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Should You Use a Realtor When Buying a New Home?


Hi everybody, it’s Lance Mohr and today
we’re on video #4 of the new home series. I want to talk about, should you use a realtor
when buying a new home? I know a lot of you are probably thinking, well of course you’re
going to say yes, you’re a real estate agent, and you’d be right, but not for the reasons
you’re thinking. Let me give you some reasons why. When I was first in the real estate business,
a relatively new agent, I was driving down the road and I got a call from a gentleman
named Dave. He said he was looking for a home. We spent about 15 minutes on the telephone,
talking about what he was looking for, his wants and needs, the areas; I was going over
everything with him. So when I asked him to meet, he said, well I tell you Lance, I’m
going to be talking to a builder tomorrow and I think I can get a better deal on a new
home if I don’t work with you. And I said, well what do you mean? He said, if I don’t
work with a real estate agent then they don’t have to pay your commission, so I think I
can get a better deal. I said, okay, I completely understand, you go out and talk to him, do
what you need to do. I said, but if I can, let me just take a couple of minutes and just
explain something to you, and take it with a grain of salt, okay? And he agreed to do
that. I said, okay, first off, you go out to the builder and you buy the home. Let’s
just say you have a problem. You don’t have a real estate agent, and 4 other buyers have
problems and they have a real estate agent. I said, who do you think the last person on
the totem pole is? And he said, me? I said, you would be right. So, 2 of those problems
get resolved, and 2 more pop up, and they have real estate agents. Who’s the last
person on the totem pole? And he said, well… And I said, that’s right, it would be you.
I said, this isn’t Baskin Robbins, this isn’t first come first serve. This is business,
I said, because at the end of the day, though the builder wants to make you happy, if they
don’t make you happy, who are you really going to tell? I said, how many homes do you
think you’re going to buy in the next year, 5 years, 10 years, with this builder? And
he said, probably just this one. And I said, you think the builder knows that? He said,
yeah. And I said, okay, let’s say you weren’t happy and you went and told 5 friends and
family members and coworkers, or even if you were happy. I said, how many homes do you
think they’re going to buy over the next year, 5 years or 10 years? He said, well…
And I said, probably zero. And he said, yeah, probably. I said, do you think the builder
knows that? And he said, yeah, they probably do. But over the next year, 5 years, 10 years,
I said, how many homes do you think I’m going to sell through this builder? I said,
1, 5 or 50? And he said, well, yeah, you could eventually sell quite a few. And I said, in
the past, and the builder knows this, about 70-80% of all builders’ business comes from
real estate agents such as myself. They have parties and VIP rooms and a whole bunch of
host of events for real estate agents. I said, so you can see how they look at things. I
said, now I understand the commission thing. I said, so let me tell you how it works. I
said, most builders out there, their fiscal year ending is December 31. And that’s sort
of normal. Most new home builders – virtually all builders, for that matter – what they
start to do at the end of October or maybe in November they start putting their budget
together for the following year. They want to find out what their projections are. How
many subdivisions are in now? How many are going to be closed out? How many are going
to be starting next year? What their advertising budget it, what their marketing budget is,
what their realtor budget is, what their promotional and VIP budget is, what their budget is to
pay their sales representatives. Everything’s going to be already in there, and then they’re
going to put their projections out there. I said, so if you go into a builder that’s
building 500 homes or 30,000 homes a year and you’re saying, hey I want you to change
all of your projections and give me a better deal because I’m not using a realtor, that’s
not how it works. Does this make sense? And he said, actually it does. And I said, that’s
how they all work. I said, so whether you use a realtor or you don’t use a realtor,
they’re not going to be changing their price of you. So it would behoove you to use a real
estate agent. And he agreed. And I said, on top of that, it would behoove you to use a
real estate agent who really knows what they are doing and has a reputation with builders
who’ve sold homes. So, he agreed. And we went on. Basically, what happened was he was
building the home and the actual home was great. He picked these colors and about 4
months later he gave me a call. He said, hey Lance I’ve got some news, they bricked my
home. I said, that’s fantastic, how’s it look? He said, it looks great but they
bricked it the wrong color. I said, oh did you talk to Rachel? That’s the sales counselor.
He said, I talked to Rachel, she said to come in and get my earnest money, and so I came
in to talk to you. I said, okay so let me give Rachel a call. So I called Rachel and
Rachel said look Lance here’s the thing, we have an out in our contract if stuff like
this happens, which they all do, because they’re the builder’s contract, not your attorney’s
or yours or the real estate communities? So she said, what we’ll do is give David back
his earnest money and he can buy another home on another lot or just go to another builder.
And I said, that’s absurd, he’s been waiting 4 months. She said, Lance, it doesn’t behoove
us to rip all of the brick off the home. That’s too much money. He could pick one or the other.
I said, give me your sales manager’s name and number, I’m going to call him. So I
called the sales manager. We went back and forth over the next couple days. To make the
story completely short, they went over there and completely re-bricked his home. So, we’re
going down the line, maybe another month or so later, they had an issue with his island
kitchen. The same thing, you don’t like it, come and get your earnest money back.
And he got all upset, he called me up, I went in and talked to Rachel, called the real estate
sales manager again, and we got it solved, they ended up fixing the problem. And I explained
to him, again, I said, remember how I told you that so much of their business is coming
from real estate agents? He agreed and he remembered that. He went through the process
and his house ended up closing on time. He was extremely happy. We got to the closing
and he said, you know Lance, I will never buy a new home without using you as my real
estate agent. And if I don’t live here I am going to pick some agent to work with and
work with them. I said, a couple of things. I said, one thing you need to know is builders
and all builders, not just the one you’re working with but all of them, are like a 2
year old. They’re always nice in the beginning but their favorite word is ‘no.’ No, no,
no. That’s what they say. Now, when you’re talking to the sales representative, the sales
representatives are really, really nice, but when there’s a problem, their bread and
butter is from their employer the builder and they’re not taking your side. You better
believe the builders have outs. He said, I’ve learned that. I said, the other thing is you
need to be very careful of who you use as a real estate agent. I said, over the years
I’ve gotten to know a lot of CEOs and owners and executives and a lot of my friends were
sales representatives, and agents that don’t know what they’re doing can really tick
off the sales manager and really tick off people if they don’t understand the game
and how to do things and how to word stuff. So I said, you need to be careful if you ever
move and buy a home in a different area and definitely get someone who knows what they’re
doing. And I have another story of a gentleman that, we went in and we were looking at a
home for him and his wife. I was showing him, and the sales rep was supposed to meet us,
and they were a pretty small builder. But building volume homes. The sales rep was supposed
to meet us. They ended up no-showing us. And then I called the sales rep up, and I talked
to him and he said go ahead and send your client in without you. To make a long story
short, my client went in and they basically cut me out of the deal. And so the client
called me up the next day and said he didn’t want to buy a house and I said okay so I’ll
follow up with you in 4-6 months. 3 months later, he called me up and he told me the
whole story. He told me how he went into the builder and he cut me out. And I said, why
are you calling me? He said, the builder basically gave me the shaft. They basically lied about
everything they told me, they’re not giving me everything they promised me, and now they’re
keeping my $3,000 earnest money. He said, what do I do? I said, I can’t help you out,
I wasn’t involved in the transaction. I said, the only thing I can tell you is go
get an attorney and hope they don’t charge a retainer. But then is it going to be worth
it to get your $3,000 back? And he didn’t end up going that way. He said, I remember
you telling me this upfront but I never thought it could happen to me. I said, no one ever
thinks it’s going to happen to them. So, we went out and he bought a home and he lived
in it for years and is very happy. So, I would say if you’re going to buy definitely use
a real estate agent. Moreover, pick somebody who really knows what they’re doing. If
you have any questions, whatsoever, click the link below, give me a call, shoot me an
email, and write a comment. If you like this video, please share it, give me a thumbs up,
and write a comment on it. If I can help you at all, please give me a call. Have a wonderful
day, and I hope this helps you.

