Do I need an agent to buy from a builder?

[mastercb]

Hi, everyone!

I'm so glad that I found this forum - so much valueable information, especially for people like us who moved from out of town. We've been renting for about a year and are now getting close to buy a home. We saw a town home that we like - it's located in the Rice Military area and about to be completed in a month or so. The question we have now is if we decide to buy this home whether we should hire a real estate agent to deal with the builder, for example, to negotiate on the purchase price, to ask for a different color of paint (the walls are not painted yet). We asked some friends and they gave conflicting advice. Any suggestions you can give here are much appreciated.

[jm1fd]

Hi, everyone!

I'm so glad that I found this forum - so much valueable information, especially for people like us who moved from out of town. We've been renting for about a year and are now getting close to buy a home. We saw a town home that we like - it's located in the Rice Military area and about to be completed in a month or so. The question we have now is if we decide to buy this home whether we should hire a real estate agent to deal with the builder, for example, to negotiate on the purchase price, to ask for a different color of paint (the walls are not painted yet). We asked some friends and they gave conflicting advice. Any suggestions you can give here are much appreciated.

As far as getting a fluffy bunny involved, I'd say find one that gives rebates and go for it. However, I think it is far, far more important to get a good independant inspector to inspect the house several times over the course of the construction process. Just look around at some of the threads on here to get an idea of the kinds of major headaches you can encounter when buying new construction. I personally wouldn't ever buy new construction without an inspector watching it throughout the process.

Edited August 16, 2006 by jm1fd

[Scharpe St Guy]

I will second JM1FD on having a good inspection done on the home.

Who is the builder? If you share you may find others on here who have had good or bad experiances with said builder.

As far as having an agent goes know that the Builder has already figured in commissons within the budget. They pray and hope for buyers such as yourself to come in who are not represented by an agent so that they can drop in your case close to $9,000 to PROFIT assuming they budgeted correctly and didn't have large overages.

With that being said you should know that there is an automatic 3% padding which you should either negotiate off the price, get in upgrades, or receive back from an agent who is willing.

Good Luck,

Scharpe St Guy

As far as getting a fluffy bunny involved, I'd say find one that gives rebates and go for it. However, I think it is far, far more important to get a good independant inspector to inspect the house several times over the course of the construction process. Just look around at some of the threads on here to get an idea of the kinds of major headaches you can encounter when buying new construction. I personally wouldn't ever buy new construction without an inspector watching it throughout the process.

[Parrothead]

Speaking as a fluffy bunny (very nice, jm1fd) I say HELL YES, get yourself some representation. It's nothing out of your pocket and it protects your interests. Remember, the builder is looking out for HIS interests. You are not his fiduciary.

[mastercb]

Everyone,

Thanks a lot for the advice. We'll definitely hire an inspector even for a new home.

The builder is Aziza. How is their reputation?

For a new town home, generally how much a buyer can negotiate down the price?

Thanks again!

I will second JM1FD on having a good inspection done on the home.

Who is the builder? If you share you may find others on here who have had good or bad experiances with said builder.

As far as having an agent goes know that the Builder has already figured in commissons within the budget. They pray and hope for buyers such as yourself to come in who are not represented by an agent so that they can drop in your case close to $9,000 to PROFIT assuming they budgeted correctly and didn't have large overages.

With that being said you should know that there is an automatic 3% padding which you should either negotiate off the price, get in upgrades, or receive back from an agent who is willing.

Good Luck,

Scharpe St Guy

Edited August 16, 2006 by mastercb

[jscarbor]

Aziza (Formerly Millenium) typically builds innerloop town homes. My guess is they do not drop price much unless they are trying to get rid of something. When they are trying to move product you can get a good amount of savings, of course, why did they have to discount?

Generally with a smaller builder like Aziza you might be able to get some of that 3% without a realtor. Some Realtors that I know will give you 2% back on a new home purchase.

[mastercb]

jscarbor,

Thank you for the advice. Would you mind share the names of the realtors that will give rebates?

Aziza (Formerly Millenium) typically builds innerloop town homes. My guess is they do not drop price much unless they are trying to get rid of something. When they are trying to move product you can get a good amount of savings, of course, why did they have to discount?

Generally with a smaller builder like Aziza you might be able to get some of that 3% without a realtor. Some Realtors that I know will give you 2% back on a new home purchase.

