Myth #1: I will save money on the commission by not using a Realtor
Myth #2: You don't need a realtor since you will be working directly with the builder. The builder will take care of the financing, the title company, and all of the administrative paperwork associated with the purchase of a new home.
Myth #3: Realtors know little or nothing of construction, so why would you need one? A realtor would just be in the way.
New home construction prices are generally based on the builder's cost plus their profit or markup. In most cases, homebuilders either have a marketing budget, whichincludes commissions or they use a percentage profit or markup which includes a commission. What generally happens when a buyer/client works directly with a builder is that the builder pockets the commission as additional profit. Most builders or their salespersons will advise you that there is no need for you to have a real estate agent. It is important to remember that builders represent themselves; not you as the client.
Myth #2: Builders will make it seem simpler without a realtor and that having one is really not necessary. This might be true if the builder represented your interests instead of theirs. Do you think he does? Did you know that most homebuilders have their own mortgage and title companies, not for your interest, but for theirs? The builders need their lender and title companies to finance their business and buy your lot and others. This is big business for both of them and be assured that those relationships favor the builder's interest way ahead of yours.
Myth #3: Remember the title of this article says "qualified realtor". The very best arrangement is for you, the buyer, to have a qualified, seasoned, realtor to represent you in a real estate transaction. Would you represent yourself in a lawsuit? Would you represent yourself in probably the largest investment you will ever make...your home? Interview a few realtors to determine their knowledge, experience, and success on new builds. You can ask them to justify the commission dollar wise, but remember, as discussed above, you are not the one who will be paying the commission.
In conclusion, having a qualified realtor to represent your interests when having a new home built is essential. Although the builder will do their best to make it seem otherwise, the commission saved will go back into their pocket and not yours. A real estate agent will keep a detailed account of the builder's actions and make sure that you are getting the most home for the money. The best part is that there is no additional cost to you. So when you go to buy a new home, find a seasoned realtor. It makes sense.
Side note: Some new-home buyers think that if they do not use an agent for their purchase, the builder will reduce the price of the home by the amount of the commission. For the most part, this cannot be further from the reality. Builders do not want to reduce their prices because it sets the comparison price for future home sales in that neighborhood. Builders instead add the commissions paid to a buyer’s agent into the marketing budgets of the homes. If a buyer goes to a new-home builder without a real estate agent, either the builder’s agent or the builder will pocket that money.
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