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Having a hard time justifying a $12,000 buyers realtor fee on a $400,000 house

15,331 Views | 92 Replies | Last: 5 yr ago by one MEEN Ag
Rustys-Beef-o-Reeno
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AG
scrap said:

exp said:

I'm in the market for a property in this range and thinking I can't F up the contract so bad as to be worth that premium. I've been through two house purchases and sales before so I'm not totally green either. I also feel like I've done most of the legwork up to this point scouting the market and viewing houses.

I'm looking at new construction options...am I crazy to think I can go at this myself and try to negotiate the price even lower?

I wouldn't be opposed to be represented by someone for a flat fee of like $5000 but $12000 just makes me choke a little bit.

Counsel me TexAgs.
I guess I'm not going to be the popular one on this thread, as my two cents is contrary to most on this post. If you have any confidence in your abilities and you have a good feel for what the builders are negotiating then by all means go in there and negotiate your best deal and leverage the 3% buyers agent commission. Be advised some builders are only paying 2% sellers commissions but find out. Research if builders are negotiating price or are they holding to their pricing schedule.

The home I live in, I bought from a builder in 1998. I negotiated my price, which was basically what the builder was asking as I was buying when the market was HOT. Builders were raising prices monthly. After we agreed on upgrades ect, I simply asked for a 3% discount since I didn't have a realtor or if they preferred I would bring one in before I sign the deal. They were very accommodating and offered to reduce the price 2%. I'm not sure if they were only paying 2% to listing agents or not but I took the 2% and was happy. It took 6 months to build and my floor plan increased $30k by the time I took possession.

One thing I have learned in life is that EVERYTHING is NEGOTIABLE and it could change daily as to what someone is willing to give or take. Also don't assume that just because you have a realtor that they know how to work the new build process to get the best pricing. I doubt most do, but I would guess there are some who have a lot of experience with new builders and their advice could be priceless. Finding the right realtor is shot in the dark for most.

I am free of any conflict of interest, I have no dog in the hunt, not a realtor, lender or insurance agent.




But you didn't negotiate anything? You bought at whatever they were asking because of a hot market.
scrap
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Rustys-Beef-o-Reeno said:





But you didn't negotiate anything? You bought at whatever they were asking because of a hot market.

You are absolutely right, but think about it for a second. If there was ever a time not to give a penny, it would be in a hot sellers market. So by not having a realtor I saved myself 2%.

But hey that was 20 years ago. Things change, maybe that will or won't work in todays market. That is why I said do some research see it builders are negotiating on their prices. If they are and you can find a realtor that can do a better job negotiating than you then of course use a realtor. If you find that builders are not negotiating very much, maybe you try and see what you can get off by what they would be paying a realtor had you had one.
88jrt06
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AG
Continues to be a very useful thread.
Appreciated!
BTD
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mazag08 said:

and if you were to break down a balance sheet they would fall under a marketing or advertising section of the expenses.
...that would be an income statement...but so close!
AggiePlaya
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I know of a buyer that didn't use a realtor because they were promised to save from the builder. They are now being screwed for 15k plus by the builder on TOP of the original purchase price. They were promised the moon LOL
scrap
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AggiePlaya said:

I know of a buyer that didn't use a realtor because they were promised to save from the builder. They are now being screwed for 15k plus by the builder on TOP of the original purchase price. They were promised the moon LOL
And of course a realtor would've prevented that!
AggiePlaya
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scrap said:

AggiePlaya said:

I know of a buyer that didn't use a realtor because they were promised to save from the builder. They are now being screwed for 15k plus by the builder on TOP of the original purchase price. They were promised the moon LOL
And of course a realtor would've prevented that!

Doing some simple math would have helped...so yes, having an EXPERIENCED realtor advising them would have avoided the train wreck in this case. I've seen real life examples of both sides.
speck3
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We just did this, we called a realtor friend and said hey we know they pay a 3% Fee, we don't have to use you, but we will happily put you on our contract if you forfeit 2.5% for our closing cost and he agreed as he didn't do any work.
agsalaska
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I didnt read any of this thread, but I think someone would be absolutely nuts to get into a contract with a builder without representation. I could see it on a resale, though I dont think its smart. But with a builder, no way.
The trouble with quotes on the internet is that you never know if they are genuine. -- Abraham Lincoln.
agsalaska
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TamuKid said:

ktownag08 said:

Used a realtor for my new build that rebated back 2.5%. Realtor just mailed me a check within days after closing as I wanted to keep my arrangement separate from closing. All went smooth!
Curious... how did you do this without it being mortgage fraud? Don't you have to disclose all that on closing forms? I thought realtor rebates could only be used towards closing costs, discount points, pre-paids, etc.

