Buying new construction from a builder - a couple of questions

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evening rose_IHB

New member
We are considering buying a new home from a builder. We visited the site over the weekend and saw a house that is already built but the price seems too high for us.

Here are my questions:

1. Is it advisable to bring a realtor to negotiate for me? If I signed in during the visit, does that mean I cannot bring my realtor to represent me (that is what she told me)?

2. Is there a way to find out for how much the other houses that were recently sold in this construction were sold for? It is not in the MLS after all...

3. If I bring my realtor, does the fact that they have to pay her commission affect the amount of money the builder would be willing to give me?

4. If it does affect, is it reasonable to ask my realtor to refund me for some of her commission?



Thanks a lot to anybody who can help me, I appreciate it.
 
[quote author="evening rose" date=1227060802]We are considering buying a new home from a builder. We visited the site over the weekend and saw a house that is already built but the price seems too high for us.

Here are my questions:

1. Is it advisable to bring a realtor to negotiate for me? If I signed in during the visit, does that mean I cannot bring my realtor to represent me (that is what she told me)?

2. Is there a way to find out for how much the other houses that were recently sold in this construction were sold for? It is not in the MLS after all...

3. If I bring my realtor, does the fact that they have to pay her commission affect the amount of money the builder would be willing to give me?

4. If it does affect, is it reasonable to ask my realtor to refund me for some of her commission?



Thanks a lot to anybody who can help me, I appreciate it.</blockquote>


1a. Maybe.

1b. No. You can bring your realtor but the small print from where you signed in <u>probably</u> precludes realtor from getting paid a commission. Irvine Co is very particular about this. She can still help you, though.

2. Yes. (but difficult).

3. Yes. Builder looks at <strong>net offer</strong>.

4. The Horror!
 
[quote author="evening rose" date=1227060802]We are considering buying a new home from a builder. We visited the site over the weekend and saw a house that is already built but the price seems too high for us.

Here are my questions:

1. Is it advisable to bring a realtor to negotiate for me? If I signed in during the visit, does that mean I cannot bring my realtor to represent me (that is what she told me)?

2. Is there a way to find out for how much the other houses that were recently sold in this construction were sold for? It is not in the MLS after all...

3. If I bring my realtor, does the fact that they have to pay her commission affect the amount of money the builder would be willing to give me?

4. If it does affect, is it reasonable to ask my realtor to refund me for some of her commission?



Thanks a lot to anybody who can help me, I appreciate it.</blockquote>


1. Sure, but builders, depending on the sales rep, can be anal about this. If you don't bring the agent on your first visit, the builder can refuse to extend the broker co-op of around 3%. The rationale is, the agent is suppose to bring you in, not you brining in your agent.



2. Not sure. An appraiser might have access to this for purposes of comps.



3. Maybe. From what I understand, assuming the builder is willing to pay out a broker coop, despite you failing to bring the agent in on your first visit, this amount is taken out of the "marketing budget." So the builder has already ear-marked those funds. I think the position you should take is "Look, I've been working with an agent for the past few months and she recommended I visit the community. There was miscommunication about when I should visit, and the intent was for us to come out together, I don't want my agent to lose out from all the work she's put in because of this miscommunication."



Typically, the builder doesn't need or want the agent to be involved in the process since the builder has the purchase contract and everything else, but there is nothing that says the agent can't come in with you during negotiation sessions.



In terms of leverage, if the builder does not want to give you the coop and says you're assed out on that front, you should use it to your advantage. Builder should either give you that amount in upgrades, knock it off the purchase price, apply it to closing costs, or a combo of both. In this shitty economy, the leverage is all yours. Make it clear that if they don't want to pay out your agent, you're aware that is something that can still be applied. If they tell you otherwise, call the builder's bluff.



4. Depends on your relationship with the agent and how invovled in the process she will be. If it's a friend and that friend hasn't done much up to this point, splitting the commission would be more than fair. Again, if you are relying on the agent to negotiate, expect less on the back end. This should be all negotiated with your agent ahead of time. But during these times, I can imagine that your agent would be less willing to kick you back money (maybe except for buying you a washer and dryer), especially if she's already done some work for you. She will expect comp for her full service.



