I am a first time homebuyer and am looking to buy a new townhome. The community I'm interested in I have already visited and filled out a guest

Asked by Looking To Buy, Morrisville, NC Sat May 29, 2010

card. I have decided that this would be the best place for me. I have been going back and forth on getting a realtor because this is a to be built home and I didn't think there was much room for negotiation. The onsite agent told me that a realtor would have to have accompanied me to the initial tour. My question is: Could I still negotiate and ask for a 3% discount since I don't have a realtor? Also, what is an average range that builders might go down?

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Sheri Moritz, Agent, Raleigh, NC
Sun May 30, 2010
Looking to Buy;

Without a doubt every 1st time home buyer needs a buyers agent who is also a REALTOR. Not every agent is a REALTOR which requires additional commitments, ethics training and membership gives us access to more statistical data and past sales that a licensed agent who is not a REALTOR has. Not only do you need a REALTOR you should find one with extensive experience in the Triangle real estate market. I have been selling homes in the Triangle for over 18 years and have also been training real estate agents for 13. My experience has found that having the right representation can make all the difference in the world when getting to a successful closing. In your situation the builders rep work only for the builder and is required to construct a contract that is in the best interest of the builder and it is your obligation to ensure you have secured your legal rights as well as negotiating the most incentives (closing costs, upgrades etc). The builders rep will tell you that the builder won't pay an agent because they represent the builder and this would most likely be in their best interest. It is your obligation to seek assistance from a buyers agent to negotiate that response from them and protect your rights in the purchase. From my experience it is customary that the on-site agents say that but very few of our builders actually follow through on that when it comes to selling actually selling the house. Because I have sold over 1500 homes in the Triangle I know many of the builder reps and can only remember one builder in the past 17 years that didn't honor the buyer agency agreement and that was when homes were flying off the market.

A buyer's agent can help ensure the building process stays on track, facilitate home inspections and work with your lender and attorney through the closing. Again, the builders rep is not there to help you as friendly as they have seemed on your visits. They are legally obligated to get the builder the best terms and price possible. For example; a buyers agent is likely to recommend a home inspection where the on-site rep is likely to never mention it. However, I have yet to have a new home inspection that didn't have needed repairs. A builders rep is likely to recommend that you use their preferred lender where a buyers agent may have a list of several lenders to contact to find the best loan for your needs. A builders rep is likely to say that is the lowest price we can go and a buyers agent is likely to say lets make them an offer and see what they say. Can you see the difference? It is endless how many situations throughout the process you will want/need to consult an experienced agent looking out for your best interest.

The second thing in your situation to understand is that no one (especially the builders rep) can't tell you that you can't have a buyer agent. That is your legal right. However, agency representation and compensation are two different issues. What they are really trying to say is that currently because you signed in with them they are not willing to pay your buyers agent 2.5%. (You mentioned 3% but few if any of our builders in Morrisville pay 3%.). No one can nor should they tell you that you can't have a buyers agent but they can tell you that to have that representation you could be responsible for the payment of that agent (or more likely the agent with negotiate a fair commission payment with the builder). Many buyers agents including myself would be willing to negotiate a reduced commission in a situation like this where you have narrowed it down to a community you are happy with so you would be able to have buyer agency representation and the builder would have a house sold. Feel free to email me through Trulia with any specific questions and if you are comfortable with disclosing let me know the community you are looking at as it is likely I know the on-site agent and could speak with them about options for getting you representation. Best of luck and congrats on purchasing your first home.
1 vote
Sarah Mendel, , Morrisville, NC
Wed Jun 16, 2010
It is always good to have your own Representative or Advocate. The seller ONLY represents the builder, not YOU the buyer. Despite sluggish market there is always room for negotiation be it price reduction or upgrades. My question to all buyers is "how do you know the asking price is correct price"? Do you have access to real comparables? Your Agent does. Do you think the seller cares about your bottom line or theirs?

There are other issues you need to consider when purchasing and financing a new home. Do you know buyers have mortgage choices? Do you know how to get a good mortgage that meets your needs at a low interest rate? How to negotiate your loan without paying junk fees........ all these issues require serious consideration and information gathering.

My advice to all Buyers is get representation - you need a Real Estate Professional to negotiate on your behalf - unless you are willing to accept anything might and could go wrong. I work diligently for all my buyers, it is not just the sales price but all the little issues on the way to the Close table like repairs, standard of workmanship, finishes, home warranty after the sale - unless you are very familiar with home buying get a professionals help - it won't cost you anything..