[ajl1986d]

yes get a realator you will be more happy becuz the buldier just wantes to get ride of them and a realatorwill actually help you

[Mark F. Barnes]

First off let me say I am not a Realtor and in no way am I associated with a Realty Company or any Consumer Protection Agency. My sister Rebecca is a Realtor in San Diego, but that's about it. There are a lot of Realtors on this Forum and people in the Home Marketing business, and I am sure to get flamed over this, but I feel obligated to voice my opinion on this subject and this is just that, an opinion. There are good and bad real estate agents, as in other businesses. I'm sure I'll get a lot of hate emails from paranoid real estate people for this, but I'm going to point out some specific examples that I have come across that testify to the degree of greed there is in the real estate industry. I am not trying to portray all agents as bad. However there are truths that I have found out through direct experience that need to be said. Print this out it may take a while.

From a "Sellers View" a Realtor is a very good source for High Priced advertising and a MLS listing. A seller benefits greatly from good advertising and exposure, to get your house out on the market and get it sold. That's what they do best SELL SELL SELL! A lot of builders refuse to deal with real estate agents because they don't want to pay them a commission. The builder feels their homes will sell themselves and they don't need to pay any Real Estate Agent commissions. Research your builder thoroughly they don't last long in this area if they build crappy homes.

Now to a BUYER Realtor is just another person to whom you have to feed a piece of the pie, in your particular instance mastercb. In this case, a realtor really wouldn't add much value to your situation it would just add one more person to the process who acts like you can trust them when you really cannot.

I've purchased in very similar situations and didn't have a realtor and it worked out better than other transactions when I did have a realtor, so don't sweat it. Realtors will not reduce the price you pay. They do not help you negotiate. They may be able to give you prices of comparable properties which have sold recently, but they won't help you negotiate. Indeed, since they're paid on commission, they're always working against you, they want the deal to be made, so that they can get paid and go home. They want the buyer to offer LOTS of money and the seller to demand VERY LITTLE money, because that closes the deal quickly. But back to the commission. Traditionally, the two agents involved each got 3% of the purchase price, carved out of the money the seller received. Since this agency and the seller are basically one and the same, your not using an agent saves them 3% of the purchase price. Accordingly, they should be willing to discount the purchase price/offer further incentives of perhaps as much as 2.9% of the purchase price, and they'll still come out ahead, and so will you. In your case if your builder isn't using an agent this is a moot point. I don't see any benefit to hiring an agent in this case. You would just be paying your agent a whack of money for very very little work. Get a good inspection and a property attorney you trust and you are ready to go. Don't sweat Mortgages, they are standing in line to loan people money, don't need an agent for that either.

The only people you will find WARNING you to get an agent are either agents themselves or part of the common food chain in the whole process. I have purchased several houses directly from a builder. The current home I live in I acted as my own builder and saved huge. If you are a home buyer, don't think your real estate agent is "going in to do battle on your behalf" with the seller's agent. That's just like your car salesman "going to get his manager's approval" on your offer for a new car.

Beware of the so called perks of agents:

1. I have an inspector I use all the time and he gives us a discount!

I have found through personal BAD experience a lot of these so called great inspectors give discounts because they do hasty walkthroughs, and are looking out just for the person who got them the work. "The Agent". You may pay $200 dollars more to hire an objective third party inspector, but that is a small fee on a major purchase that is money well spent. Either way you are still paying for the inspection, no need for the "Agent"

2. I can save you money in the long run!

In what way can they do this, any service professionally they provide they hire out, (i.e. Inspections, mortgage brokers, appraisals, etc.) An agent is nothing more than a salesman, or sales person. 99% of them know nothing about structural engineering, or anything to do with the construction of the home. They are there to "close the deal". If they tell you anything different they are telling you a lie.

I love this quote:

I say HELL YES, get yourself some representation. It's nothing out of your pocket and it protects your interests. Remember, the builder is looking out for HIS interests. You are not his fiduciary.

Spoken like a true blue agent. They love to use legal terms to boost there look of professionalism. How often does the layman hear the term "fiduciary", answer; usually never, typical catch line to get the balance leaning in their favor. Get the "mark" confused, have them thinking they really need someone to think for them, and look out for you legal best interests. Here I will save you a Google: Fiduciary is a legal term for a person to whom property or power is entrusted for the benefit of another. I am telling you the agent is not you fiduciary either. They may act like it, but they are there to close the deal PERIOD. Oh they will tell you "By Law" the are obligated to be your fiduciary, and they are telling you the truth, it is the LAW. But let me tell you that is the biggest farce know to mankind. They divulge information to the other agent all the time. They will try to ask you what your absolute top dollar is and the minute you are not in the room they will divulge it to the other side to try and close the deal as fast as possible. They can deny it all they want, but they are lying plain and simple. And unless you have hidden surveillance cameras or have their phones tapped you can prove nothing in "wrong doing" and it's done everyday. They are as bad as attorneys when it comes to it.

