Buyer Myth #501: Going Directly to a Builder Will Save Money (not having to pay an agent)

By
Real Estate Agent with Prudential Preferred Real Estate

Homebuyer Myth # 501:

Going Directly to a Builder Will Save Money (not having to pay an agent).

FALSE!

The fact is, as a buyer, with the exception of a few folks out there, open themselves up for overpaying contractors when they try to circumvent a qualifed, professional real estate agent.

Money in Pocket

Often buyers look at price-per-square feet usually in comparable houses to the one in question to formulate their offering price. Not a bad system, and 70% of the time it works for me and my buyer clients in my area. Not sure how much it's used in other areas, but that's the way it is here. This is for resales and spec houses.

I've had a few buyers recently, who I'd been helping for a month or so, decide not to buy a resale but possibly build. Great! I can help. My company lists houses for some of our area's best builders. Plus there's a few more that I could easily get their business by laying a golden egg, a custom, in their lap. Not only is it fun to these guys to build a custom, but in this market, let's face it, you can get a deal. While I'm gathering the best samples of these builders' work, a few who I know would be easy to work with if I took them a client, my buyers sneak away and talk to one of the builders I was actually going to introduce them to.

I know, not so great clients.

Regardless, when I spoke with them the next day, they told me what the builder would charge them for a specific floorplan with a basement added-on, lot picked-out and everything. Let's just say I crunched the numbers and the builder would make an extra $30K to $50K off these people. The buyers were floored!

"But I thought...."

Yeah I know what you thought. Going directly to the builder, and him not having to pay me a commission, he'd give you a deal.

The fact is, 99% of the builders in this part of the world use the services of a realtor.  Builders like to build, not talk to clients. Much less, stingy clients. In my example, this particular builder, knowing that his phone number is not anywhere to be found at ANY of his properties, (they're all phone numbers of agents that he knows and trusts), knows that these folks had to dig to get his number, to get around the system, and to try to take business away from the people who market his properties and keep him in business. He either overpriced on purpose 'cause he didn't want to work with them, or babies need new shoes! I don't know yet.

I do know, that outside of prospective business, if you were to ask a builder, loyal to real estate agents, which he'd rather prefer: dealing directly with buyers or having the buyers and himself represented in some form of agency, he'd choose the latter.

Questions? Comments? Snide remarks?

Photo by Dani Simmonds

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