Buyer Rep Letter - New House
Buyer Rep Letter - New House
Hello - we have a realtor who is asking to sign a buyer rep letter for a period of 1 year is this normal standard of practice when buying a home? We will be building and right now it takes about 1 year to build so not sure if she is doing it for a year to cover that entire period for representation, or if we should ask for a 3-6 month period instead? Thanks.
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Re: Buyer Rep Letter - New House
We've never signed a buyer rep agreement.amindu wrote: ↑Thu Sep 16, 2021 3:02 pm Hello - we have a realtor who is asking to sign a buyer rep letter for a period of 1 year is this normal standard of practice when buying a home? We will be building and right now it takes about 1 year to build so not sure if she is doing it for a year to cover that entire period for representation, or if we should ask for a 3-6 month period instead? Thanks.
Only a seller rep agreement, as they do a lot of work behind the scenes (or used to...!?).
And why... if you are building?
And why would you need anything during the build?
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Re: Buyer Rep Letter - New House
Nope. No. Just no. You don't need a buyer's agent for building a house. If you feel you got good service from the agent and want to compensate him or her, write them a check. Don't sign anything.
Re: Buyer Rep Letter - New House
Are you building it to sell it?
Just wondering why you need a realtor at the moment.
Just wondering why you need a realtor at the moment.
Re: Buyer Rep Letter - New House
We are getting 1% back from her with new construction (builder pays her commission) and if problems arise she can jump in to take care of it especially given now with labor, supply shortages, to do what’s in our best interest.
Re: Buyer Rep Letter - New House
No, however due to supply shortages builders are cutting corners by substituting products that aren’t apples to apples so that is where she could possibly come in if we are not happy with the substitution. She is also driving around to other communities to check out the other builder we are interested in. Being in the industry she may have more information than what we would be able to gather especially when trying to negotiate design credits and what not which a lot of builders are not doing anymore.
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Re: Buyer Rep Letter - New House
I’ve heard of a builder-paid realtor for spec homes in a development I.e. the home is being built whether I buy it or not...but if I buy I get to choose the carpet, trim package etc.
Otherwise...
1. Why on earth would I want a middleman between me and the builder (if I want to politely “yell at” the builder for an issue?
2. Having a go-between does not protect you.* The language of the contract *with the builder* protects you - look for something about cost overruns for labor, how your design changes are handled, increased materials costs (often the buyer does pay the last one), and deadlines with payment schedules.
* Especially not one paid for by the builder . Have an attorney review the contract.
No, I’m not signing an agreement for 1 year. The builder can employ the realtor...or put it in the contract that the purchase of this exact property is via this realtor.
Last edited by Freetime76 on Thu Sep 16, 2021 6:01 pm, edited 1 time in total.
Please spell out new acronyms. Thank you.
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Re: Buyer Rep Letter - New House
We hired a buyer's agent when buying a new house and they were completely worthless, essentially ended up representing the builder's interests. She discouraged us from doing a pre-sale inspection which turned up several significant defects.
Re: Buyer Rep Letter - New House
Thanks she’s not a realtor for the builder, one I found once I started looking and negotiated a rebate through. Atleast in Texas there are lots of realtors that give upto 2.5% back on new construction, not sure if this is just more prominent in Texas vs other areas. This would not be a spec home.Freetime76 wrote: ↑Thu Sep 16, 2021 5:12 pmI’ve heard of a builder-paid realtor for spec homes in a development I.e. the home is being built whether I buy it or not...but if I buy I get to choose the carpet, trim package etc.
1. Why on earth would I want a middleman between me and the builder (if I want to politely “yell at” the builder for an issue?
2. Having a go-between does not protect you.* The language of the contract *with the builder* protects you - look for something about cost overruns for labor, how your design changes are handled, increased materials costs (often the buyer does pay the last one), and deadlines with payment schedules.
* Especially not one paid for by the builder . Have an attorney review the contract.
No, I’m not signing an agreement for 1 year. The builder can employ the realtor...or put it in the contract that the purchase of this exact property is via this realtor.
I do plan on looking at those clauses and to see if there is an escalation clause.