So if you are buying a house instead of selling a house, you really don't need a real estate agent. For many savvy home buyers, the only purpose a real estate agent serves is to get the buyer past the guard at a gated community, or to unlock the key to the seller's empty house from the lock box on the front door. They also handle the closing and escrow, which can be done instead by your property attorney. But if you know you have a great Real Estate Agent who will tenaciously hunt down houses matching your criteria, it can save you a lot of time. But you do still need a good property attorney, and no matter what you do, don't let your real estate agent choose your property attorney. You choose your own property attorney on your own. One of the biggest mistakes many home buyers make is assuming that their "buyers agent" is working for them. They could not be more wrong. Again I reiterate , never let a real estate agent choose your attorney. You must choose your own attorney, not one with a cushy relationship to the salesperson who is trying to sell you a home. I cannot say this enough.

Remember this, after the deal is done, you will never here from them again, unless of course you want to buy again. Are they your friend? No! Are you going to get a Xmas card from them every year? No! They are sales people bottom line and what they get paid for is selling homes not making friends. Ask Ms. McDonald if she is offering you her Keller Williams services free of charge? Answer: To do the reverse of her quote "I say HELL NO". Keller Williams will definitely concur that.

3.Rebates Rebates Rebates

The big Kahuna. The ultimate lure. If you think rebates benefit you, you need to wake up. It's smoke and mirrors, give it on one end and take it on the other. Rebates at any level, whether it be real estate or cars or whatever, it's almost a stereo-typical bait and switch.

4 I will get you the best price!

"Real Estate Agent" Is Just Another Name For "Salesperson"

Don't ever lose sight of that fact. Their only mission is to sell, sell, sell to YOU. Don't ever let on that you are in a desperate situation, or that you need to sell a house fast to pay for emergency bills, or that you are in a desperate crunch to buy this house now, because you are being transferred into town this week. It's simply none of their business and as far as they are concerned, you are not in a rush to buy a house.

5. I am here for you!

You cannot ever be guarantee impartiality

If your real estate agent's commission is based on the selling price of a house you are about to buy, you cannot guarantee that the agent has your best interest at heart. The only way to guarantee that is to actually pay a large fee to a real buyer's agent who does not get a percentage of the selling price. But the fee almost removes the benefit of bypassing the commissioned real estate agent in the first place. To play it safe, never tell anyone but yourself how high you are willing to go. By law the seller's real estate agent has a "fiduciary" (there that word is again) responsibility to the seller, and they WILL tell the seller everything you say, so pretend you are under police interrogation. The first thing the agent will do is ask you how high you are willing to go on the house. Don't fall for this trick. Just give them the price you want to pay for the house and if they ask how high you are willing to go, tell them that's it. If the seller does not agree there is no deal and you're taking your money elsewhere.

Bottom line do whatever you are most comfortable with, but know you have options and it's not near as bad as it will be painted most of the time.

[Parrothead]

Wow, what a load of crap. I can't even respond right now, I have to pick my jaw up off the floor first.

I'll be back later after I gather my thoughts, but Mr. Barnes, you couldn't be more wrong.

[Mark F. Barnes]

Wow, what a load of crap. I can't even respond right now, I have to pick my jaw up off the floor first.

I'll be back later after I gather my thoughts, but Mr. Barnes, you couldn't be more wrong.

I figured you to be the first to respond. Be sure when you gather your thoughts and come up with some sort of response you be sure to do so with something besides the same old Realtor rhetoric. Because honestly you cannot change what I feel is my opinion. I have been down this road many times, and if you think your profession from the buyers standpoint is anything other than sales, don't waste your time and words. If you read carefully you read that Realtors are of great service to sellers, but in all honesty in my opinion you have no real service to a buyer that has any savvy at all. You can take it any way you want. That's my opinion and it will not change.

