Should You Add a Realtor to a New Home Contract?

I am asked constantly whether it’s a good idea to add a Realtor on to a new home contract. Is it a good idea or will a homebuilder penalize you by holding back on available incentives. Let’s discuss a few basic truths to answer that question.

SET INCENTIVES AMOUNT

The sales person in a new home model has a set dollar amount that they are allowed to use to discount the home in an effort to close the sale. That dollar amount changes month to month based on sales needs but there is rarely an opportunity to get more off on the home. Some weak sales people will give that money away the second you walk in the door. The good sales person will hold back and offer a little off the price to see where you stand and then offer just enough more to close the sale. This tactic makes you believe you got a better deal by negotiating them down when in fact they were playing on your emotions. They typically hold back on some of the money for later in the homebuilding process if something goes wrong and they need to offer money or free appliances to make the problem go away. Here is where a Good Realtor can make sure you get the full discount or more.

REALTOR COMMISSION BUILT IN

Close to 80% of all new home contracts are brought to the new home builder by Realtors. Due to this fact, the majority of new home builders place a 3% padding into the sales price to cover a Realtor’s commission. If a home buyer does not have a Realtor, that 3% goes to the builder’s bottom line and is rarely ever given to the home buyer. The sales person does not have the ability to give it away without the corporate office’s approval. It’s corporates job to increase margins not give money away. It has been my experience, both as a Realtor and as a New Home Sales Person for many years that having a Realtor on the contract does NOT hurt the deal. In fact, 9 times out of 10, a GOOD Realtor can get you a larger price reduction than the set discount amount using past new home sales and negotiating the price per square foot, etc.

OTHER BENEFITS TO HAVING A GOOD REALTOR

• A GOOD Realtor will know the new home builders and can assist you in choosing the right one based on quality and customer service, not just attractive floorplans.
• A GOOD Realtor will know which new home communities will not only fit your needs but will also provide you the best investment and resale in the future.
• A GOOD Realtor will be able to negotiate the best deal for you and help you keep your costs lower by suggesting which upgrades are really worth it and which ones can be done later at a huge savings. Builder upgrades are where they make most of their margins and usually upcharge over 100% on the actual cost. $500 in crown moulding will cost over $1,000 as an upgrade.
• A GOOD Realtor will be able to assist you during the home building process to identify real vs. superficial problems and help you make sure these issues are addressed and corrected.
• A GOOD Realtor will be able to identify whether using the homebuiler’s mortgage company is a good deal or if it’s better to use an outside lender. Often times, a builder will add incentives if you use their mortgage company. Nothing is free, their interest rate is usually higher (not always) which is why they can give the extra incentive money. Unless you plan to sell the home in less than 4 years (which is not wise unless the community is closed out), it’s almost always better to go with the lower interest rate.

Notice I said, “A GOOD Realtor”. Not every Realtor is going to know the ins and outs of the homebuilding business and ensure that you will get the very best deal. If you are in the market for a new home or simply have questions, please email me or call me at 800-326-9011 and I will be happy to help.

RESEARCH NEW HOME BUILDERS IN DALLAS FORT WORTH
Highland Homes
David Weekley Homes
Darling Homes
Huntington Homes
New Lineage Custom Homes