Over the past year I have had many phone calls from agents asking how to answer the following question from their prospective clients: “Why should I hire a Realtor if I’m buying from a new home builder, after all, builders have their own salespeople?” The purpose of this article is to provide you with some answers.
Representation: A builder’s sales representative at the model home may look and sound like a real estate agent, however, the builder’s salesperson is a representative of the builder, and as such represents the builder’s best interest. You on the other hand are a licensed professional bound by law and professional ethics.
Negotiation: It is true some buyers can negotiate effectively. Buyer negotiations can be effective, as long as the buyer knows what incentives are typical and customary, how to compare alternative financing, who pays for what (title costs, appraisals, inspections, additional warranties, surveys, closing costs, etc.), what upgrades cost and how to apply builder concessions, and many other construction, legal and service and warranty issues. Your role is to make it look easy by knowing what questions to ask the builder on behalf of your client.
Inspections: This is a big one. You need to advise your client to get a home inspection. The number of new home defects may rival resale home problems in some situations. This issue alone justifies your involvement in the transaction. Buyers often think that the new home warranty will take care of all their problems. That is simply not the case with every home builder.
Buyer Agent Cost: The typical 3 percent commission comes from somewhere, right? Nobody charges the buyer the commission; the builder pays it. Reputable and honest builders absorb this cost as part of their expense base. There are occasional builders that skew prices to compensate, but this is considered to be both unfair and unethical. In fact today, many builders are paying bonuses and incentives to agents above the standard commission structure. Builders do understand how important you are to their overall sales success and go out of their way to make you an important part of the sale.
The Buying Process: This can become a bit tricky. Builders can become resistant to Realtors who show up at the builder’s model home after the buyer has been introduced to the home by the builder’s salesperson. The best process is to either shop with your client or at least immediately, by phone, inform the builder’s salesperson you are representing the buyer. It is important that you register with the builder as soon as possible. This insures that you are part of the buying process. It is strongly recommended you give your clients several of your business cards to give to a builder’s salesperson in case they visit a model home without you. Inform your client not to complete any paperwork or contract without you being present to review and provide advice.
In summary, a home purchase involves one of the biggest financial investments most people will experience in their lifetime. Ask your clients the following question: If you had a $100,000 income tax problem would you attempt to deal with it without the help of a CPA? Hopefully, your clients will understand the risk of purchasing a home without the assistance of a professional Realtor. Consider using the reasons discussed in this article to convince your clients that you, like a CPA, represent peace of mind.
Bob Hafer has been a leader in the housing industry for 40 + years. His extensive experience gives him unparalleled insight into the mysteries and marvels of home buying and selling. His background includes new home success in consulting, management, administration, sales, marketing, merchandising, research and sales training. In 2009, to complement his new home experience, he earned his real estate license. He is currently the VP of Business Development for HomesUSA.com. In 2016 Bob co-founded www.homesusaalliance.com with Ben Caballero. Its mission is to connect Builders and Realtors through communication and education. Contact Bob at firstname.lastname@example.org or call him at 972-795-5926.