Do builders like Toll Bros pay agents at settlement who bring in a buyer? I heard they pay up to 5%...Is it fair to ask my agent for 1 or 2%?

Asked by Steve, Sterling, VA Fri Oct 15, 2010

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James Deskins, Agent, Worthington, OH
Fri Oct 15, 2010
BEST ANSWER
Steve, it sure is. Funny how my colleagues jumped all over this one. All is fair in love, war and real estate. Go for it.

And here's why it's fair: if I'm your Realtor and you are looking at (2) houses, virtually the same price, and I get 3% for one and 5% for the other which one might I want you to buy? Yeah, every Realtor will say "I would NEVER influence a buyer (or seller) for more money." Human nature is human nature. Why do you think so many agents don't have a problem with dual agency (same agent for buyer and seller). Double commission. Again, it's human nature. There will always be somebody who is influenced by $$$. You would be naive to think otherwise. Maybe not your agent. Maybe not me. But I'm on our local grievance committee and I've done this for 15 years. Some people ARE influenced by money. It's part of life.

Steve, I actually have a clause in my agreement that says if I'm offered more than 3% that I give the additional amount back. That kind of thing is done around here a lot. Nothing wrong with it at all. My answer is predicated on the agent getting 5% so let me make that clear.

Go for it, Steve, and stand your ground. And don't forget: the market determines what somebody gets paid, not opinions of Realtors. What do I mean by that? If 3% is common in your area and your Realtor won't cut by 2% I guarantee you can find somebody who will. I am NOT saying to get rid of your Realtor or ANYTHING like that. I'm just saying that it's not wrong to ask. Everything is a business transaction and everything in life can be negotiated.

People talk in platitudes a lot. If a buyer-client of mine asks me to cut my fee from a builder and I think he might get another agent or go straight to the builder I might say yes. Why? Because I'm playing the odds and deciding if "less fee" is better than "no fee." I think some Realtors don't quite understand this. I'm not saying I do it often or that I like being in this position but sometimes we have to make the hard calls. IMO, 3% is much better than 0%. The math is pretty easy on that one.
1 vote
Jim McCowan, Agent, Arlington, VA
Fri Oct 15, 2010
The commission will be in the contract. I don't understand why buyers think agents should give them part of their commission. I wonder how many buyers would agree to give back part of their salary?

If you don't think your agent deserves it then maybe you need a new agent?
4 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Fri Oct 15, 2010
Steve - builders are paying agents in this market, and sometimes it is a higher than normal fee (not always). HOWEVER, no I would not agree to give you any portion of that unless there was some extenuating situation. I just closed a deal with Van Metre for a buyer client. AFTER we had a ratified contract, I negotiated things on his behalf that ended up putting almost $9K extra in his pocket having to do with BS the builder was trying to pull and I simply wouldnt let them. Could the buyer have negotiated this on his own? (Shrug) He tried, and failed. He didn't think I'd be able to help him when he told me of his concerns, and was thrilled when I was able to get things put together for him. Does that happen in every transaction? Nope. However, it might happen. Agents have the ability to use their knowledge, and the collective knowledge that we as colleagues share, to your benefit. Most people buy no more than 3 or 4 houses in their life - sometimes not that many. I close that many a month. That leads to a LOT of knowledge....Knowledge and experience that benefits my clients directly in the form of better decisions, lower risks, comprehension of the situation and "what ifs", a list of alternatives for when bad things happen...and you can't underestimate the value of mental and emotional support. Keep in mind that we always work on contingency. If you want out of the contract, it is our job to help you get out and not get paid. And, we do it. Seriously? Name one other profession where that is the case. Agents deserve to get paid....the same way that you deserve to get paid for the job you do. Respect that.
Web Reference:  http://www.vickychrisner.com
2 votes
Lauryn Eadie, Agent, Reston, VA
Tue Aug 23, 2011
I think Jim said it best. I am sure there are plenty of agents that would agree to give you a cut, but if you had a lawyer that discounted their fee because they needed the business and you were going up against a company like Toll Brothers that has lawyers coming out of the wazoo...who would you want to represent you? Probably an agent that does not need to discount their business to stay in business!
1 vote
Ritu Desai, Agent, Chantilly, VA
Fri Oct 15, 2010
As few of them have mentioned. Different builders have different programs for Realtor. Some will offer us bonus commission to sell a spec home while other appreciate repeated business they will give additional incentive on commission.

Everything in real estate is negotiable.

Interview with the Realtor rather than just getting caught up who is giving you the maximum rebate. Make sure that does not exceed the amount on your closing cost.

Good Luck!!

