Profile picture for COLORADO1234567

Do I need a broker or agent when buying a brand new home from a builder?

I'm pretty savvy, and know that i can find the comps and sales prices of nearby homes on the county's tax assesor website.  i also understand that the 3% commission is a seller cost for the builder, but I'm the one buying the house, so that's actually me paying the commission.....i feel like if i don't have a realtor, i can negotiate that 3% off my price and save about 50 bucks on my mortgage....  what do you think?  should i go in and try to get the deal i want, and if i can't get that deal, go hire a realtor to negotiate for me????  thanks!

on a side note, a friend of mine who just moved into the neighborhood i'm looking at hired a realtor and he basically disappeared after contracting and just showed up at closing.  i would want someone who's there for the whole process.  
  • September 05 2012 - Colorado Springs
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Answers (26)

The county "tax assessor" will not have market value comps to look at and  evaluate. They also have no market knowledge that comes from working in the field 24/7 with buyers,sellers and closing sales successfully.
 An appraisal will be more like it, or a Brokers CMA that will evaluate the market more accurately. A "Buyer Agent" who has an agreement with their buyers will have no problem helping you every step of the way and advising you as well.
 It's actually 'not you" paying the commission, it comes out of the sellers profits that they have agreed to pay in advance to the Realtors.
  
 It could be you paying commission or even additional commission (over advertised rate)if you agree to do so in a separate contract. That is always an option.

 It's doubtful that you could "negotiate the 3% off the selling price". With new homes price negotiations are extremely difficult, your Realtor might be able to negotiate other concessions though.since they will know about the property, the demand, the location and the bottom line for the seller.
Basically, without a Realtor on your side, you have no representation at all and no help..savvy or not...you are taking your chances.
 
  • December 10 2014
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  • December 09 2014
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Wow lots of answers but here is my take.. Yes you should if builder Co-Ops

Yes I am real estate broker but you have a flawed understanding of Builder and agents.  First, you will not be able to negotiate 3% of the price without an agent unless the builder is about to file bankruptcy or is truly desperate.  Builders have sent me exactly 4 emails today trying to get me to bring my clients to them.  They have offered lunches, prizes, etc.

If they let you negotiate the price down, they are shooting themselves in the foot and 95% of builders have hard policies against that.  Any negotiating on price goes back to the main office and they don't discount in that manner.

Next, I give half my commission back to my buyer in the form of a rebate.  They can use it for upgrades, etc.  The transaction is not that hard BUT there are some tricky builders out there.  They get you in steep upgrade fees or don't share incentives you don't know about....

Recently I had a Veteran buyer for a new home.  I got 3% commission from builder, credited half back to him.  Also, they didn't tell them about their $1000 internet special or the Veteran $800 discount that I knew about.  Also, I checked with another transaction I did a couple months earlier and was able to get them a free fridge, washer, and dryer - new.  That promotion was still going by deadline but they stopped advertising it.  I had a copy :).

I suggest you talk with your Realtor.  I also think people walking into builders without an agent are foolish because they are literally leaving money on the table. The only one you are helping going in without a Realtor is the builder.  They have 3% set aside and it has no bearing on the purchase price.  If they lower the price for you, then they undercut all the people they just sold to the month prior.  How would you feel if you bought at $400k and the next month Bob your neighbor got $380k for same model?  They won't do it because it causes lawsuits.

Hope that helps!
  • November 13 2014
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Wow lots of answers but here is my take.. Yes you should if builder Co-Ops

Yes I am real estate broker but you have a flawed understanding of Builder and agents.  First, you will not be able to negotiate 3% of the price without an agent unless the builder is about to file bankruptcy or is truly desperate.  Builders have sent me exactly 4 emails today trying to get me to bring my clients to them.  They have offered lunches, prizes, etc.

If they let you negotiate the price down, they are shooting themselves in the foot and 95% of builders have hard policies against that.  Any negotiating on price goes back to the main office and they don't discount in that manner.

Next, I give half my commission back to my buyer in the form of a rebate.  They can use it for upgrades, etc.  The transaction is not that hard BUT there are some tricky builders out there.  They get you in steep upgrade fees or don't share incentives you don't know about....

Recently I had a Veteran buyer for a new home.  I got 3% commission from builder, credited half back to him.  Also, they didn't tell them about their $1000 internet special or the Veteran $800 discount that I knew about.  Also, I checked with another transaction I did a couple months earlier and was able to get them a free fridge, washer, and drying - new.  That promotion was still going by deadline but they stopped advertising it.  I had a copy :).

I suggest you talk with your Realtor.  I also think people walking into builders without are foolish because they are literally leaving money on the table. The only one you are helping going in without a Realtor is the builder.  They have 3% set aside and has no bearing on the purchase price.  If they lower the price for you, then they undercut all the people they just sold to the month prior.  How would you feel if you bought at $400k and the next month Bob your neighbor got $380k for same model?  They won't do it because it causes lawsuits.

