Why Use an Agent to Buy a New House?

By
Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000

My phone rang and it was a client from another state.  I'd helped this client buy a retirement home for his parents here in Peoria.  They are all very nice people and I enjoyed helping them.  Seeing their satisfied grins and exchanges when the sale was complete was a great feeling. So it was a complete surprise when the phone remained silent after leaving voicemails.   

 

Fast forward to yesterday when I ran a search and my suspicions were confirmed.  My client had purchased his retirement home ahead of schedule and without me.  A somber feeling doesn't even describe the emotion, which bordered on a hurt feeling more than anything.  He had told me he registered my name at every new build subdivision and wasn't ready to buy anyway.  Since he did not plan his trip in advance, but happened to be in town on a weekend, we both agreed he would simply give my name to the builders.  

 

New BuildBut one subdivision had eluded him, even though I researched it for him while he was driving the neighborhood.  He was across town and I had a meeting with a different client.  Since no advance notice had been given that he would be in town, he proceeded without me.  He told the agent that he had been giving all of the builders my name as he went because I was on the other side of town, 25 miles away. Every builder had respected that notification; everyone but this one.  

 

This builder decided to offer him a deal if I wasn't included in the equation.  Figuring he was saving thousands, he went along with it.  Only after my search of the tax records did I figure out that he must have bought a spec home due to the closing date and our phone conversation; he was a cash buyer. 

 

Deciding what to do, I wrote him an inquisitory email asking him if I had done something wrong.  The email idea worked better because he works nights and this would be a non-threatening approach, plus I needed time to cool off.  

 

When my phone rang this morning, I knew I hadn't done anything wrong.   He relayed to me that the builder had offered to reduce the price of the home to a level that would entice him to buy and not include me as his agent. Unbelievable!  I've read about this happening to other agents, but it's never happened to me.  

 

In the current housing climate, every builder has been 100% honest in saying they would honor an Agency representation.   I'm shocked it happened but the blow is softened thanks to my clients' honesty. He proceeded to tell me he feels bad as we had an arrangement and that I would be helping him with his retirement home purchase.   We talked about investment properties and he has referred his sister to me for assistance in purchasing a home for her so our relationship is in tact.   

 

The home buying public may not realize that even in new construction, the assistance of an agent representing them provides value.  We will be a 3rd set of eyes looking for defects at a walk through.  We will recommend a home inspection when a new home consultant will not.  The new home consultant represents the builder, not the buyer.  We will review the surrounding area for resales to make sure that buying a new home is of the best value.  We will research vacant land to ascertain the zoning and most likely construction of future projects.  We will review infrastructure for freeway access and whether the area has a solid track record for growth.  The information we can provide will benefit the home buyer and provide confidence in the home buying decision.

 

I've decided that it's not worth contacting a builder or spending any more energy on this issue.  What will I do next time?  Advise me client to please give me more notice if he's coming to town.  Even though I asked him to let me know when he's coming, I need to be more communicative in the process.   It's my hope that this post will help another agent in a similar situation.

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Comments (33)

Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Thankfully, he was mature enough to get back to you and explain what happened. Home buyers, of resale and brand new construction, should definitely use a buyer's agent. They need someone on their side. 

Aug 30, 2016 08:39 PM
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

Wait until the market shifts, that builder will likely be an inexpensive "handyman".

Aug 31, 2016 05:16 AM
Jeanne Gregory
RE/MAX Southwest - Sugar Land, TX
The most important home I sell is YOURS!

This happened to me a few months ago.  The client was waiting to make his captain rank as pilot for a big airlines.  They weren't really ready to buy.  They went out to a builder on a Sunday afternoon and the builder told them if they signed up that day without a Realtor, he would discount the house $5000.  The client called me the next week.  She had cold feet.  When I looked up the house, it was backing to what will be construction on a major tollway coming through the area.  I explained that I really couldn't help because she was already in a contract.  Sometimes that "discount" isn't really worth much. 

Aug 31, 2016 05:50 AM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

An intelligent professional at the helm here this Jan Green be......

Aug 31, 2016 05:59 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

That buyer may not be out of the woods as far as problems are concerned.  Buying a spec home for cash straight through the builder is no guarantee that he has a perfect house and now he has no advocate to guide him through the rest of the process.

Aug 31, 2016 06:50 AM
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

I have had this happen before.  I think its part of the game but also may be bad karma to the builders.

Aug 31, 2016 07:39 AM
Harry F. D'Elia III
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Buyers that go to new home builds are easy prey--thanks for sharing

Aug 31, 2016 08:21 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I actually walked in on a builder rep doing this to buyers one time.  My Mom was moving in to the community and I stopped in to bum a water off of her.  I was so stunned.  

Since then, if someone wants to see new construction, I let my buyers know that we need to make an appointment to go together or they may be responsible for paying my fee.  