Ritu Desai
Associate Broker at Samson Properties
Cell: 703-625-4949
Web Reference:  http://www.eNOVAhomes.com
1 vote
Heather Elias, Agent, Ashburn, VA
Fri Oct 15, 2010
Steve,
It totally depends on the builder. Some offer higher commissions than others, sometimes it depends on whether it is a 'quick delivery' home or not. Your agent should tell you what the builder is paying to them in a commission, and the contract should specify as well. I will disagree with the out of state agent below who said that the builder does all the work... a good buyers agent will help advise you through the contract process even as the builder's representative fills out the paperwork. (A good buyers agent would also bring you market data to help you make sure you aren't overpaying for your new home, too, so that you can make prudent decisions on that purchase contract.)

~Heather

Heather Elias
571-233-5491 (mobile)
Heather@LoCoMusings.com
Century 21 Redwood Realtors
Ashburn, VA 20147
Licensed in Virginia

http://www.LoCoMusings.com
http://www.LoCoMarketStats.com
http://www.facebook.com/LoCoMusings
Web Reference:  http://www.locomusings.com
1 vote
Michelle Tre…, Agent, Huntley, IL
Mon Dec 15, 2014
Plain & Simple: The Commission Agreement is between the seller (the builder) and the broker (real estate company) -- not between the seller (the builder) and the buyer; therefore, this is not an agreement that is possible for a buyer to negotiate as the buyer is not a party to that agreement. However, the buyer can negotiate his/her Purchase Agreement with the seller (the builder).
0 votes
EmpoweredBuy…, , Bethany, OH
Mon Jan 10, 2011
We have professionals in the area that can assist you and offer to share the commission.
0 votes
Brenda Feria, Agent, Richmond, VA
Sun Oct 17, 2010
Steve,
The agent who has signed up as your buyer's agent, should disclose to you their compensation before the contract is written. It should also be dislosed in the contract. You have a right to know what your agent is earning on the house that you are buying. That being said, the builder is offering this incentive to the agent, not the buyer. Even if you want the builder to compensate you, does not mean that he can or will. Sometimes incentives are in the form of trips or getaways. These should also be disclosed. If the builder is paying closing costs for the buyer (limit allowed per lender), they cannot pay any additional closing costs or the loan will not be approved. Additonally, builders do not want to reduce the prices in the development because that could affect future appraisals. As you can see, there is a reason that the agent is targetted for the incentives in many instances.
0 votes
Monir Mamoun, Agent, Denville, NJ
Sat Oct 16, 2010
Steve this is a sensitive issue because the agents are working for the money. And it is not necessarily the case that they will pay that much. Probably depends on the property. Certainly most NEW property actually pays a LOWER commission for most brokers.
0 votes
James Deskins, Agent, Worthington, OH
Sat Oct 16, 2010
It wouldn't be a "discount broker" if the commission is at the going rate (which in this case they are asking to lower the "bonus" by 1-2%). If 3% is what discount brokers do tell me where to sign up.

BTW, Steve, if an agent won't give you full representation and due diligence for 3% I'd think about finding one who will (in theory, that is. Not telling you to get rid of your agent). There are PLENTY of agents who will work their tail off for a 3% deal, especially since that is about the going rate in many markets. The buyer's broker fee is usually 3% in my market and agents are happy to do their job to make that. Don't let anyone fool you.
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Sat Oct 16, 2010
Hi Steve:

Different builders have different programs.

While it is fair to ask, the motivation to negotiate and show will not be there.

What you need is then a discount broker, who does it for less but you set the price, and see if it sticks
and he gives you feedback.

However, if you set a goal for your agent to negotiate say 15% off the ask, and he keeps his / her
commissions wouldnt it be worth it for you?

Best Regards
Perry
Web Reference:  http://www.ruthandperry.com
0 votes
Lisa Moroniak, Agent, Ashburn, VA
Sat Oct 16, 2010
For what it's worth, another vote on the subject. As some of my collegues previously agreed, I too balance the value I bring clients with my compensation - also factoring in how easy the client is to work with.

If a builder is taking work off my plate while maintaining the interests of my client, I am inclined to offer a cashback incentive. It frees up my time to take on more clients.

Regardless of the final agreement a client reaches with their agent, the level of service you get from your agent should not change. Your Agent should always be looking out for you, "quarterbacking" the process. Make sure you agree to a plan of action -in writing if possible- from your initial consultation to closing.