Hope that helps!
  • November 13 2014
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  • October 21 2014
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Profile picture for user518609
How did this work out for you?  Did you go without an agent?  You said everything here that I have been thinking.  I too am looking to build in the springs, and I think I can get a better deal without an agent.  I won't present it to the builder that way, because they will not openly alienate the realtor community, but the 3% savings is part of my whole offer, which I should be able to get back and then some in upgrades.
  • August 04 2014
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Profile picture for user2291699
I do not see a single "normal user" in these answers. Only realtors protecting their businesses jump to answer. The reality is that I can hire the best attorney in town to review the documents 10 times at the price I am paying to my realtor. The 3% commission is what the buyer WILL PAY one way or another when using buyer agent. 

Honestly, none of these answers convinced me to use a realtor. Rather I would like to see someone who has bought a house with and without a realtor to share her experience.
  • June 09 2014
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Profile picture for davidhawke
The fact of the matter is, you (or an agent) will most likely not be able to negotiate any on a new build in this current "sellers marker". The builders are getting full price, and still selling every home the can churn out faster than the can finish building them. That being said... An agent is still a smart decision, because the builder's contracts are full of tricky verbiage that is terribly slanted in favor of their best interests. Their contracts give them several opportunities to keep your deposit, and to charge your unreasonable fees for minor changes, etc. I am currently working with a client who just lost a $10,000 deposit to a builder last month (before she met me). If I had interpreted the contract for her, it wouldn't have happened. The ironic part is, that the builder would have paid me for her... So it would have been free for her to have had me working in her corner.
  • March 16 2014
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Profile picture for jason.talwar
I am going to assume that most people responding to this question are in fact realtors-- just look at their pics :). All I read is that you cannot negotiate on your own, however, I have negotiated by my car, salary and other items. If you feel you can negotiate on your own, do it, and ask for the 3% back in commission that will go back in your pocket.

You can represent your own interests and not a realtors commission interest-- your realtor is not working for free.
  • March 13 2014
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You really need on but you want an agent representing your best interest.
  • December 04 2013
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Yes! you should have a Buyer's Agent work for you when purchasing a new build home. Have you bought a car and wished there was someone you could talk to, bounce things off of and seek advice from besides the guy trying to sell you the car????

It really is the same kind of situation. The person sitting there smiling giving you water and soda and saying how cute your kids are works Only for the builder.

That's my opinion anyway.

Chuck Wartman
  • December 04 2013
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Coming from a builder, this can either way. Of course, builders are going to represent themselves in the contract process, but if you're savvy enough you can negotiate the contract without paying a relator. I don't know if realtors will also agree with me on this, but there are TOO many of them out there, and it can be difficult to find a good one who is worth their 3%. However, I do agree that having some representation on your side, especially if you're not familiar with the process can be helpful. Contracts can be lengthy and tricky, and include a lot of small catches, especially in a build-to-suit or builders contract which they are accustomed to and you are not. That being said, I've seen buyers come to us WITH a realtor who doesnt have a clue about building contracts and messes up the process for everyone. If you go at it yourself, the best thing you can do is have an attorney look at it so you don't miss anything. 
  • May 23 2013
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I think a good Realtor is the key to dealing with builders.  I have had great success negotiating builders down substantially (10% or more) from their list price.  There is a key to negotiations to get the job done.  I have also written addendums to the builder's contracts when I find issues that I didn't like for my buyer.  Knowing all the ins and outs and potential pitfalls comes from experience that a full time Realtor could provide for your behalf.  Good luck.

  • May 23 2013
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Strictly speaking, you do not "NEED" an agent representing you. But their experience will save you a lot of hassle and issues which you may be unfamiliar with. Even if you could negotiate 3% down, and lose 5% in other issues which you did not consider, did you actually come out ahead?

Professionals are trained and licensed for a certain reason, which is to represent a consumer and tackle issues that consumer may not fully understand.

Raheel Shahzad, Attorney, CPA, Real Estate Agent
Lombard, Illinois
  • September 08 2012
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Absolutely!  The builder has agents that work directly for them (the seller)- generally in the model home, etc.  You need an agent to represent you and your best interest as the buyer.  Look for an accredited buyer's agent -with an (ABR) Designation.
The Buyer's Agent may also recommend certain types of inspections to be done prior to closing, as a contingency in the contract.  Speaking of contracts and paperwork- everything must be in writing and it is considered a legal contract once all parties agree.  With all of the forms, disclosures, documents, and legal-ease, you would want someone to explain it to you and what your obligations are as the buyer/purchaser.  They can also help write certain things in the contract, that benefit you!  They can look up recent sales, concessions the builder gave, etc. 
  • September 07 2012
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Short answer is YES. the builder is not working in your best interests. You need an agent to negotiate on your behalf. I hear your concern about an agent being absent for the process. Simply look at Zillow in your area and pick one with a ton of great reviews
  • September 07 2012
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I would strongly encourage the involvement of an agent when purchasing a new home build. Agents are there to look after your best interests and to take it a step further I would encourage the employment of an Inspector to inspect the home.  Even though a new home purchase comes loaded with limited warranty's you have to remember that in most cases these homes are being built at a rapid pace and once the builder's warranty has expired...it's EXPIRED and probably covered by a statute of limitations. It's your money and a long term investment...so protect it and know what you're buying flaws and all.
  • September 06 2012
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Buying a home isn't something most people do very often.  Realtors work with the contracts all the time.  Before I became a Realtor, I thought I knew quite a lot about buying houses.  I was really surprised to learn what I didn't know.  As someone else pointed out, the buyer's agent is paid from the builder's marketing budget, and you won't see a price reduction because he wants to keep his comps up for the other homes he's selling in the neighborhood.  A better approach is to ask for upgrades to the property, rather than price reductions. 
  • September 06 2012
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Thanks for posting your question on Zillow.com!