17 Replies to “Should You Use a Realtor When Buying a New Home?”

  • I have one question sir, what about when you first visit a new development, and their new home rep makes you sign that BOOK, that registered you in as a solo buyer, is it to late to get a Realtor for that builder?

  • You might have been a good realtor, but in my experience most realtors disappear once you sign a contract they never ever have time to answer your call or they say go with the changes or buy another home. Three homes dropped where realtors did not work on behalf of me so what is the true point of having a realtor. What to do with such realtors as in my case?

  • I have looked at new home construction without a Realtor and the builder offered me a discount by not using a so called buyer's agent.

  • I watched videos, asked questions and used a realtor as recommended. After we filled out paperwork and put earnest money down. Haven't heard from our realtor. We received a call drywall begins tomorrow. How do I know what my realtor should be helping us with? We received a call from building superintendent stating tray ceilings can't be the standard 8" each because it may interfere with the door frame of bedroom. They will be reduced to 6" each. Is this something my realtor should assist with?

  • Hi Lance!
    Who pays the realtor's fees ? And how much?
    Do you know any realtor that can recommend me in raleigh, NC?
    Thanks

  • As a Retired Canadian Real Estate Lawyer I am surprised that more home buyers do not deal directly with the listing agent in an attempt to save the commission usually paid to the buyers Realtor. So much information required to buy a home is readily available on the Internet thereby giving buyers the tools necessary to be their own Realtor and save the substantial fees being paid for services that can be handled by most buyers, many of whom are familiar with the process having purchased homes previously.

  • What you're saying has no bearing on a traditional home buyer's situation. This is for developers… Boo Wendy…

  • Do you know any good real estate agents in Texas? What do you think of Starlight homes (Ashton Woods)? I never heard of them but I am strongly considering getting a home there within the next few months

  • One question SR are there companies that charge for helping you find a home besides the closure commision?Do I have to give them money besides the money they get from the closure??

  • I wish you were in California. I will be watching all your videos in preparation for my new home. Thank you for being an honest man and God bless you

  • Aside from "new construction" I used a buyers agent on several deals, when there was an unknown rat infestation, they stopped taking my calls and I had to sue Coldwell Banker. Once you sign and close??
    they forget your name.

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