Thursday, September 28, 2006
Beware of home builders that discourage buyer's agent
Why would builder jeopardize sale in a down market?
Q: I saw an article in the newspaper about a subdivision near where I live in Southern California, so I stopped in to view a model home.
The builder's sales representative informed me that because I didn't have a Realtor at the time of the first visit, even if I were to come back to pursue a potential purchase with a buyer's agent, my agent would not be entitled to any commission.
Is this true or is it a ploy to discourage buyer representation? How can I be denied fair representation or have to pay for it myself when it was a builder's model home that's open to the public?
A: I hate when builders do this. They're trying to save the commission they'd pay to a buyer's agent. Or, perhaps the builder's representative you spoke with gets a bonus if she brings in a buyer without paying a commission to another agent.
The builder is giving you fair warning, as required by the law, that you're now considered "unrepresented" and they'll never recognize your representation. But that's not necessarily the final word. More on that in a moment.
The builder is trying to save a buck, but all the company is doing is discouraging qualified buyers from coming back. It's a lousy way of doing business in a time when builders around the country are desperate to get buyers through the door.
And, it really leaves a bad taste in my mouth.
But just because the representative says that's how the builder will treat you and your buyer's agent doesn't mean that's how it will be by the time the contract is signed.
Here's what you do: If you decide to go back to see this development again, hire an agent first. Then, don't turn up without your agent in tow. If the salesperson gives you a hard time, push back. Inform the builder's representative that you're going to make an offer but only with your agent. If that's unacceptable to the builder, you'll take your business elsewhere.
Then, walk out the door. Most builders won't let you get too far before they call you back.
As I say, some builders are in fairly desperate straits right now. That may put you in the driver's seat.