January 24, 2022

Steve Novak

Who Pays the Realtor on New Construction?

So, you’re considering buying a new construction or newbuild home and you are wondering where to start…  Should you use a Realtor to buy new construction and if so who pays the Realtor on new construction?  Let’s start first with who pays…

Who pays the Realtor on new construction?

The builder pays the Realtor on new construction homes and thus it is in your best interest to work with a Realtor at no cost to you.  In fact, certain Realtors and companies like EZ Agents may even provide you a commission rebate on new construction homes allowing you to keep a portion of the commission paid to your Realtor by the builder.

Just like in the sale of a traditional home the buyers agent is paid by the seller not by you – the buyer. In the case of buying a new construction home, the seller is the builder and thus the builder is responsible for paying the Realtor.

The costs of using a Realtor to buy new construction are already built in by the builder.

The reality is that since they are on the hook for the commission, the Realtor’s commission is usually already factored into the builders price.  Many buyers believe that because of this, builders will reduce the price of the home if a buyer does not use a Realtor, but in our experience this is simply not the case.  More likely, if you choose to buy directly from the builder without using a Realtor the builder will simply pocket the commission or pay it directly to their sales reps as a bonus for saving them money.  So, in essence, as the buyer you will likely be paying the built in cost of using a Realtor whether you use or not.

This is often why the sales rep will ask you on your first visit to the sales office whether or not you are working with a Realtor.  If you say that you are not, they will often ask you to sign something waiving your right to representation.  Once you do this, you will no longer have the right to use a Realtor to help you navigate the buying process.

Keep in mind that, while the builders sales reps admittedly do the bulk of the work throughout the process they work for and are paid by the builder.  They do not work for or represent you in any way.

What does a Realtor get paid on new construction?

The commission an agent receives on a new construction home varies widely from builder to builder and even from community to community.  In Colorado, the builder generally pays the Realtor somewhere from 1-3% and this can be on the base price of the home or the full final sales price (after all upgrades and premiums).

Should you use a Realtor to buy new construction?

Before answering this question let’s review a few key points:

·        Realtors get paid their commission by the builder not by you – in fact it should cost you absolutely nothing to work with a Realtor and get full representation throughout the process.

·        The commission is already priced into the home by the builder.

·        The on-site sales reps work for the builder not for you

·        If you visit on site without a Realtor you may waive your right to representation

Given the above, it seems that using an a Realtor that is experienced in navigating the new construction process with the builders and their reps to fully represent your interests, at no cost to you is the best choice.

At EZ Agents, we take that a step further.  We recognize that, as stated above, in the new construction process the sales reps will do the bulk of the work and often our services are very front loaded – finding the right community and home, helping you as the buyer understand what questions to ask, and helping you understand the different components of the builder’s contracts and the process just to name a few.

Because of this we offer our new construction buyers a buyer commission rebate and split our commission, paid by the builder, 50/50 with you.  Our rebate allows our buyers to save thousands on their closing costs and prepays will also receiving full representation from a top, local Realtor at no cost to them.