[dalparadise]

I figured you to be the first to respond. Be sure when you gather your thoughts and come up with some sort of response you be sure to do so with something besides the same old Realtor rhetoric. Because honestly you cannot change what I feel is my opinion. I have been down this road many times, and if you think your profession from the buyers standpoint is anything other than sales, don't waste your time and words. If you read carefully you read that Realtors are of great service to sellers, but in all honesty in my opinion you have no real service to a buyer that has any savvy at all. You can take it any way you want. That's my opinion and it will not change.

I am a former Realtor -- I did it for a year or so while my industry was in shambles a few years back. I believe your views of buyers' representatives may be overly cynical, but not necessarily false. Many are just as you describe. I wasn't, and found people really relieved at how I was treating them. I did do things like find inspectors who would save my clients money. It wasn't huge amounts, though. I also negotiated strongly on their behalf -- Often, a good deal is about timing -- and motivated sellers will come off thousands in order to do a deal in a specific time frame. It's important that a buyer's agent investigate this. True -- the buyer can and should do this himself, but not everyone is a skilled deal maker.

As far as the commission thing goes -- It's hard to get a rebate from a builder. I tried on my own home (I wasn't a Realtor at the time) from Millenium and the guy wouldn't budge. I even walked away from the deal. No dice. There's almost no chance if the seller is represented and you aren't, either. That 6% is already negotiated, so good luck getting anything from the blood-sucking Realtor.

The only real hope you have is to get a rebate FROM YOUR BUYER"S AGENT. In a new construction home, this is especially easy to do. Find a new, inexperienced Realtor looking to close a deal and make an offer of 1.5-2% rebate. The Realtor really does NOTHING in a new construction purchase -- in fact, the builder even does all the paperwork!

In one case -- a former client of mine, to whom I hadn't spoken in several months, called me when HE FOUND a new construction town house to buy. He mentioned my name and signed the papers himself before I even saw the property. At closing, I wrote him a check for 2% of the deal and kept 1% for doing nothing more than going to the closing and having a beer with the guy after the closing. Now, you're right -- I offered nothing to this guy, but he got a nice savings on the deal by having a buyer's rep. Of course, I was a good one. There are many who aren't.

[bachanon]

as much i do not want to offend parrothead, i must add my two cents.

i too have had unfortunate experiences with a buyer's agent. on my last home purchase, i was stressed personally and i grew to trust my realtor over the 8 months i worked with her. EVERY..... SINGLE.......ITEM...... i told her was important to me about the condition of the house i purchased turned out to be unimportant to her. i went with HER suggested inspector. i did not hire outside sources. the list of grievances is too long and too depressing to go over. you live and learn.

i was not ready to make a decision (although i had given her my personal deadline) on the house that i purchased. she told me, knowing i was stressed with classes, preparing my then current home for rental and working, to ____ or get off the pot. "keith", she said, "do you know how long we've been looking at houses?". "maybe it's time you do something or get off the pot."

i wanted to get it done, but it wasn't right for me at the time. i grew to admire and trust this very educated and interesting, mother like figure. she read me. then she took advantage.

even though i told her i did not want a $1000 home warranty, at the closing table it was apart of closing costs. after bringing it to her attention in front of the broker, they both explained how much time it would take to reprint and get new documents. they told me how they had benefitted from this type of home warranty. the warranty was a joke. i was extremely exhausted. i gave in. the contractors who the warranty company used didn't want to do crap and ran me around in circles to avoid fulfilling the promises of the warranty. it cost me at closing and then it cost me with AC Companies, plumbers, etc. what a joke. i wouldn't doubt that realt-whore got a commission for selling me the damn warranty!

i do not give my loyalty easily. i do not trust people easily. after i moved in, settled down, i realized i had been played. she didn't want to return my calls. she avoided me after closing. she had promised to give me a list of books i should read (she had a masters in literature). she bought a house near mine and said they'd invite me over when they moved in and would check in with me to see how the house upgrades were coming. not a peep. i spent eight months becoming friends with this woman and her husband.

i realize that i was the sucker, but i am not easily played! i wanted to depend on someone other than myself for this process. it is way better to talk to friends and family about the process than to trust a realtor. it is an entire WASTE of time and money.

get your mortgage loan preapproved. use the realtor of the seller, if they have one, to let you look at and inspect the houses. learn all you can about buying new or used homes.

in case you're wondering, she works for gary green/prudential in the woodlands.

oh, and to answer the question that started the thread.......NO, you DO NOT need an agent to buy from a builder. however, inspect the new house from the foundation to the rooftop and everything in between. be an active home buyer and let the builder know you are paying attention. they are not used to people being concerned and may not take kindly to your involvement. screw them. the sellers of new homes are just as bad as realtors in many cases. once you've been approved and signed on the dotted line, they couldn't care less how your house turns out. get the number of the contruction manager and hound his trail (nicely).

