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The Tierra Antiguan
The Tierra Antiguan
Make Sure You Are Eligible To Be Paid For Your Buyer Purchasing A New Construction Home
“Hey, Jim, just wanted to follow up with you for the homes we saw yesterday afternoon and see which one you wanted to put an offer in on. I know we’ve missed out on the last few, but I’ve got some new ideas on how to make your offer stand out versus the other buyers so we can get this one accepted!”  Samantha and Jim had really been disappointed the last few offers they made, but with sellers receiving multiple offers, it was definitely a challenge and Steven wanted to make sure his buyers would get the next one.

“Well, Steve, Sam and I have great news.  After we got done looking at those homes, we actually stopped into a new home site.  Don’t worry, we gave them your card and let them know you’re our agent, just like you told us.  We have an appointment for tomorrow to sign a contract on a new home!  It’s a bit more than we were looking for, but it’s brand new, we get to pick out our own items, and best of all there isn’t a gazillion offers on it.  Can you make the appointment?”

Could he make the appointment? Of course he could!  Steve put the time into his day planner, made sure he would have no conflicts (it could take up to three hours) and even printed out his disclosure documents to take with him for the buyer to sign.

At the appointment, there were the usual pleasantries with the site agent.  Sam and Jim took Steve out to look at the model they had selected and were very excited that their hunt was over.  As they were getting ready to sit down and go over the paperwork, the site agent took Steve aside and let him know that he had spoken to his sales manager and was happy to let Steve know that they were willing to pay him $500 for representing the buyer.

Needless to say, Steve was floored. “What do you mean, $500? This is a $400,000 house!”

“Well,” said the site agent, “you were not here when the buyer first came in, so that’s the best we’re willing to offer you.  You can still represent them, no problem, but we’re only willing to pay $500 towards buyer’s agent commissions.”

Steve was speechless.  His clients had let the site agent know, first thing, that he was their agent.  They even gave him his business card!  Why was the builder now not willing to compensate him?!?!?!

As buyer’s agents, we need to be sure that not only do we fully understand the Builder-Broker Code, but that our buyers are aware of it as well.  The Builder-Broker Code is very clear as to what a buyer’s agent needs to do to earn a commission on a new construction home.  And while some builders might be “flexible” on those requirements, some builders follow the requirements to the letter.  A buyer just saying “so-and-so is our agent” or even giving them a business card does not meet the requirements of the Builder-Broker Code.  And if we have a Buyer Broker Exclusive Representation Agreement, the builder is more than happy to work with a buyer’s agent, but we must always remember that representation does not equal compensation.

Additionally, even if the property is listed in MLSSAZ with a co-op offered, there is still the question of procuring cause.  For Steve, his buyers had already decided to buy (ie, they made an appointment to write the contract) prior to Steve even being aware they had visited the site.
Per the Builder Broker Code:
  1. Agents must accompany the buyer on their first visit to the site
  2. Registration is only good for 30 days
  3. Registration can be extended
  4. Registration can be voided if buyer re-visits site and is registered by another real estate agent
  5. Registration is only good for that one site, not all of the builder’s sites
Some builders do have ways to register buyers that is easier than having to visit the physical site.  Some builders, but not all, will allow phone in registration or on-line registration.  Some will allow a registration to be valid for all of their sites, some do not.  Some will offer compensation even after initial visit, but this is completely at the builder’s discretion.

How can we as buyer’s agents avoid what happened to Steve?  Not only do we need to be fully aware of the requirements of the Builder-Broker Code, we also have to make sure that our buyers are fully aware of them as well. As agents, we have to have a frank and candid conversation with our buyers as to how we are compensated so that they understand how our business works and that they can help us to help them.

For a more in-depth look at the Builder-Broker Code and how to incorporate new construction into your business as a buyer’s agent, be sure to register for our new Expert Series class with Tierra Antigua Realty:

New Construction and Buyer Representation: Tapping the full multitude of options for our buyer clients
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