Home Selling in Hinsdale>Question Details

Clp 100, Other/Just Looking in Hinsdale, IL

If a buyer uses a realtor to purchase vacant land and the realtor is paid a commission at closing and then the realtor puts together the buyer with a

Asked by Clp 100, Hinsdale, IL Thu Sep 24, 2009

builder for a house, is the builder obligated to pay a commission to the realtor on the price of the structure?

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Patrick Thies SFR, CNC’s answer
Clp 100,

That's usually how it's done. The commission is paid on the final cost of the house or an agreed upon price of the house (upgrades by the buyer are usually not included in the final cost of the house). If that agent does not have some kind of relationship with the builder then they should have had the agreement in writing. In most cases builders know that if an agent brings them a buyer they will pay a commission to that agent on the final cost. One time builders or out of area builders may not know this.

Hi Debbie,

I would say that paying a commission to the agent is probably just understood in most cases. Most builders here have an agent they work with. The agent finds the lots and the builder builds a spec house on it then the agent lists that house. So when they do it that way they have all the proper listing forms and such that spell out the commissions. A lot of times agents have clients looking to build and bring a buyer to the builder who has a lot but nothing built on it. The builders know that they are probably paying a commission to that agent. The commission is usually just on the base build not any upgrades or extras. The agent that works with the builder usually gets a commission as well. It's almost like a custom build but the whole thing usually goes in the computer for both sides.

Good lots are a hot commodity around here and smart builders know they better work with an agent if they want to get them and keep building. The ones that don't come and go.
0 votes Thank Flag Link Fri Sep 25, 2009
There was an agreement between the builder and the realtor stating that the builder would pay a 2.5% commission on the "final contract price." Now the builder is reneging saying that he meant the final contract price means what his payment from the client is. He also is calling it a referral fee, not a commission. His end was about 100k and he wants to pay the realtor only 2.5% on that instead of the final price of the house which was close to a million.
0 votes Thank Flag Link Fri Sep 25, 2009
HI Patrick - I will certainly defer to your expertise in your area...
Just curious.....is this commission agreement in writing (or just "understood") between the builder and agent?
We have a lot of new construction in my area..if they are just selling the lot separately, no such agreement would be in place unless it was a package deal right from the onset, at whichpoint the price would be for the completed home

Thanks for the clarification!
Have a great weekend
Debbie
0 votes Thank Flag Link Fri Sep 25, 2009
Hi Debbie,

Hinsdale is right next to Elmhurst and there has been a lot of new construction homes going up over the past years. Buyers are free to choose whatever builder they want, however, it's very common around here that if an Agent puts the buyer and builder together that the agent will get a commission for those services. Most builders have a relationship with an agent and do the bulk of the negotiations and footwork on behalf of the builders.
0 votes Thank Flag Link Fri Sep 25, 2009
Hi Clp
My short answer would be "no",, the builder shouldn't be obligated to pay anything....UNLESS, as Patrick mentioned, there was some sort of written agreement between the parties ahead of time.

.Once the buyer purchased the lot, I assume he was free to find and work with any builder he chose.. Certainly, no commission would have been due under those circumstances.
0 votes Thank Flag Link Thu Sep 24, 2009
That's something the agent should have worked out with the builder ahead of time. The land is a separate transaction from the build. Many agents sell builders or buyers the lot and then get paid on the build for bringing a buyer.
0 votes Thank Flag Link Thu Sep 24, 2009
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