[pineda]

Any comment on all this, John Coby?

[PapillionWyngs]

I skipped to the bottom, so someone may have already said this, but some builders won't deal with agents at all.

[mpbro]

I agree that savvy buyers probably do not need a buyer's agent, but most buyers are not savvy. Unfortunately, I fear many realtors do not adequately represent buyers. I used a buyer's agent to purchase an existing home, and I'm glad I did. Robert Gray (grayhometeam.com). We offered on 5 homes, went to contract on 2. More than once we were willing to pay too much for a "cute" house. Bad realtors say "yes" when the buyer wants to pay too much and call it "customer service". Robert did not. The guy is primarily a seller's agent, with 10s of listings at any one time. Considering we went through a relocation agency, we were not worth his time or money.

When you're dealing with existing homes in high land value areas, market price is not so obvious, and mistakes are costly. Perhaps with new-build townhomes it does not matter, but buyer's agents still serve a purpose.

[Guest danax]

3.Rebates Rebates Rebates

The big Kahuna. The ultimate lure. If you think rebates benefit you, you need to wake up. It's smoke and mirrors, give it on one end and take it on the other. Rebates at any level, whether it be real estate or cars or whatever, it's almost a stereo-typical bait and switch.

Nah. You can do well when buying to use a company that does both mortgages and realty agency. With both pieces of the transaction, they are more willing to give the buyer a nice rebate and they still make a nice profit. If you're fortunate, you'll find an agent that's a loan officer too and is truly knowledgeable about both ends. Someone like that is rare, but they can give the buyer a much more comfortable experience as they only have to call one person to find out how their loan is going and how the real estate end is going, instead of the usual semi-circus, and, they can get a completely competive loan and get a nice refund too.

There's one company in particular that I know of that is doing just that and doing it well and they've got a patent pending on the process.

[Mark F. Barnes]

Nah. You can do well when buying to use a company that does both mortgages and realty agency. With both pieces of the transaction, they are more willing to give the buyer a nice rebate and they still make a nice profit. If you're fortunate, you'll find an agent that's a loan officer too and is truly knowledgeable about both ends. Someone like that is rare, but they can give the buyer a much more comfortable experience as they only have to call one person to find out how their loan is going and how the real estate end is going, instead of the usual semi-circus, and, they can get a completely competive loan and get a nice refund too.

There's one company in particular that I know of that is doing just that and doing it well and they've got a patent pending on the process.

Well Dan I really don't want to argue the point but I will give you an insight on amortization and the processes that take place in the numbers game lenders and brokers play to maximize "their" dollar value not yours.

Now I am not a banker or loan officer, however I deal on a daily basis, multi-million dollar AFE's in the Petroleum Exploration field. Oil Companies do not risk hard cash on drilling, they use loans and investors to foot the bill and deal directly in short term reclamation and a half a point on a 30 million dollar AFE is quite a bit of money. So thru my experience in negotiating these over the years I have become very aware of the number shuffling game the bean counters use to give the appearance of the borrower saving money out of pocket, where in fact they end up paying more in the long run. It is done everyday believe me.

Risk-based pricing is a method the mortgage industry relies on to adjust interest rates based on borrower profile. To mitigate any potential risk, banks and lenders have created pricing adjustments for a variety of loan criteria. In simple terms, a borrower deemed more risky by a bank or lender will receive a higher interest rate. After all, it makes perfect sense to give the more qualified borrower the better rate. This all sounds good and it sets the playing field for the big score and that is the average everyday Joe with an average Fico score

There are a number of factors that can adjust the pricing of your loan. One of the most important factors will always be credit. Credit scores range from 300-850, and greatly affect the rate you will ultimately receive. Scores above 720 are generally the highest tier, and will offer a rebate to the rate you receive. Look at this example:

Fico score >720 score = .375% rebate

Fico score 660-679 = .25% cost

Note that scores between 680 and 720 weren

[Guest danax]

^

I understand all of that.

I would say the typical gross profits for a mortgage broker on a loan would be 1% yield spread premium, 1% origination and maybe $600 in fees. Perhaps in the oil and gas business, where these loans are huge, making origination and yield spread is considered "double-dipping". In mortgages it's not. Is all of this negotiable? Sure, it all is.

