Many Home buyers of new builder homes think that they don’t need a realtor help either to look for homes or help them on their buying process. They think that there are tons of websites to help them find homes and why should we use the Realtors. They just use the Realtor to get some money back from the 3% commission which builder gives for the Realtors. I would agree with them to certain extent but when it comes to negotiation Realtor are the experts in their own field unless buyer possess good experience in haggling with confident to close the deal.
I came across a new study released by CC LIFESTYLE REALTY (CCLR) which performed a study using actual homes sales to determine if Realtors really do impact the final sales price for new construction. Below you will find two sets of data. Each set was a random selection of over one hundred new construction sales throughout Houston and the surrounding suburbs. The builders were a mix of national organizations like Toll Brothers and Meritage Homes along with regional builders such as Perry Homes.
What’s the take away?
You can see two trends from this graphs.
The first trend is that the higher the listing price the higher the probability a buyer will be utilizing a Realtor.
Another trend shows that for homes below $200,000 the builder appears less willing to accept an offer that is significantly below the list price. We believe these two trends are not anomalies but instead actual behavior by both buyers and builders.
Similar to luxury vehicles the mark-up is generally larger on higher end homes thereby limiting a builder’s ability to drop the price. At the upper end of the market buyers may be less concerned with shaving a few percentage points off the list price. Both of these trends would most likely evident even if additional data points were included in the study.
The data is undoubtedly weighted towards a smaller savings off the list price when foregoing a Realtor. This is primarily caused by the 28.3% buyers that purchased a new construction home that paid more than the advertised list price. Only 9.8% of buyers that employed a Realtor paid above the list price on a new construction home.
Lastly, regardless the buyer 17% of the home purchased yielded a savings of over 10%. This would indicate that educated and savvy buyers do have the potential to save significant money regardless if a Realtor is present. By selecting the correct property and having good negotiation skills any buyer has the potential in obtaining a significant reduction in the list price.
The data clearly reveals that Realtors actually improve a buyer’s odds in saving money and obtaining a lower sales price on a new construction home. By utilizing a Realtor the buyer will most likely yield a savings between 1-10% off the list price with the average between 6 and 7 percent. For those buyers determined to purchase without the aid of a Realtor our suggestion is to not accept just any offer provided by the builder especially if the savings is below 4%. Becoming emotionally attached to a new construction home is the worst possible scenario for a buyer and places the builder in a position of control. There are numerous homes for sale so shopping combined with skilled negotiating tactics is critical in obtaining a savings on a home. To read the full report, go to CCLR blog.
My final thoughts, you are welcome to use the Realtor to new builder homes and they will surely add value both in negotiating a good deal and as well sharing their commissions depending on their effort. But if you think you possess great haggling quality, you can give it a try and good luck with it. Just keep in mind that builder contracts have lots of clauses which supports them most than the buyer. Make sure you take time to go through it before signing the contract otherwise you might be put in bad situation if things aren’t going well.
About Vijaianand Thirnageswaram
I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.
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There are definitely pros and cons in having realtors help with buying a new builder home but the reality is that there are a lot of unscrupulous home builders who will promise one thing and then try not to deliver on it. Whether home buyers go with realtors or not in their quest to get a new home, as Judge Judy would say always make sure you get any concessions in writing to protect yourself in case something, or someone, goes wrong later on.