Wanting to build new construction after signing buyer agent agreement

Asked by Arby, Pittsburgh, PA Sun Jun 15, 2008

After looking for a house for the last few months, we decided to build our house. We were using an agent to look used houses, but certainly didn't include her on any discussions concerning building. Our "Business relationship Between Broker and Seller" agreement states that if we buy ANYTHING, then we owe our agent a commission. Is this true, and are there any ways to get out of these agreements?

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Sandy And Jay…, , Pittsburgh, PA
Mon Jun 23, 2008
The agent is there to protect you whether it is new construction or existing construction. The builder will pay the commission to the agent, not you. If he tells the buyer that he can save them money by taking the agent out of the picture...beware. The agent can negotiate things with the builder for you that you have not even thought of. Not necessarily the price,but inclusions, terms. Since the agent has been working with you for months it is only fair that he or she get paid for helping you . Finding a house is only half the battle. The work really begins when you find it. If you do not have an agent, you do not have representation,and are at the mercy of the builder. Best of luck to you.
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Jeffrey Benn…, Agent, Pittsburgh, PA
Sun Jun 15, 2008
As Mr. Ceparano points out, if you're happy with your agent (apparently you are if you've been with him/her for a "few months"), you're well served by just using your current agent with the builder. Most do pay Realtor commissions, although they may require a non-standard agreement of sale. There are lots of issues surrounding new construction where a Realtor's help is invaluable. Here are just two:

1) The deposit. Good luck getting it back from the builder if the deal falls through! You may have to pay a lawyer to sue them, and spend more than the amount of the deposit trying to get it back. A Realtor can have the money escrowed at the brokerage, which is a lot safer for you -- nobody gets it until closing or a release is signed by both parties.
2) Builders may give you trouble with the inspection, or even claim you don't need one. You do! I've had new construction clients whose inspections found egregious faults (e.g., several pipes jutting 2-3 feet out of the middle of the floor in the "finished" basement). A Realtor will take you through the inspection and walk-through process.

If the builder won't pay the commission, you may end up paying it (it would only be "half", and might be well worth it if you really want the house and the Realtor helps you negotiate a good price). If you're determined not to use the Realtor, you can always just wait out the time period of the agreement. By default, the agreements last 1 year, but usually agents write in shorter periods (e.g., 90 days).

Good luck!
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Rebekah Sieg…, Agent, Pittsburgh, PA
Sun Jun 15, 2008
You'll probably want to talk to an attorney for this type of advice, but you are right - there are scenarios in which if the Business Relationship was signed, the buyer's agent is a owed a commission regardless of anything else. You might want to check the details of the contract you signed, including the stated length of term, etc.
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Michael Cepa…, Agent, Tampa, FL
Sun Jun 15, 2008
It's hard for us to say, as we are not lawyers. But why wouldn't you want her to represent YOU when dealing with the builder, as she will be working for you, I would assume for FREE, as the builder would pay her, and protecting you from the "typical" catches of building. Remember, the builder is there for his best interests, not yours. Trust me, a builder could swallow you up faster then a normal seller, as their pockets are deep. Do yourself a favor and take the help. Good Luck.
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