The advantage of having the same person/company be your real estate agent and loan officer is that there is more profit to share with the buyer.

Example:

Buyer's agent commission (paid by seller) 3%

Loan fees (paid by buyer) 2.5%

The agent can give the buyer either a lower interest rate, lower closing costs, or a check outside of closing. With a 2% rebate, the agent is still making a nice profit and buyer gets a loan almost for nothing. Compared to the typical scenario where you have separate companies handling your loan and real estate, it's just much tougher to negotiate either portion.

[rps324]

I agree that savvy buyers probably do not need a buyer's agent, but most buyers are not savvy. Unfortunately, I fear many realtors do not adequately represent buyers. I used a buyer's agent to purchase an existing home, and I'm glad I did. Robert Gray (grayhometeam.com). We offered on 5 homes, went to contract on 2. More than once we were willing to pay too much for a "cute" house. Bad realtors say "yes" when the buyer wants to pay too much and call it "customer service". Robert did not. The guy is primarily a seller's agent, with 10s of listings at any one time. Considering we went through a relocation agency, we were not worth his time or money.

When you're dealing with existing homes in high land value areas, market price is not so obvious, and mistakes are costly. Perhaps with new-build townhomes it does not matter, but buyer's agents still serve a purpose.

There are plenty of lame agents in the real estate industry. One of the hardest parts of my job is keeping the other agent on track. Often times I feel like I am having to manage them to make sure they are doing their part. There are also plenty of sharp ones that can negotiate hard. I have dealt with both kinds.

Back to the original question, no, it isn't necessary that you have a buyer's agent on a new construction townhome sale b/c there is usually very little flex room on price in that arena. I also doubt you would get a better deal without one either.

Normally a Buyer's Agent should try to get you the best deal. I am sure it doesn't always happen that way. I am not going to make broad generalizations because I can't answer for the whole industry. I just know what I do. I always negotiate for the best deal. Often time I find myself "holding back" a buyer when they are too eager to jump on something that I do not think is a good deal. Again I don't know what everybody else does, and I am sure people have had experiences to the contrary, but that is how I handle it.

[Parrothead]

I figured you to be the first to respond. Be sure when you gather your thoughts and come up with some sort of response you be sure to do so with something besides the same old Realtor rhetoric. Because honestly you cannot change what I feel is my opinion. I have been down this road many times, and if you think your profession from the buyers standpoint is anything other than sales, don't waste your time and words. If you read carefully you read that Realtors are of great service to sellers, but in all honesty in my opinion you have no real service to a buyer that has any savvy at all. You can take it any way you want. That's my opinion and it will not change.

Well, first of all, I suppose I should apologize--for two things. One, in my delayed response. I couldn't really get back here this past weekend. I also need to apologize for my defensive position. I took what you said very personally. Later I realized you slammed my profession, not me. I understand a lot of people have had bad experiences with agents. I am not a bad agent, so I don't necessarily appreciate being lumped in with the percentage who are. I understand you weren't trying to do that, but that's how it sounded to me. So, my apologies.

Secondly, I am not out to change your opinion. I could care less what you present as your opinion. I do, however, care about what you present as fact. If you have a good realtor that you trust, they can do a LOT for you. Everyone that thinks they are a "savvy" buyer are so until they run into trouble.

Most of the smart buyers out there have an agent to cover all the bases for them, dot their "i's" and cross their "t's". It's like doing a will yourself. While I would like to believe I'm smart enough to fill in the blanks, I'd rather have the peace of mind that comes with an attorney looking it all over and making sure it's what it needs to be....and there are just as many bad attorneys as there are bad agents.

I hope I managed to respond without the same old Realtor "rhetoric", whatever that is. But hey, thanks for giving me the chance to do so.

[gwilson]

As a builder, I can say, in general, it is in your best interests to have a real estate agent or lawyer involved. They will protect you and fight for your rights as well as go over specs and such to make sure you are getting what you paid for. The money doesn't come out of your pocket, and the money is being paid to someone (whether it is the agent or the builder) either way. It isn't like you get the money back if you don't have an agent.

Alternatively, you can take the contracts, specs, and other documentation to a real estate attorney and have them looked over then they can act on your behalf to make sure you aren't getting screwed. They can also do the due dilligence necessary to make sure you are getting a good builder.

[jscarbor]

I am a Realtor.

