Real Estate Agent with Exit Realty Clarksville Tennessee

Original content by Lenn Harley 303829;0225082372

Builders paying real estate commissions.

I received mail from a member who asked for my opinion about agents collecting commissions from builders who require that the agent introduce and register the buyer. 

I'm not sure of the details of the transaction for which the agent believe that you should be paid. There was a suggestion that the builder tried to convince the buyer that they could get a better deal without an agent.  That is a risk an agent takes when they have not introduced the buyer to the builder.  Some builders pay their representatives a higher fee if the buyer doesn't have and agent, but that's not a problem if the agent has accompanied the buyer to the site and registered the buyer.  Some builders have a 30 day registration.  That means that the agent must reregister that buyer every 30 days until they buy something.  This is a case where the seller/builder has the power and weilds it like a club studded with nails.

THE COMMISSION IS EARNED WHEN THE AGENT INTRODUCES THE BUYER TO THE BUILDER.  When an agent is working with a buyer, that agent MUST take the buyer into all new home locations in the buyers price range and location of choice. It doesn't matter if they buyers has specifically stated that they aren't interested in new homes. Experience says, get them in and get them registered. We know the builder's requirement with respect to introducing the buyer to establish procuring cause. If an agent follows that process, there is no problem collecting the fee, unless, of course, the buyer changes agents and removes the original agent's name and replaces it with their new agent.

SCHEDULE REGULAR TOURS.  If an agent is merely "working with a buyer" and then finds that the buyer has visited the new homes and registered themselves with no agent, the agent has no claim on a commission if the buyer buys a home. Agents who work hard advising buyers of the processes, touring with buyers, planning new and resale showing, will collect a commission. Agents who do not do not and should not.

FOLLOW THE BUILDER'S RULES AND GET THAT BUYER REGISTERED EVERYWHERE!  If agents don't want to follow the rules and get their buyers into the builder and get them registered, let another agent work with that buyer. Many agents work hard selling new homes. We tour them and develop relationships with the builders rep. I also make sure that my buyers know that I must introduce them to new home builders to qualify for the fee.

IF YOUR BUYER IS INTERESTED IN NEW CONSTRUCTION, LET THEM KNOW THE VALUE OF WORKING WITH A BUYER'S AGENT.  If an agent can establish their value, by virtue of their knowledge of the new home process and real estate in general, many buyers will have a sense of loyalty and not visit new home builders without their agent. If an agent is concerned that the builder's rep will offer a better price to the buyer without an agent, the only safe procedure is, don't let the buyer visit builders without the agent. "After the fact" buyers agents commissions are not fair to agents who make sure that they introduce buyers to builders.

COLLECTING YOUR FEE FROM THE BUYER.  If an agent has the buyer under a Buyers Agent Agreement and the buyer buys without their agent registered, the agent can proceed to collect their fee from their buyer, assuming the buyer doesn't have a claim of abandonment. So, get those buyers under contract or at least get them out to visit the builders with you and get them registered.

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Phone: 931-245-1341
Cell: 931-801-4905
Toll Free: 1-866-517-7070 ext.1341
Fax: 931-553-8159

Comments (1)

Chuck Capan
REMAX River Cities - Moline, IL
REALTOR Licensed In IL. - Moline Homes Quad Citie

I have new construction listings by several different builders.  My listing agreement clearly states, in so many words, I will be paid regardless who introduces the buyer to the property.  If I am going to show and unlisted spec home I will have a "One Time Showing" agreement with the builder/seller.  My brokers "New Construction Registration" has a fill in the blank protection period.  Me I will go for 12 to 18 months for a protection period.

Mar 23, 2009 09:39 AM