Question Details

Michael Roth, Home Buyer in San Francisco, CA

Why should I use an agent if I am buying directly from a developer?

Asked by Michael Roth, San Francisco, CA Sat Jan 17, 2009

I am interested in buying a condo in SOMA directly from the developer and I don't need a buyer's agent. I would be working with the developer's sales rep. However, I know that I can work with an agent if I want to. I was thinking I could get a better deal because the developer wouldn't have to pay any commissions. So, I'm just wondering what will increase my chances of getting a better deal?

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Michael, since the only issue you're addressing seems to be the "savings"... let's address that directly.

Yes, I'm sure the developer will give you a "discount" perhaps a couple thousand dollars off the list price, for being unrepresented and he doesn't have to pay a buyer's agent.

BUT, buyer's agents are far more familiar with the developers in the area. They know the weaknesses and strengths of the particular developer and the particular building. As an example, one of the developments in our area was known that they would STONEWALL on price. They wouldn't budge a dime, with or without an agent.

BUT, we agents knew, that the reason they didn't want to budge, was because they didn't want it to show on the tax records that they had discounted any units... 'cause that would anger other owners in the building, as well as affect future sales.

We agents knew, however, that they were MORE than willing to negotiate FREE upgrades... such as granite counters, upgraded appliances (stainless package), in-unit washer and dryer (the unit only came with a hook-up), and an extra free parking space... None of those things showed up on the tax record... and these savings represented more than $25,000... if you include the parking space.

So.. while you might save $2,000 - $3,000, the buyer's agent's expertise might save you dramatically MORE.

Don't be penny-wise and pound foolish.

There are plenty of other reasons to want a buyer's agent representing you... but that seems to be the one you're concerned with.
0 votes Thank Flag Link Sat Jan 17, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Micahel,

Please read some of my other answers to similar questions about dealing with new home developments. You're logic makes sense to someone from the general public, but the reality is that the builder/ developer doesn't save on the commission, it just all goes to the company that is doing the marketing for the builder. The builders/developers are relying on relatively uninformed buyers walking into their sales office so they can create a sense of urgency and get the buyers to leave a check. No new home agent will tell you prices are going to go down. They'll always tell you that they're selling well and this is the price, so you better buy one now before they're all gone. The sales agents have an ethical responsibility to get the highest price possible for the builder, so even if the prices are going to go down the next week, they are not allowed to tell you that.

Now for a quick reality check on SOMA and prices. Waittttttttttttttttttt...prices are going down.
0 votes Thank Flag Link Sat Jan 17, 2009
WE handle more calls and emails across the country when a buyer believes they can handle a sale transaction between either a builder / developer / listing agent / direct seller. At that point it is tooooo late become involved for either a realtor or attorney, and buyer has lost $1000's to $10,000 - or + on escrow money paid and etc. they did not read the fine print OR understood exactly all details were in an executed contract signed between buyer and seller.

Builders like realtors business if our buyers are treated well we bring back other clients to community sale more properties. As agents we pull MLS listings determine house value, we are aware of other new construction pricing similiar areas , list is endless on how we protect you as a buyer vs. a developer looking for a higher profit margin.

Many developers know the fine print wait for you violate the contract therefore keep your earnest money. There is nothing you can do about it. ! You signed the contract.

Realtors have e & o insurance your protection. Real Estate Agents we have team of professionals who are dispatched regarding security of your purchase most buyers are not seasoned enough understand why's. I love those calls " IF WE ONLY KNEW". "Gosh wish we had a realtor involved from the beginning"

I only NAMED a few thoughts , the list is endless.

EXAMPLE: Would you go to court represent yourself against a seasoned attorney OR would you have your own attorney represent you.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sat Jan 17, 2009
Your interests would be better served with your own Buyer Agent. The developer's sales rep is working for the developer. Commissions have already been accounted for in the developer's budget, so that should not be a concern for you. Your agent not only can help you negotiate a price, but can help you in determining resale marketability. I have seen instances where a buyer has purchased directly from the developer and has paid a premium for options, and location that did nothing for the resale value. Seek the advice of a local agent. Good Luck!
Web Reference: http://www.VassiSaviano.com
0 votes Thank Flag Link Sat Jan 17, 2009
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