Re: Buyer Rep Letter - New House
We did phase inspections on our first home when it was being constructed and plan to do the same. She encouraged this as well.baconavocado wrote: ↑Thu Sep 16, 2021 5:14 pm We hired a buyer's agent when buying a new house and they were completely worthless, essentially ended up representing the builder's interests. She discouraged us from doing a pre-sale inspection which turned up several significant defects.
Re: Buyer Rep Letter - New House
Is she charging you?
If you are tempted, I would do 90 day increments. It will keep her hungry.
If you are tempted, I would do 90 day increments. It will keep her hungry.
Re: Buyer Rep Letter - New House
To be clear, you are buying a real estate agent 2% for a new home build? I don’t feel like you are going to get your money’s worth. For that kind of money you could probably hire someone who actually knows construction (say a GC) to come inspect the build several times and provide feedback.
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
Re: Buyer Rep Letter - New House
I am not paying her anything if I don’t bring a realtor the builder pays nothing if I bring a realtor the builder pays 3%. Either way with or without a realtor there’s nothing out of my pocket.ScubaHogg wrote: ↑Thu Sep 16, 2021 5:27 pmTo be clear, you are buying a real estate agent 2% for a new home build? I don’t feel like you are going to get your money’s worth. For that kind of money you could probably hire someone who actually knows construction (say a GC) to come inspect the build several times and provide feedback.
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Re: Buyer Rep Letter - New House
I see. Thank you for explaining!amindu wrote: ↑Thu Sep 16, 2021 5:21 pmThanks she’s not a realtor for the builder, one I found once I started looking and negotiated a rebate through. Atleast in Texas there are lots of realtors that give upto 2.5% back on new construction, not sure if this is just more prominent in Texas vs other areas. This would not be a spec home.Freetime76 wrote: ↑Thu Sep 16, 2021 5:12 pmI’ve heard of a builder-paid realtor for spec homes in a development I.e. the home is being built whether I buy it or not...but if I buy I get to choose the carpet, trim package etc.
1. Why on earth would I want a middleman between me and the builder (if I want to politely “yell at” the builder for an issue?
2. Having a go-between does not protect you.* The language of the contract *with the builder* protects you - look for something about cost overruns for labor, how your design changes are handled, increased materials costs (often the buyer does pay the last one), and deadlines with payment schedules.
* Especially not one paid for by the builder . Have an attorney review the contract.
No, I’m not signing an agreement for 1 year. The builder can employ the realtor...or put it in the contract that the purchase of this exact property is via this realtor.
I do plan on looking at those clauses and to see if there is an escalation clause.
If you are reviewing your contract carefully, that’s the bigger one - most people who have issues end up being sent to read their contract to see if there is any recourse (I.e. it’s too late ).
Please spell out new acronyms. Thank you.
Re: Buyer Rep Letter - New House
Gotcha. Now I get it.amindu wrote: ↑Thu Sep 16, 2021 5:30 pmI am not paying her anything if I don’t bring a realtor the builder pays nothing if I bring a realtor the builder pays 3%. Either way with or without a realtor there’s nothing out of my pocket.ScubaHogg wrote: ↑Thu Sep 16, 2021 5:27 pmTo be clear, you are buying a real estate agent 2% for a new home build? I don’t feel like you are going to get your money’s worth. For that kind of money you could probably hire someone who actually knows construction (say a GC) to come inspect the build several times and provide feedback.
It does beg the question if whether the builder will give you 2% off for not using a realtor. Wouldn’t hurt to ask
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
Re: Buyer Rep Letter - New House
So in Texas they won’t do that as the builder can be black listed by the NAR. I went down this route the first time and was told that they would not come off any if you don’t bring a realtor. I think the national association of realtor has some pull as I imagine no one would bring one and that would impact quite a few across the U.S.ScubaHogg wrote: ↑Thu Sep 16, 2021 6:22 pmGotcha. Now I get it.amindu wrote: ↑Thu Sep 16, 2021 5:30 pmI am not paying her anything if I don’t bring a realtor the builder pays nothing if I bring a realtor the builder pays 3%. Either way with or without a realtor there’s nothing out of my pocket.ScubaHogg wrote: ↑Thu Sep 16, 2021 5:27 pmTo be clear, you are buying a real estate agent 2% for a new home build? I don’t feel like you are going to get your money’s worth. For that kind of money you could probably hire someone who actually knows construction (say a GC) to come inspect the build several times and provide feedback.