The trouble with quotes on the internet is that you never know if they are genuine. -- Abraham Lincoln.
ATM9000
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TamuKid said:

ktownag08 said:

Used a realtor for my new build that rebated back 2.5%. Realtor just mailed me a check within days after closing as I wanted to keep my arrangement separate from closing. All went smooth!
Curious... how did you do this without it being mortgage fraud?

Well... the answer is unless a mortgage isn't involved it IS fraud.
speck3
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How so?

The realtor agreed for forfeit that 2.5%
The company we purchased the home through wrote everything into our original purchase agreement including the realtor forfeiture at closing which was signed by all parties.
ATM9000
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speck3 said:

How so?

The realtor agreed for forfeit that 2.5%
The company we purchased the home through wrote everything into our original purchase agreement including the realtor forfeiture at closing which was signed by all parties.

Poster said it was done outside of the closing docs... that's fraud. It's an easy way to build cash into a mortgage amount. Lenders need to see that and all parties have to sign off. When it's done outside of the closing process, that's problem. Sounds like that wasn't the case in your situation.

If done outside of closing my guess is the builder paid closing costs and buyer didn't pay any points and just wanted some cash to pay for their move... which inherently your mortgage paid for,
DallasAggie0
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IIRC from my sales classes a realtor giving clients cash money outside of the deal is most definitely a TREC violation. It's one of the few things that's actually taught.
stallion6
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AG
Agree DallasAg. Money back from a realtor would most likely be a TREC violation.
Carnwellag2
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AggiePlaya said:

AGGIE WH08P said:

I used a Realtor on my new construction build about 5 years ago. She was a waist of time and didn't add anything to really be of value. I did get her to agree to split the 3% commission.

See me other thread I recently posted. I used Creekview Realty. They took 1% commission and I kept 2%.
I'm not a realtor, but you can't even spell "waste" so why should I take your word for realtors sucking?

And just because you had a bad realtor it doesn't mean it is a "waist" of time...
but you are married to one.
AggiePlaya
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Carnwellag2 said:

AggiePlaya said:

AGGIE WH08P said:

I used a Realtor on my new construction build about 5 years ago. She was a waist of time and didn't add anything to really be of value. I did get her to agree to split the 3% commission.

See me other thread I recently posted. I used Creekview Realty. They took 1% commission and I kept 2%.
I'm not a realtor, but you can't even spell "waste" so why should I take your word for realtors sucking?

And just because you had a bad realtor it doesn't mean it is a "waist" of time...
but you are married to one.
And if you aren't married to one you at least know one as well.
SnowboardAg
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I love the realtor vs. no realtor threads.

The fact is, buyer can go into builder and do whatever he wants. He doesn't have to close with the dealer's lender and he can command what he wants (savings off house, etc.).

When going out for a loan, bid 3-4 major lenders (Chase, Wells Fargo, Bank of America, private lender, etc.) and compare the quotes / ask questions. This is not rocket science. If you have concerns, get a real estate attorney for a couple hours to look over everything and provide feedback.

I've bought 2 homes by owner, sold one house with 1% to sellers agent and 3% to buyers agent and never had a problem. The important part is to bid out everything (title company, lender, etc.) to get the best deal. Ask questions and learn.

How many of you all have purchased a car with a middle man (like a realtor at the dealership)? Are you telling me there's just a business waiting for a broker to represent me at the dealership?
mazag08
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SnowboardAg said:

I love the realtor vs. no realtor threads.

The fact is, buyer can go into builder and do whatever he wants. He doesn't have to close with the dealer's lender and he can command what he wants (savings off house, etc.).

When going out for a loan, bid 3-4 major lenders (Chase, Wells Fargo, Bank of America, private lender, etc.) and compare the quotes / ask questions. This is not rocket science. If you have concerns, get a real estate attorney for a couple hours to look over everything and provide feedback.