I think you are better off negotiating with the sales agent face to face. The builder makes the final call as to what offer it is willing to accept. If the sales agent likes you, sees that she is helping a good family get into a good home, the sales agent may be able to push the builder on things because she is advocating for you. The sales agent might get you the tiles or hardwood floors you really want or convince the builder to pay your closing costs or knock of the purchase price. Your own agent may get in the way of this. But the agent can advise you on the back and forth.



PM me if you need the name of an agent. What's the price range of the house? The agent I know would be more than willing to come sign the broker coop agreement (and after deducting about $1200 in broker fees - the person I know is an agent, but not a broker, so will have to go through a broker who charges its own admin fees), might be willing to keep the 1/3 of the broker coop and kick you back the rest so you have cash for furniture and appliances. He may advise you on negotiation points, but I think it's more effective if you go in yourself with the family.
 
[quote author="evening rose" date=1227060802]We are considering buying a new home from a builder. We visited the site over the weekend and saw a house that is already built but the price seems too high for us.

Here are my questions:

1. Is it advisable to bring a realtor to negotiate for me? If I signed in during the visit, does that mean I cannot bring my realtor to represent me (that is what she told me)?

2. Is there a way to find out for how much the other houses that were recently sold in this construction were sold for? It is not in the MLS after all...

3. If I bring my realtor, does the fact that they have to pay her commission affect the amount of money the builder would be willing to give me?

4. If it does affect, is it reasonable to ask my realtor to refund me for some of her commission?



Thanks a lot to anybody who can help me, I appreciate it.</blockquote>
1. Maybe as IR2 states. If you already signed in without a realtor, that means a realtor that you might have would not be paid commission if you bought the property.

2. You can find out, either visit the county recorders office or have a realtor check online for you (there's usually a 1 month delay).

3. You may be able to negotiate a lower sales price yourself without having a realtor as you know that most builders pay a 3% commission to the buyer's agent.

4. I would definitely ask your realtor to contribute some of their commission into escrow for your closing costs (asking them to give you money outside of closing can get the agent in trouble and they are liable for all of the taxes on the commission income). I normally contribute 50% of the commission I earn on buy transactions to my buyer's escrow for their closing costs, but then again I'm not a full-time agent needing to make a living via commission income.
 
[quote author="usctrojanman29" date=1227064755]

4. I would definitely ask your realtor to contribute some of their commission into escrow for your closing costs (asking them to give you money outside of closing can get the agent in trouble and they are liable for all of the taxes on the commission income). I normally contribute 50% of the commission I earn on buy transactions to my buyer's escrow for their closing costs, but then again I'm not a full-time agent needing to make a living via commission income.</blockquote>


I'm not a tax professional, but to address the tax issue on 4, while that is true the agent is liable for taxes, if the agent kicks it back to the buyer, the agent can write this off as a business expense, as i understand it. Whether the buyer pays taxes on this amount is another matter.
 
When the listing agent states commission split 4%.

Does that mean 4% is the entire commission, with the listing and selling agent each getting 2%?

Or something else
 
[quote author="tenmagnet" date=1227065231]When the listing agent states commission split 4%.

Does that mean 4% is the entire commission, with the listing and selling agent each getting 2%?

Or something else</blockquote>


The 4% advertised is offered <strong>for </strong>the broker representing the buyer <strong>from </strong>the broker representing the seller. Usually it's half of what the listing agreement states but it is up to the listing broker to determine. For 4% offered, I'd guess that it is not an 8% listing, but instead probably a 4% to buyer's agent and 2% for listing agent. Sellers can specify this breakdown in their listing agreement or leave it up to broker's discretion.
 
[quote author="tenmagnet" date=1227065231]When the listing agent states commission split 4%.

Does that mean 4% is the entire commission, with the listing and selling agent each getting 2%?

Or something else</blockquote>


A listing agent for a new build? I've seen some communities offering a 4% broker coop in this market, but in those instances, the "listing agent," is the group hired by the builder to sell the units, unless the builder gets desperate and also enlists the help of other agents to sell the property. But in that case, if there is a split, the buying agent would get 5 or 6%?
 