It seems to me arguing with Mark Barnes will get you nowhere. Some of what he says may be true but it isn't the whole truth. I speak from many sides of the process. I am a consumer, a builder and a realtor. I can tell you that in some cases a Realtor has been a huge advantage in some deals. I can say that as a Realtor I have put my own feelings aside in order to best represent my client. As a builder I have had good experiences with buyers agents even if I dodn't like paying them 3%. I didn't like paying the 3% so much in fact I started my own real estate company with lower commissions. Now I can't really reduce the 3% rate to buyers agents because thats the market rate but I can get a little piece of the pie while offering lower commissions for people that work for me.

That all being said....if I were someone without good real estate knowledge then I would look into working with a Realtor. When you use someone who gives a discount on their fee more than likely they will not be an expert in what you are looking for. But with technology and power of MLS you can get a good feel for just about any area for your client. On the other hand if you work with a full fee realtor you still might not work with an expert in an area?

It all goes back to there are great/good Realtors out there and there are some horrible ones.

[Mark F. Barnes]

As a builder, I can say, in general, it is in your best interests to have a real estate agent or lawyer involved. They will protect you and fight for your rights as well as go over specs and such to make sure you are getting what you paid for. The money doesn't come out of your pocket, and the money is being paid to someone (whether it is the agent or the builder) either way. It isn't like you get the money back if you don't have an agent.

Alternatively, you can take the contracts, specs, and other documentation to a real estate attorney and have them looked over then they can act on your behalf to make sure you aren't getting screwed. They can also do the due dilligence necessary to make sure you are getting a good builder.

Well are you saying one or the other or both? The thread started on the question, do you need an agent to purchase from a builder. The simple answer is no. If you already have a property or home located, and you are just trying to buy the home, what do you need an agent for? Either way you are going to have to have a property attorney. The attorney can cover all your needs, that is what I said earlier in my post the first time. Most builders don't even want to deal with agents anyway. Just another body in the food chain.

Now if you are in the market and looking for a used home, and really don't have anything located, a buyers agent can save you a lot of time and get you a property located and options to choose from. Then you have a great use for the agent, especially with all the gated communities and security you have to deal with in certain areas these days. You just have to pick you a proactive agent that really appears to be taking an interest in your purchase and don't just grab the first one that comes along. You want a go getter that is proactive but not a pest. One that when you lay out your wants and needs and the price range that you layout, that they stick to the plan and not try to immediately take you outside the box.

A big problem is the influx of the part timers in the realtor world, what I like to refer to as the used car dealers. There are those long time agents that have dedicated themselves to there field and that's why they are successful. They actually do their jobs and do it well. Those are getting fewer and farther between.

[jscarbor]

So if the builder doesn't want the Realtor in the deal you shouldn't get the realtor? Great advice.

And your right, you don't HAVE to get a realtor to buy from a builder.

[Mark F. Barnes]

So if the builder doesn't want the Realtor in the deal you shouldn't get the realtor? Great advice.

And your right, you don't HAVE to get a realtor to buy from a builder.

Look Scarborough I am not going to get into a pissing match with you, but if you have a property attorney, what do you need the agent for? Answer that plan and simple. What legal advice can this agent give you that the property lawyer can't handle? Answer: None. No why, a realtor is not a lawyer. If you have a new property located with a builder, what is the agent needed for? If you need companionship, might I suggest a Cocker Spaniel. If you have an attorney, do you need an agent to close for you? Answer: No. Do you need the agent to hire an inspector? Answer: No.

Come on Scarborough enlighten us with your great wisdom, with all you experience with your all in one firm you have.

[jscarbor]

Look Scarborough I am not going to get into a pissing match with you, but if you have a property attorney, what do you need the agent for? Answer that plan and simple. What legal advice can this agent give you that the property lawyer can't handle? Answer: None. No why, a realtor is not a lawyer. If you have a new property located with a builder, what is the agent needed for? If you need companionship, might I suggest a Cocker Spaniel. If you have an attorney, do you need an agent to close for you? Answer: No. Do you need the agent to hire an inspector? Answer: No.

Come on Scarborough enlighten us with your great wisdom, with all you experience with your all in one firm you have.

You don't want to get into a pissing match but you take that kind of attitude? OK.

It seems earlier you implied that since the builder doesn't want a Realtor in the deal you shouldn't get one? If that was your implication then thats pretty dumb logic? If you were not implying that I appologize to you but stand by the statement regarding not getting an agent because the builder doesn't want one.