It does beg the question if whether the builder will give you 2% off for not using a realtor. Wouldn’t hurt to ask
Re: Buyer Rep Letter - New House
Follow the money.
The builder pays her, and you think she is going to be looking out for your interests during the build?
You are one transaction, the builder probably does dozens of these types of deals every year. If there is some issue, you think the realtor is going to risk cutting off thay gravy train?
I am skeptical.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: Buyer Rep Letter - New House
True however I would still have final say either way, and if I don’t like the advice she’s giving I can ignore it. I guess it would be no different if I didn’t have a realtor either way I would be making a decision should issues arise.marcopolo wrote: ↑Thu Sep 16, 2021 6:42 pmFollow the money.
The builder pays her, and you think she is going to be looking out for your interests during the build?
You are one transaction, the builder probably does dozens of these types of deals every year. If there is some issue, you think the realtor is going to risk cutting off thay gravy train?
I am skeptical.
Re: Buyer Rep Letter - New House
This is what I would expect. The builder pays the realtor 3%, who in turn gives you 1% to squash your requests/ complaints. The builder then says to talk to your realtor, instead.baconavocado wrote: ↑Thu Sep 16, 2021 5:14 pm We hired a buyer's agent when buying a new house and they were completely worthless, essentially ended up representing the builder's interests. She discouraged us from doing a pre-sale inspection which turned up several significant defects.
Re: Buyer Rep Letter - New House
Thanks I see your point.celia wrote: ↑Thu Sep 16, 2021 10:14 pmThis is what I would expect. The builder pays the realtor 3%, who in turn gives you 1% to squash your requests/ complaints. The builder then says to talk to your realtor, instead.baconavocado wrote: ↑Thu Sep 16, 2021 5:14 pm We hired a buyer's agent when buying a new house and they were completely worthless, essentially ended up representing the builder's interests. She discouraged us from doing a pre-sale inspection which turned up several significant defects.
Re: Buyer Rep Letter - New House
Well, maybe this then. My current home was one of the first sold in a block of spec homes. The builder clearly wanted to keep the listed sell price as high as possible, so instead of a lower list price I negotiated a LOT of concessions.* I think they were happy to do it since no one but me would know. Just a thought.amindu wrote: ↑Thu Sep 16, 2021 6:34 pmSo in Texas they won’t do that as the builder can be black listed by the NAR. I went down this route the first time and was told that they would not come off any if you don’t bring a realtor. I think the national association of realtor has some pull as I imagine no one would bring one and that would impact quite a few across the U.S.ScubaHogg wrote: ↑Thu Sep 16, 2021 6:22 pmGotcha. Now I get it.amindu wrote: ↑Thu Sep 16, 2021 5:30 pmI am not paying her anything if I don’t bring a realtor the builder pays nothing if I bring a realtor the builder pays 3%. Either way with or without a realtor there’s nothing out of my pocket.ScubaHogg wrote: ↑Thu Sep 16, 2021 5:27 pmTo be clear, you are buying a real estate agent 2% for a new home build? I don’t feel like you are going to get your money’s worth. For that kind of money you could probably hire someone who actually knows construction (say a GC) to come inspect the build several times and provide feedback.
It does beg the question if whether the builder will give you 2% off for not using a realtor. Wouldn’t hurt to ask
*which my "agent" strongly advised against. Had I listened to her it would have cost me more than even her commission.
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
Re: Buyer Rep Letter - New House
It is worthless to have a buyer agent in a new build situation unless he or she is rebating 90% of the spiff to you as the buyer. The buyer agent cares a lot more about his or her relationship with a builder--dozens of houses to sell from that builder, if not more, in your local area, whereas you are a single transaction that will be over soon--than he or she cares about your wishes. We made this mistake and our agent repeatedly suggested we "move past" some items of concern during our build. It became very clear she was aware who buttered her bread, and this was before rebating agents were a thing in our locality.