I've bought 2 homes by owner, sold one house with 1% to sellers agent and 3% to buyers agent and never had a problem. The important part is to bid out everything (title company, lender, etc.) to get the best deal. Ask questions and learn.

How many of you all have purchased a car with a middle man (like a realtor at the dealership)? Are you telling me there's just a business waiting for a broker to represent me at the dealership?
Apples to oranges.
SnowboardAg
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Not really - they are both a transaction with legal documents involved. Yes a house has more to it, but the legal forms are mostly standard and as soon as a realtor is asked a question, I get the "I'm not an attorney." response. I'm simply saying someone should not be afraid to tackle it in their own with sound legal advice and understanding the fees / process.
mazag08
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Not all transactions are easy. Some people don't have the time or level of understanding to deal with some of the complications that come up. If you don't want to use a Realtor, don't. But some people need one.
scrap
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SnowboardAg said:

Not really - they are both a transaction with legal documents involved. Yes a house has more to it, but the legal forms are mostly standard and as soon as a realtor is asked a question, I get the "I'm not an attorney." response. I'm simply saying someone should not be afraid to tackle it in their own with sound legal advice and understanding the fees / process.
Not all transactions are easy. Some people don't have the time or level of understanding to deal with some of the complications that come up. If you don't want to use a Realtor, don't. But some people need one.

Bottom line is that both of you are right. The client who buys a home every ten years or more might be comfortable using a realtor. The person who is very familiar with the process and buys property every year or every other year may be fine not having the advice of a realtor.

My experience level is higher than most buyers out there because I have been involved in 18 purchases over the last 20 years. I see this industry beginning to change. Unfortunately for the real estate career outlook the model is getting more streamlined and the service is being eroded with a flood of inexperienced part time realtors. It is for these two reasons people rightly are asking themselves are realtors worth 6% of the transaction. For some it is, for others it is not.

Ragoo
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leanderag82 said:

I am a builder and a licensed realtor and own part of a title company and have a preferred lender we utilize. Here is my in-site.

First, if you have already visited the model/builder in question, it is established whether you have a realtor or not. Your realtor would have registered you (or accompanied you) to the models. If your realtor did that, you have a realtor. If you went without a realtor, you don't have a realtor and the builder is not going to let you add one after the fact (most builders will fire their on-site agent if they find out they are adding realtors). It is simple question of procuring cause. Did a realtor lead you to the builder? If so, they should be paid by the builder.

With regards to negotiating a better deal with, or without, a realtor the fact is with most builders it does not matter. You are probably going to get the same price regardless. Most use an average of what % of deals come through the door with a realtor. This goes into our job cost. It is not 3% and it is usually more than than 1.5%.

Builders can't take a huge $ amount off one home, because it does not have an realtor, since it would potentially kill future appraisals.

That being said, if a builder has sitting inventory and you make an offer, they will look at their job cost in figuring out if they can/will accept your offer. If you don't have a realtor, you might get a better deal at times (i.e. more builder paid CC, blinds, refrigerator, washer/dryer, etc). Your probably not going to get much off the price.

As a bulder, we love realtors who bring their clients in and let the on-site sales person do the work and get out of the way. The good top producers have done their homework and know if they get their client with right builder they can get the deal done and move on to another client. I pay realtors an average of $18k/home just for bringing the client by our models.

Some builders have their own contracts (i.e. most of the large builders). As a medium size builder we use TREC forms and amendments to clarify the deal. Most buyers and realtors prefer the TREC forms. Some of the builders contracts are one sides, so read them carefully. However, you will not get a major builder (i.e. Lennar/Horton/Pulte) to change their contract.

I have a preferred lender we use. While some builders own the lender, in my case we only use & recommend the lender because they have good rates and do what they say they are going to do. Some lenders do play games with the rates & CC so you have to do your homework. My preferred lender will pay the owners title policy cost for the buyer if they utilize them. Yet they know the rate & service must be there to get our referral as the builder. We don't get anything from the lender except good service.

I own a portion of a title company we use. It is disclosed at contract. We can't require our buyers to use the title company but 95% of them do. from what I see, they pay lower escrow fees, etc at our title company than the big title agencies. Of course the title policy fees are set and are non-negotiable.

I hope this information helps you in you home buying quest.
i remember reading this post when you originally wrote it. I want to bump it back up.

