It's perfect!
With available housing inventory at historical lows, many home buyers without a tight timeline are looking at newly built house or condos. I recently spoke with a past client who was considering combining his family with his partner’s and visited a showroom. He asked me: Because I do not require a Realtor to buy a house with a builder, can I save money by going with the builder’s (seller’s) representative and negotiating the 3% off?
Great Question. It seems like it would be: the home is brand new and has warranties on it, the builder will negotiate because they are saving money, the salesperson said a Realtor would not be needed because it’s a new house.
Here's the great news- you can get discounts when buying a new house, and by having a skilled Realtor with you to know where the wiggle room is. A builder’s salesperson may lead you to believe that there is a direct relationship between commission and sale price or upgrades, but there isn't, according to the Home Builders Association of Colorado.
Here are some things to consider when making this decision:
1. Builders will generally not lower the price of a new home, especially not in this seller’s market. They have more of the same model for sale, and if they sold the same product to another buyer last week at full price and that buyer finds out they were undercut, lawsuits tend to follow.
2. According to a spokesperson at Richmond Homes, a prominent local builder I talked to, a 6% sales commission split between buyers agent and salesperson is allocated ahead of time as part of the marketing budget for the overall project. So if the commission does not go to to a buyer's Realtor, it will usually go to the salesperson, who gets two commissions, and is not legally obligated to represent buyer interests like a licensed Realtor.
3. The salesperson represents the builder. Most home showroom salespeople are unlicensed and want to maximize their personal profit and the builder's. They may not point out that the when you buy a home from a builder you do not use the Department of Real Estate approved contract. The builder changes the language to be in their favor. This language makes it much more difficult to get your earnest money deposit back should you change your mind, and usually removes or dramatically weakens the warranty clauses for any construction defects.
4. Newly built houses are often built in a hurry, and have as many defects as existing houses.
5. An experienced Realtor knows where you can save money, for example when dealing with builders, and makes sure you don’t miss any of those opportunities.
6. Your Realtor’s license is on the line in every transaction and is obligated to inform you fully and look out for your interests.
Counter to what it might seem in the sales office, you could easily end up with more discounts with a Realtor in your corner, and avoid a lot of risk should things go awry.