[quote author="JLegend" date=1227064991][quote author="usctrojanman29" date=1227064755]

4. I would definitely ask your realtor to contribute some of their commission into escrow for your closing costs (asking them to give you money outside of closing can get the agent in trouble and they are liable for all of the taxes on the commission income). I normally contribute 50% of the commission I earn on buy transactions to my buyer's escrow for their closing costs, but then again I'm not a full-time agent needing to make a living via commission income.</blockquote>


I'm not a tax professional, but to address the tax issue on 4, while that is true the agent is liable for taxes, if the agent kicks it back to the buyer, the agent can write this off as a business expense, as i understand it. Whether the buyer pays taxes on this amount is another matter.</blockquote>
That is true, however if the IRS comes knocking and the realtor don't have verification of the money going out via an invoice or 1099. The main benefit for kicking money back into escrow for the buyer is that the agent never has to pay taxes on it and all it does for the buyer is decrease is cost basis a bit.
 
[quote author="IrvineRealtor" date=1227067313][quote author="tenmagnet" date=1227065231]When the listing agent states commission split 4%.

Does that mean 4% is the entire commission, with the listing and selling agent each getting 2%?

Or something else</blockquote>


The 4% advertised is offered <strong>for </strong>the broker representing the buyer <strong>from </strong>the broker representing the seller. Usually it's half of what the listing agreement states but it is up to the listing broker to determine. For 4% offered, I'd guess that it is not an 8% listing, but instead probably a 4% to buyer's agent and 2% for listing agent. Sellers can specify this breakdown in their listing agreement or leave it up to broker's discretion.</blockquote>


I think you?ve got it right.

4% for the buyer?s agent and 2% going to the listing agent.

Thanks for the response and for clearing that up.
 
[quote author="evening rose" date=1227060802]We are considering buying a new home from a builder. We visited the site over the weekend and saw a house that is already built but the price seems too high for us.

Here are my questions:

1. Is it advisable to bring a realtor to negotiate for me? If I signed in during the visit, does that mean I cannot bring my realtor to represent me (that is what she told me)?

2. Is there a way to find out for how much the other houses that were recently sold in this construction were sold for? It is not in the MLS after all...

3. If I bring my realtor, does the fact that they have to pay her commission affect the amount of money the builder would be willing to give me?

4. If it does affect, is it reasonable to ask my realtor to refund me for some of her commission?



Thanks a lot to anybody who can help me, I appreciate it.</blockquote>




1. It is too late as they where not the percurring cause for you to come visit the first time. If the agent looks the other way and i have personally seen Realtors mess up the deal all the time and cause more problems than it is worth which at that point they will try to make you buy a resale. Most, but not all resale agents are inexperienced let alone good at negotiations as most look out for their own interests first. Do your own homework and walk around the community and talk to the people who live there. Start shopping the builders competition and comparing. The other trick is visit the models of the builder and the competitions models and start talking to the people in them as you will find buyers in escrow with the builders and people who have done their homework and you can compare notes, after a while you will get a good feel of what is happening. You can always walk in and submit an offer based on what you think the price should be. Realtors know resale they do not know New Homes let alone be able to negotiate effectively. Realtors are not part of the purchasing process as they get a referral commission when you close and you will never hear from them again once you sign up as the builders agent will take care of the process from then on. Builders do not sell homes with a buyers agent on the agency form. I do always invite the realtor to be part of the signing and instruct my buyer's that you can still talk with your realtor during the process.

2. Get the tract number and go to the county seat as once it is recorded it is public record. It will not help much as you will only get a price of what it sold for not what the builder did in incentives.

3. No because it usually comes out of the marketing budget so it does not have anything to do with the bottom line.

4. I have seen this happen at the eleventh hour but the agent needs to get their brokers approval and they money would have to be credited in escrow to normal closing costs etc, no hidden gains. It would be a kick back if it was direct cash to you outside of escrow at that is illegal.
 
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