My wife and I have been toying around the idea of moving from our starter home into a bigger new master planned community.

Our curiosity has led us to go model home hoping on several Sunday afternoons. In some we've given our information, in others we haven't.

We have identified two builders we like but are not sold on the idea of a new construction. The lot location is almost more important to me than the builder.

It sounds like we have screwed ourselves on the realtor front, at least according to your post.

If we do go the new construction route, what would you recommend we do from our side to have a professional in our court?

We are in Houston.

The entire build process seems like it would be extremely stressful. Like as soon as you sign they have you and can bend you over backwards. Almost like a scam.
one MEEN Ag
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Ragoo said:

leanderag82 said:

I am a builder and a licensed realtor and own part of a title company and have a preferred lender we utilize. Here is my in-site.

First, if you have already visited the model/builder in question, it is established whether you have a realtor or not. Your realtor would have registered you (or accompanied you) to the models. If your realtor did that, you have a realtor. If you went without a realtor, you don't have a realtor and the builder is not going to let you add one after the fact (most builders will fire their on-site agent if they find out they are adding realtors). It is simple question of procuring cause. Did a realtor lead you to the builder? If so, they should be paid by the builder.

With regards to negotiating a better deal with, or without, a realtor the fact is with most builders it does not matter. You are probably going to get the same price regardless. Most use an average of what % of deals come through the door with a realtor. This goes into our job cost. It is not 3% and it is usually more than than 1.5%.

Builders can't take a huge $ amount off one home, because it does not have an realtor, since it would potentially kill future appraisals.

That being said, if a builder has sitting inventory and you make an offer, they will look at their job cost in figuring out if they can/will accept your offer. If you don't have a realtor, you might get a better deal at times (i.e. more builder paid CC, blinds, refrigerator, washer/dryer, etc). Your probably not going to get much off the price.

As a bulder, we love realtors who bring their clients in and let the on-site sales person do the work and get out of the way. The good top producers have done their homework and know if they get their client with right builder they can get the deal done and move on to another client. I pay realtors an average of $18k/home just for bringing the client by our models.

Some builders have their own contracts (i.e. most of the large builders). As a medium size builder we use TREC forms and amendments to clarify the deal. Most buyers and realtors prefer the TREC forms. Some of the builders contracts are one sides, so read them carefully. However, you will not get a major builder (i.e. Lennar/Horton/Pulte) to change their contract.

I have a preferred lender we use. While some builders own the lender, in my case we only use & recommend the lender because they have good rates and do what they say they are going to do. Some lenders do play games with the rates & CC so you have to do your homework. My preferred lender will pay the owners title policy cost for the buyer if they utilize them. Yet they know the rate & service must be there to get our referral as the builder. We don't get anything from the lender except good service.

I own a portion of a title company we use. It is disclosed at contract. We can't require our buyers to use the title company but 95% of them do. from what I see, they pay lower escrow fees, etc at our title company than the big title agencies. Of course the title policy fees are set and are non-negotiable.

I hope this information helps you in you home buying quest.
i remember reading this post when you originally wrote it. I want to bump it back up.

My wife and I have been toying around the idea of moving from our starter home into a bigger new master planned community.

Our curiosity has led us to go model home hoping on several Sunday afternoons. In some we've given our information, in others we haven't.

We have identified two builders we like but are not sold on the idea of a new construction. The lot location is almost more important to me than the builder.

It sounds like we have screwed ourselves on the realtor front, at least according to your post.

If we do go the new construction route, what would you recommend we do from our side to have a professional in our court?

We are in Houston.

The entire build process seems like it would be extremely stressful. Like as soon as you sign they have you and can bend you over backwards. Almost like a scam.


At the very least give Jamie at Red Pear Realty a call. We're using his services right now and have loved the set up. Flat fee listings for sellers, 2% back at closing for buyers.

Don't know about new construction, the phone call is worth saving you $8,000 on a home.

I've said it before and I'll say it again- every real estate agent who charges 3% will be out of business in 10-15 years. Builders will be the last bastion of market inefficiency, but residential resales are going to continually be a price competitive market moving forward.

There is too much information out there today and home prices have shot up so much that 6% will not last.

These threads are basically consumers complaining about poor service and real estate agents complaining about who moved my cheese.
 
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