This is something that I hear at least once a week when speaking to perspective clients. In the greater Austin area, there is quite a bit of new home construction especially in areas such as Round Rock and Cedar Park. Most of the home builders have a sales office in each one of their communities with on-site sales agents that are ready to assist homebuyers with the purchase of one of their homes. Given that a buyer can just walk into the model home, be wowed by the sales agent and sign a purchase contract without being represented by a Realtor, why do they even need a Realtor? The answer is quite simple. Where you may be involved in a home purchase every six or eight years, I am involved with 20-30 home purchases EVERY year. I've seen numerous examples where buyers felt that they would get a better deal from the builder if the builder didn't have to pay the Realtor's commission. The truth is that those people usually end up paying too much because they weren't aware of the potentially undisclosed incentives that sometimes aren't offered up front. Take for example a recent experience that I had with a potential client. After showing him various locations to consider, he went back to one of the builder's sales offices and asked if they purchased a home unrepresented, could they negotiate on their own behalf to get a better deal. Of course the builder agreed to this knowing that the prospective buyer didn't have access to really verify if they got a good deal or not. In this situation, the buyer ended up paying about $15,000 too much for the property. How do I know that? Because when he finally returned my calls and told me that he had already purchased a home and what he paid for it, I emailed him recent comparables that had sold for at least $15,000 less than what he had paid for! With all of those other comparables, a Realtor had been involved and had been able to negotiate a better deal than the buyer was able to do on their own. Given that the Realtor's commission is paid by the builder, then why wouldn't you agree to FREE representation to make sure that you got the best deal possible?
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