Can the lawyer tell you if you are paying what others are paying for a similar property? Does a lawyer know what certain incentives are being given to buyers for similar properties? Does the lawyer know what is fair for earnest money....option money....closing time....any other stuff? No, because the lawyer is a lawyer not a Realtor. Can many of these things be done by an individual? Maybe, but i bet that person has a better chance of messing up then one with a Realtor.

Edited October 2, 2006 by jscarbor

[Parrothead]

Mr. Barnes, I thought your original argument was that you didn't need an agent, period. Now you're saying why have one if you have an attorney?

[Mark F. Barnes]

You don't want to get into a pissing match but you take that kind of attitude? OK.

It seems earlier you implied that since the builder doesn't want a Realtor in the deal you shouldn't get one? If that was your implication then thats pretty dumb logic? If you were not implying that I appologize to you but stand by the statement regarding not getting an agent because the builder doesn't want one.

Can the lawyer tell you if you are paying what others are paying for a similar property? Does a lawyer know what certain incentives are being given to buyers for similar properties? Does the lawyer know what is fair for earnest money....option money....closing time....any other stuff? No, because the lawyer is a lawyer not a Realtor. Can many of these things be done by an individual? Maybe, but i bet that person has a better chance of messing up then one with a Realtor.

Well I don't see where I implied anything, in fact I usually make no bones about it, and say what I mean and mean what I say. It's a funny thing about being accused of implying something, it takes an assumption by the other party, to read into what someone is saying. And I am fully sure you are aware of the breakdown on the word assume. Now I will address your questions one at a time.

1. Can the lawyer tell you if you are paying what others are paying for a similar property?

I say he should be able to if he is any kind of a property attorney that deals in real estate in the general area everyday. If he does, then you find another lawyer.

2. Does a lawyer know what certain incentives are being given to buyers for similar properties?

(see above)

3. Does the lawyer know what is fair for earnest money....option money....closing time....any other stuff?

once again (see above). However let me carry that a step further and break this down:

The actual amount of earnest money will vary I am sure with each particular market. In most instances, I have found, it will represent between 1 to 2 percent of your offer price. If you are involved in a competitive bidding situation, an increased amount of earnest money may just make a difference in you being the successful bidder. Your earnest money will be deposited in a trust account or with the escrow company shortly after you go under contract with the Sellers anyway, and it is then applied to your closing costs and is money that you would normally spend anyway, so no loss there. It's not rocket science, and a good property lawyer should know this, keyword being "property" lawyer.

By "option money", I take it as you mean the fee the lease/purchaser pays to enter into a lease/purchaser agreement. The rule of thumb to typically use for the MID% is 10 to 20 percent. You may need to clarify that point some if I missed it. I stay away from those deals all together anyway, just doesn't work for me.

And finally closing time. Hmm, I am fully aware timing and deadlines are very important in real estate transactions. But you should allow yourself enough time in the "Offer to Purchase Real Estate" phase to get an inspection, negotiate the Purchase and Sale Agreement, apply for and obtain mortgage financing, and then set a closing date. Real estate deals often fail based on the inability to meet deadlines set forth in the offer. But I have found 30 days to close is pretty standard, I don't see any hard line negotiation to be made there, and if the seller is in any bigger rush than that, BEWARE! Something maybe wrong in there.

So I really don't see any gain with an agent, maybe it's just me. I don't see the rocket science in it all. Any competent property attorney will protect your interests as a home buyer, and will:

1. Help you negotiate a fair purchase price

2. Help you prepare the Offer to Purchase

3. Help you negotiate a more favorable purchase price if the home inspection uncovers significant problems

4. Draft and/or revise the Purchase and Sale Agreement to protect you and your money

5. Assist you with the mortgage process.

6. Prepare you for the final walk-through of the property

7. Attend the closing and represent your interests.

That's what they do everyday, that why you hired them in the first place. And I am not trying to be little any agents, but it's going to sting some. I just feel more comfortable with someone with a Doctorate of Juris Prudence, who is specializing in Real Estate, than the ex Mary Kay or Amway person looking out for my best interests.

P.S. there's only one "p" in apologize!

[Mark F. Barnes]

Mr. Barnes, I thought your original argument was that you didn't need an agent, period. Now you're saying why have one if you have an attorney?

Polly,

Please save yourself some grief and go back and re-read my original post, just below your quote, second paragraph in bold black letters. I sincerely hope you read your closing paperwork more thoroughly than you read these threads.