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.
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If I can help you at all, please give me a call.
Have a wonderful day, and I hope this helps you.