Good Luck!
0 votes
K.C. McLaugh…, Agent, Cary, NC
Sun May 30, 2010
You never know what the builder will accept until you try. The last new construction transaction I had we were able to get every upgrade available, requested a premium wooded lot, $3000 in closing costs and still got it for $80,000 less than the builder estimated. Originally my buyer was a cash buyer, but then decided to finance a portion.

The builder should honor your relationship with your builder - especially if you have a written document to show them. Explain the circumstances and be firm.

Good Luck!

K.C. McLaughlin
Web Reference:  http://www.kcmclaughlin.com
0 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Sat May 29, 2010
Hi there, it is common for builders and their agents to require agents to be with you when you register the first time in order for the relationship to be honored and your agent to be paid. I had an experience similar to what Dan describes - established relationship with a buyer, confirmed appointment to see the property the following Wed., but that weekend my buyer decided to stop in as they were leaving town - totally unplanned, really on a whim...and I was out of town. The builder's agent registered their name and essentially I was out. I called the agent immediately upon learning that they had visited to connect the dots - but to no avail. In the end, my buyer refused to consider the home if the builder would not honor the relationship.

Your agent will be able to help you a great deal in negotiating a good price. There is always room to negotiate, either directly on price or by adding upgrades/extras. An agent can help you with this.

If the builder refuses to pay, and you feel you will benefit from teh services of an agent, you can pay the agent yourself.

Good luck!
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:  http://www.feenick.com
0 votes
Joe Matthews,…, Agent, Cary, NC
Sat May 29, 2010
My answers first; then the explanation. You may still negotiate but if that is a reputable builder respecting the Realtor community (most builders get more than 80% of their buyers through Realtors), they WILL NOT hand over to you the 3% in-lieu of the Realtor commission. About an average range of discount, there is nothing like an average range. It DEPENDS.

Now, about having a Realtor on your side, it is not just for negotiation. A buyer agent is somebody who is on you side, to represent you throughout the process. That person is there while you do the home search, contract, walk through's with the builder, loan issues, closing statement review and final settlement at the attorney's office. In each of these stages, you can come across issues, sometimes issues you have never heard of. It can all happen. But an experienced buyer agent, using his/her education, knowledge and experience with each builder can fight for you and navigate you through, smoothly.

In addition to all the above, builders may be open to negotiation with an experienced agent (or even allow an agent even if he/she did not accompany the buyer at the first visit) because they know this person from past deals or he or she brings in a lot of customers.

In addition to all the above, some agents (like me) might be ready to share a part of their commission with you towards your closing costs etc. at settlement through HUD. That will be the icing on the cake.

Therefore, my suggestion is, don't think twice in getting a Buyer agent to help you through the buying process. You have nothing to lose but everything to gain.

Joe Matthews, Broker
Real Triangle Properties
Web Reference:  http://www.RealTriangle.com
0 votes
Kelly Smith, Agent, Garner, NC
Sat May 29, 2010

Dan is right. You can offer what ever you want for any reason or no reason at all as far as price, term, closing costs, etc. However, the builder may decline your offer or counter back, especially since this sounds like a pre-sale, (you pick lot and build from the ground up). Typically this is much more involved for both you and the builder since you will be picking colors, flooring, and other changeable features and incurs more cost for both parties.

As far as you being represented by an agent, the builder's representative can not dictate an agency relationship when they have not signed any paperwork with you nor created any verbal agency, (signed buyer agency is not equivalent to a guest registration). In our office's experience when this has come up the builder has honored the buyer agency relationship even if it was created after a visit. Hope this helps.

Kelly R. Smith
Triangle Smith Team
Web Reference:  http://www.wrcasold.com
0 votes
Dan Chase, Home Buyer, Texas City, TX
Sat May 29, 2010
You can ask for anything you want. You can offer anything you want. What the builder will agree to is a different story.

Their agent may think a realtor had to be with you. But what if your realtor was sick and you went anyway? What if your agent was busy and you looked before bothering them? There are many different reasons a realtor might not be with you even if you had a realtor already.

I would ask a local realtor or agent what they think.

I would also offer low. You never know what a builder will do until you try. If they do not agree seeing you walk away could change their mind.
0 votes
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