Should we bring a broker?

After pondering how much house to purchase, and learning your financial opportunities and limitations from a lender, comes the excitement of considering newhome floor plans, smart home gadgets and aesthetics. But all along, purchasing a new home revolves around relationships.

One of the first of many important

relationships that a buyer develops may begin before or during the first visit to the new-home community’s sales center. Some buyers, especially those who have bought and sold resale homes previously, may wonder if they need to have outside representation from a Realtor or broker.

The simple answer is no. But because individual dynamics, priorities and comfort levels vary from buyer to buyer, some people may choose to involve an outside broker through a builder’s co-op program.

“Many builders tend to co-op,” said Marc Burnstein, vice president of sales and marketing for Walnut Creek-based Davidon Homes, which is currently selling in Orinda, Antioch and Napa.

“If a buyer is already working with a broker, we always recognize the importance of that relationship.”

He explained that buyers may stop in to visit a new community for the first time either with their broker or alone.

“The buyer who comes with a broker registers with that agent when they arrive,” he said. “But we make sure the buyer who registers with us on their own understands how it works. Typically, the buyer can’t add an agent at a later date unless they’re willing to pay the agent’s fees themselves.”

Burnstein noted that registering with an outside broker or agent does not mean that the buyer is required to continue working with that individual. Doing so simply establishes a set period of time during which the agent can take part in the broker co-op incentive with that particular buyer.

“We recognized that resale agents can bring tremendous benefits to the table because they often know the market very well,” said Burnstein. “They can help the buyer understand the value of buying a new home relative to the resale market. They’re also good about keeping reality in check when emotions are running high.”

Trust and legalese

Still, the question may remain for people considering new construction: “Do we need our own agent?”

Again, the answer is no. Semantics are important. Typically, an outside broker will join a builder’s co-op program in exchange for a flat referral fee paid by the builder, as opposed to the percentage they would earn from a traditional resale transaction. The agent then continues their relationship with the buyer to whatever degree the buyer prefers, which is much less than a buyer’s agent would in resale.

The broker is not formally considered a buyer’s agent who would take part in commissions; if a formal buyer’s agent is what the buyer wants, then it is the buyer, not the builder, who would pay additional fees or commissions beyond the builder’s referral fee.

“Oftentimes, the buyer will realize that the process is not as scary as they thought it would be and they don’t feel the need to have an outside agent involved in every aspect,” said Burnstein.

“In this (real estate) environment, we all have to look out for the buyer,” said Burnstein. “In California, whether in resale or new construction, all of the responsibility is on the seller.”

He added that buyers shouldn’t feel scared or worried about walking into a new-home community without an agent. Also, any Realtor, including a builder’s sales team member, may not provide legal advice or interpretations.

“We aren’t going to get into much detail other than reiterating what is already written in the clauses of a contract,” he said.

For that reason, some buyers decide to work strictly with the builder’s sales team and consult with their attorney when they want more detailed answers to legal questions.

Even with an outside agent, however, a buyer is always entitled to all that the builder owes them through the agency disclosure agreement.

Builder’s agents offer direct line to the builder

“Among the best reasons to work directly with the builder’s team is that, in most cases, you are going to get a very direct line of communication with the builder,” said Burnstein.

“There isn’t necessarily a benefit to having — or not having — an outside broker get involved,” he said. “It’s more about your personal feelings about the process and how comfortable you feel about buying real estate.”