involved from the very beginning. There should be no problem adding an agent's fee to the price otherwise. I work as a buyer's agent and will be happy to help. Linda Watson

I just closed on a new home and I noticed the 3% fee that went to the realator who recommended the builder. I agree there should be compensation for the sale but 3% is too high for the services rendered in my experience. The agent provided no services to me other than the recommendation. This is just another piece of the housing bubble origin. Way too many hands in the cookie jar. When it comes to existing home sales it is a different story...agents can be very useful and should be compensated for all the work they do.

Very good answers from others. Ken is right on. They already factor this into the home prices. Contrary to the past, home builders look to build relationships with agents(at least the good builders do). And in reality, a home you buy that's not brand new has the commission factored into the price already as well. I know myself as a business person trying to put $$$ on the table for myself and my family, if a new home builder reduced the price of the home because someone went in without an agent(instead of working through me), I would no longer sell those new homes. There is actually a lot involved with a new home purchase that an agent can help with. And actually, if the agent has a good working relationship with the builder, they can usually get a discount off what would happen if a new home buyer just walked in through the door by themselves.

It is all done by averages. Good builders know how many houses will have FHA, how many VA, how many Conventional. They track points and closing cost figures from day to day. They know how many houses will sell with agents and how many without. Everything is averaged into the price. If a builder were to cut the price for someone without and agent, agents would no longer show their properties ... it only stands to reason. Most builders do require that the buyer/agent relationship is established up front ... and most builders would rather have an experienced agent on the buyer side to assist with the transaction. However, most builders do not appreciate people who bring in an agent at the last minute after all the work is done. You should visit http://www.NewHomesCashRebates.com and save more money.

The price you get from a builder has our compensation already built in. The realtor community is a marketing arm of the building community. Some builders may get up over 50% of their sales from the realtors. So as a builder you ask the question...do I spend more money on advertising, or do I pay realtors to bring buyers to my home? Either way, it is money spent on marketing. Will builders discount pricing if no realtor is used? I would say that happens very rarely. 2 reasons: 1st, they won't bite the hand that feeds them, so to speak. In return for bringing customers to them, they have reciprocated in compensating us. If you have the chance of 50% of your business coming from realtors, or for that matter, call it 10%, it's an easy call to spend the money. It's not up front money either. It's paid out at closing, unlike TV, Print or Radio ads that are prepaid. 2nd: When a builder starts discounting they run the risk of segmenting pricing within the community they are selling. They are protecting a price point. Can you imagine the problems they would have if they sold 10 exact models of a home, but all ten had different pricing? If I was one of those home owners that paid the most, I would be upset. By not discounting on realtor fees, they are protecting the integrity of the community. If a builder is willing to cut deals with someone, kinda makes you wonder what other deals they have cooked up. It's pretty well established that you won't gain much going alone on a new build. Since all builders budget, upfront, a certain percent of their homes will use realtors, and they average this across all sales, why would a buyer not want representation? A builder is in business to sell their product, which may not always be in your best interest. Realtor representation can help make sure you are not under or over building in a community. We will help with lot selection and suggest building under power lines, or next to commercial developments, might not be such a good idea on resale, even if you are getting a "lot discount" upfront. Most builders have in house loan arrangements, which might not give you the best terms. (Offering financing is another profit center for builders and you are a captive customer) I would argue I can negotiate better costs and rates than you can do on your own. We have the benefit of doing this many times through the year, have direct access to multiple lenders for competition, follow current rate and cost trends, and know what is acceptable and what is fluff. The average buyer does this only once every 5-7 years. A good agent will also know a little about construction, BAGI standards, and what are preferred practices on a job site.
We have the benefit of working with all the builders in the market. At some time or another all the major builders will call on our offices, remind us of specials, specs, or upcoming promotions. They will be in our office talking up their product, sending us emails and post cards, etc. There may even be special promotions for realtor customers that may not be advertised to the general public. It's probably there for the asking, but would you know what to ask for? Lot specials, free upgrades, financing specials, subsidized rates, gift cards,etc???
Just some random thoughts here. If you would like to talk more about new construction, or buying homes, I am at eric@karrfalt.net . If your in the market, I would like to earn your business. -Eric

Dear Fish,
Everyone here is right on target. The builders expect and allow for Realtor representation. You will get the same price whether or not you are represented. The difference is you will not have the knowledge of a professional to help you make decisions. I work for a Real estate company, The Mall House. in Tampa, FL that specializes in New Home Sales. Our agents are trained to research new communities, stay updated on builder inventory, and contract new home sales. We have preferred relationships with numerous builders who without us would not have the volume of sales that they do by encouraging us to bring our clients. Never kick a gift horse in the mouth. It does not cost you a penny!
Patricia Aponte, Tampa, FL

Agree with above. Builders have a marketing fund to promote sales. Best to have a realtor with you if ever consider building a house to make sure you have proper representation.

I'd be happy to assist you if you would like to pursue this.

I have experience working with local builders. I am closing on a transaction with Ryland Homes next week. Using a Realtor for your transaction will only benefit you. I saved my clients several thousand dollars on the "sale" price and helped negotiate a good rate for them on the mortgage. They are very satisfied with the outcome.

Realtors get paid from the advertising budget from the builder. It does not affect your price at all. Please be aware that on your first visit to a builder you must register your Realtor's name when you register with them. Some builder's Realtor Programs will exclude Realtors from the transaction, if you do not register them on the first visit. In the end, everything is negotiable, if you choose a good Realtor! If you have any further questions about this issue or any other real estate matter, please contact me at:

http://www.callcarpenter.com/agent/AgentContact.asp?CEQ_Agen…

I am always here to help!

Have a great holiday weekend!

Tony Wilson
Carpenter Realtors
317-354-7410
tonywilson@callcarpenter.com

Visit my website at http://www.CallCarpenter.com/TonyWilson

Home builders rely on real estate agents to help introduce clients to their home sites and home designs. The home builder pays a real estate commission on the home; the cost is not part of the home purchase.

In fact, buyers can gain much by working with a realtor when building a home. For example, an agent will negotiate on the buyers behalf, often getting the buyer more for their money. Experienced agents will understand how the home-buying process works, and can help buyers put together the offer. Good agents, also will stick with you through the whole process. For example, I recently went on a walk-through with a client who was building a home to help make sure everything was according to the purchase agreement, and helping put together a punch list of things that still needed to be taken care of. Last week I was with a client who went to a design studio to help them think through all their options; they wanted an expert opinion on decision that might impact the resale value of the house (why spending a bit more for 9 foot ceilings in the basement was more important than upgraded flooring, for example).

When you're spending hundreds of thousands of dollars, you want someone on your side, watching out for your best interest, and someone that you trust. And that's often the No. 1 reason that buyers work with real estate agents to help them through the home buying process. Builders understand that, which is why they provide agents with lots of information about their homes and home sites, and ask for us to bring clients to their communities.

You do need to make sure that you let the home builder know from the very first introduction that you are working with a real estate agent. If you want to know more about how the home building process works, I'd be happy to explain more.

Best,
Laura

Hi Fish44,

You're right. Agents can't work for free any more than you can.

Many builders add in the cost of Realtors to their marketing budget instead of the cost of the home,
because most of the homes they build will be sold by Realtors. So, to ensure the health of their
bottom line, builders strive for good relationships within the professional real estate community.
In fact, if you shop around, you'll notice many builders use Realtors to list their new homes too,
thereby costing them even more money to market their homes, but ensuring quicker sales.

Good Luck in your search,

Marita Topmiller
Century 21 Realty Group 1
513-4652