Aug 31, 2016 08:33 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you for all the comments folks.  I have an update and will post it and link back to this post. Stay tuned Tom Bailey , Kat Palmiotti , Doug Rogers , Jeanne Gregory ,  Richie Alan Naggar !  

Aug 31, 2016 12:36 PM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you Richie Alan Naggar , Ed Silva , Chuck Carstensen , Harry F. D'Elia , Chris Ann Cleland .  Definitely a lesson learned.  I was out of town and he went without me.  I'm posting an update to this post and will link back to this post.  Stay tuned!

Aug 31, 2016 12:38 PM
Brigita McKelvie, Associate Broker
Cindy Stys Equestrian and Country Properties, Ltd. - Lehigh Valley, PA
The Broker with horse sense and no horsing around

Jan,

This has not happened to me as yet.  The salesperson was only looking out for his employer, the builder.  Sounds like all he was interested in doing was getting his commission and not caring about anything else.  

Brigita

Aug 31, 2016 10:22 PM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Would you have an operation without a doctor, go into court without a lawyer? The stakes as high in real estate that has to go for as much as possible and with the least expense of time and money and emotional drain. We are a necessary evil! We do the list, twist, sell (repeat) daily and practice guides the process from the kitchen listing to the formal sit down and pass the keys please. Whether a building or a seller is on the other end of the table, whichever side you represent, someone has to be on board to navigate the quick sand. 

Aug 31, 2016 11:14 PM
Mike Bjork
Evolve Bank & Trust - Redondo Beach, CA

I'm sorry that happened to you, Jan.  It's unfortunate when another professional doesn't respect the ethics behind Agent and Client.  It's similar to when the Listing Agent includes a clause in the purchase contract that the Home Buyer, even when they have a Loan Officer, must go thru the Pre Approval process with their preferred Lender.  Some of them are respectful of the relationship, then there are a few whom interfere with it too.  I've dealt with both kinds, with both success and failure.  It's disheartening.  I definitely recommend letting other Agents know about the Builder not respecting Agent/Buyer relationships, as it may affect his bottom-line (then he/she may think twice about interfering again).

Sep 01, 2016 03:01 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

I agree Brigita McKelvie except that now I'm not so sure. I wrote another post as an update to this one.  We'll see! 

You're right Andrew Mooers .  I wish every buyer and seller thought the same as you on this topic!

I can understand Mike Bjork how that happens.  I've always been honest with the lenders I work with here in Phx.  I always tell the buyer that the listing asks them to be pre-approved through a specific lender, then I ask them how badly they want the home?  They can be pre-approved if they want, but it might be a credit pull. I then call the agent to say my buyer won't use their lender and it's usually fine.  But frustrating that someone "must be pre-approved" with XYZ company.  Unethical in my opinion! 

Sep 01, 2016 03:07 AM
Ty Dwyer
First Choice Realty - Richmond, VA
Richmond VA Condo/Townhouse Expert

I read what happened, but have not read fellow agents responses.  In Virginia, by law, we have to get a buyer broker agreement signed by the buyer.  This allows you to get paid in this scenario EVEN if the builder and buyer try to cut you out of the deal.  From what I understand some states don't require it and some do, but it's a great way to lock in a buyer from poo-poo'ing on your commission.

Sep 01, 2016 03:28 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

I like your laws in Virginia Ty Dwyer !  We don't have that law here and it's not always easy to get a buyer to sign a Buyer Broker agreement.  This buyer was a year and  a half from retiring and out right fibbed to me.  I rechecked my emails and had emailed him about the builder on 4/29 and he signed 5/2, closing 6/4.  I called, emailed and nada.  I wrote an update to this post as well.  I called the builder on it.  Next!

Sep 01, 2016 03:55 AM
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

When the next new home construction client comes along, YOU register them with every builder within 25 miles.

Sep 01, 2016 01:14 PM
Florida Tolbert Team Keller Williams Advantage
Keller Williams Advantage III Realty in Lake Nona - Orlando, FL
Keller Williams Land Luxury Division Specialist

And of course you are going to share the name of any builder that deliberately swindles customers from realtors so that no other realtor will make the same mistake of sending clients to this builder. V

 

in our area it is KB Homes that can't be trusted and had we not had a signed buyer broker agreement, they would have done the same to us. B

Sep 01, 2016 03:07 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Jan Green I 'feel' the pain you had to go through.

Believe me, there are some builders who still do this. They have just one 'excuse' - your agent was not with you at the first visit!

And I like you approach - move on!

Sep 01, 2016 03:49 PM
Melissa Jackson
Century 21 Alliance Properties - Azle, TX
Helping You Make The Right Move

This is a terrible experience. Jan Green we do have a buyers rep contract in Texas.  Still I have heard of sales reps trying to get the deal done without using or paying the agent.  Worst part is, your client decided to take the discount over your experience.  Buyers just don't understand, for us it's not only about the commission.  We do look out for their best interest.  

Sep 02, 2016 02:46 PM