Well, I am biased being a Realtor but I say it all the time....hell ya you need a Realtor!  Just because you negotiate away the 3%  (if you can) how do you know the Realtor will not get you upgrades or money off elsewhere or keep deadlines being met, etc....????

Once you try on your own, that is it.  The builder will not let you bring in an agent after that.

Please do not judge all Realtors by the actions of a few bad ones....

Good luck!
  • September 06 2012
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I am a broker here in town and also work for one of the more popular builders.  To answer your questions it's both a Yes and a No.  If you are buying from a production builder inside a community, they don't reduce the sale price (unless it's the last home to be built) regardless of having or not having a broker, so that it doesn't affect their community stats.  But if you are doing a custom home, then Yes you can work directly with the builder and get the buyers broker commission recuced off the price.  They want to build, so they will do everything they can to help you with floor plans, finishes and pricing.  Always try to get a fixed price contract, NOT a cost plus. You want to get the facts up front.  And for the most part, there really isn't any negotiating(at least with my builder).  You get the best price right up front and the contract really doesn't get changed. If you'd like some more info please feel free to Ping me back.

Jay Feaster
  • September 06 2012
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Profile picture for Lorraine K
Dear Colorado, 
The builder's representative is representing the builder.  So I would suggest you hire a realtor with great references, just as you would when buying a resale.  I represented the buyer of new construction and we were initially told the price was set and there would be no other negotiations.  However, we were able to get the buyer a significant amount of upgrades.  Good luck with your new purchase.  Lorraine
  • September 06 2012
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Profile picture for Best Miami Beach
You do not need an agent for this, builders have their own sales forces as well. This is an excellent option.
  • September 06 2012
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No, you do not need an agent.  The builder will typically walk you through the whole transaction.  However, not having an agent will not benefit you in any way typically.  I have never seen a builder give a buyer without an agent a better deal.  But who knows, maybe you could negotiate something?

By the way, I would like to clarify that I do think you should work with an agent, because they will help protect your rights and make sure that the builder follows all the processes that they should, and that they don't try to pull the wool over your eyes.

Here are a couple of examples.  I have seen builders not offer the same incentives to clients not working with an agent, because they think the buyer may not know about the incentives that other clients have gotten.  Also, it helps to have an agent at the final walkthrough to make sure that the builder takes care of any issues with the construction or condition of the home not being just right.  When helping clients at the final walkthrough, I have spotted things that both the builder, and my client didn't, that needed to be addressed.
  • September 05 2012
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Profile picture for Matt Hiatt
I'm sure that you will look at all these replies as bias, but let me explain. First, the person you are dealing with represents the builder ONLY (ask them, they have to tell you). Second, I use to work in new homes, and the money we paid the buyer's agent came from marketing, so we never gave anyone a discount for not using a realtor. Third, the realtor, same as resale, are good or bad, and a good realtor will help you get the best price, read through the CCR's and public report, and be there all the way. So, in my opinion, since it does not cost you, why not use a GOOD Realtor to represent your best interest, and it could save you money (I got one client a complete appliance package worth $1800 that they never would have got).
  • September 05 2012
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Profile picture for AmandaMack1
I have not ever seen a builder give a "discount" for not having a Realtor.  The way they see it is if you don't have one that is money in their pocket.  My suggestion would be NOT to hire the same agent your friend used but to ask other friends for recommendations of Realtors they used and then interview the ones your friends did like.  Once you find an agent that you get along with hire him/her and then put his/her skills to work.  A good agent will not only do all of the negotiation for you, they make sure the paper work is correct, follow up with the inspections, appraisal, title company, make sure you are getting a great deal, and above all...keep you in the loop and make sure you know they are doing their job.

Congrats on your new home! 
  • September 05 2012
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Profile picture for SoCal Engr
If you are confident in your knowledge of RE transactions, no. REAs provide a service. If you don't need the service, you don't need the REA.

Just remember, the builder does this for a living - so I wouldn't count on that buy-side commission.

p.s. Even if you do go without REA support, don't forget things like inspections, finance contingencies, etc. "New" doesn't necessarily mean "right".
  • September 05 2012
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