All my best,
Lisa

Lisa Moroniak | REALTOR® | Service360°
Keller Williams Realty
Phone: 703-635-0388
Fax: 703-679-1701 http://www.LisaMoroniak.com
Licensed in VA
Web Reference:  http://www.LisaMoroniak.com
0 votes
Tina Beasley, Agent, Saint Augustine, FL
Fri Oct 15, 2010
Steve,

I was not trying to be mean, but make a point that we work hard for our clients. I am one of those agents that go the extra mile for all of my clients. I offer money towards your closing or towards a home warranty. I have staged homes for my sellers for FREE and I have helped them get repairs done at deep discounts, etc. I totally believe in helping my clients any way that I can. However, I was just trying to find out why you were asking this question in the first place. Just curious. Please share with me. Thanks! (And of course, the other agents here are all making great points about how we get paid through builders...cudos to my peers.)
0 votes
Cindy Jones, Agent, Alexandira, VA
Fri Oct 15, 2010
Steve I will also say many times when you see a 5% commission offered it is cumulative. First buyer the agent brings is 3%, next one 4% etc. I do always pass on agent bonuses and additional commission to the buyer with the lenders approval. And sometimes that gets to be the tricky part. If the builder is offering a 10K incentive and then the agent offers a commission "rebate" of 2% then you may have exceeded the allowable closing cost credit from the lender. Since everything must be reflected on the HUD-1, no under the table money allowed, then you may have an issue.

Good luck and glad to hear you have an agent you have confidence in helping you get the best deal in today's market.
Web Reference:  http://www.cjrealtygroup.com
0 votes
Steve, Both Buyer And Seller, Sterling, VA
Fri Oct 15, 2010
All,

First, thanks for everyone's feedback (except Tina, who is mean), even though I feel like you're all ganging up on me! I certainly understand the agents position and my intent is not to take food off the agent's table but to put the commission on par with a re-sale's commission, which I believe it typically 3%. My agent will receive 3% off the sale of my home plus 5% off the purchase of my new home, far greater than what I thought was typical.

Also, my agent is great and I fully trust that he will continue to do an outstanding job for me throughout my sell/buying process. But that doesn't necessarily mean I should overpay him. I'm smart enough to know that the extra 2% on a $600k home ($12k) is added to the price I'm paying for the house. Thus, I thought it was a fair question to ask.

For those, like Tina, who were insulted by my question I apologize but consider yourself lucky you don't have a client like me...Cindy and Heather, thanks for keeping your answer unbiased.

steve
0 votes
Scott Miller, Agent, Boca Raton, FL
Fri Oct 15, 2010
Yes, sometimes builders do pay up to 5% but not often.

No, it is not fair under any circumstances for you to ask your agent for 1 or 2%.

Scott Miller, Realty Associates, Boca Raton, FL
0 votes
Joe Gillis, Agent, Warrenton, VA
Fri Oct 15, 2010
Steve:

Lets see..... You do your homework and hire a top notch real estate professional to represent your interests in a transaction to buy a new home. Through discussions with you, your agent determines the kind of home you want, takes you to new home builder models that feature the kind of home you want in your price range and after you find one, your agent negotiates with the builder to deliver your new home in the time frame that meets your needs at the best possible price. Afterward, your agent will arrange for a home inspection conducted by a licensed professional to assure the quality of construction you expect and then negotiate with the builder to correct and deficiencies found. When all is ready, your agent will be present at settlement to assure that everything agreed to by both parties has been satisfied. All of this and much more that I haven't described here because of space and absolutely free to you!

Without knowing the extent or complexity of the services your agent provides to you, why would you think it's OK to ask the agent for part of the earned commission? Remember that the sales agent works for and represents the interests of the builder. Your agent represents your interests. In my opinion, a very good deal for you.

Good Luck with you home purchase.

Joe
0 votes
Tina Beasley, Agent, Saint Augustine, FL
Fri Oct 15, 2010
Good grief Steve!

I would like to know what profession you are in at the moment. And, if I were to come to you and ask you for part of your salary as a rebate for working with you or your company...would you want me as a client/customer? I doubt it. Please, let us earn our money and do the job for you that we are being paid for. Protecting your interest and helping guide you with a huge personal decision and financial investment. If you hire a good REALTOR to help you, you will feel that they definitely earned their money. If you don't feel that you need an agent...just go to the builder directly and see how much "skin" they take off of your hide before the deal is closed. All that I can say to you if you do that is "Good Luck"!
0 votes
Cindy Jones, Agent, Alexandira, VA
Fri Oct 15, 2010
Steve the simple answer to your question is yes builders do pay agents who bring an client to their site and help them make the decision to purchase. However the second part of your question is between you and your buyer's agent and should be discussed upfront before you head out for any showings.

An agent who understands the difference between selling new homes and re-sale will earn every penny of their commission. They will keep you from making costly mistakes during the sales and construction process.

Here is a new construction guide I put together for my clients to read.

http://issuu.com/cijones52/docs/new_construction_buying4
Web Reference:  http://www.cjrealtygroup.com
0 votes
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