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Jonathan Dalton
REALTOR
ePro, SFR
602-502-9693

The Reward for Community Heroes – Lack of Independent Representation

The Reward for Community Heroes – Lack of Independent Representation

Jonathan Dalton, Phoenix Real Estate AgentA couple of weeks ago I chronicled the difference in builders’ attitudes when it comes to specially-designed incentive programs for teachers, police officers, fire fighters and other community heroes or champions.

The short version – Pulte gives the above folks an additional $5,000 discount off the price of their homes. Taylor Morrison gives such buyers 3% off the price – as long as they aren’t working with a real estate agent.

A month ago, one of my buyers was told by Richmond American that they have a similar 3% discount that was independent of the buyers’ decision to work with an agent. Today we learned just the opposite was true.

In my original post I speculated that even without the incentive officially being available to one of my clients I’d likely be able to get them their discount. That was the case today with Richmond American. So from that standpoint there’s no harm done.

But consider the overall message … thank you for helping us build community and keep us safe. We want to recognize you for your hard work and sacrifice and the best way for us to do that is make sure you don’t have anyone to represent you or negotiate on your behalf.

Being a community champion doesn’t mean you deserve to have someone working in your best interest. Sorry. But really, thanks!

Considering builder contracts are weighted heavily in favor of the builder, buyers should have their own representation. We could let this branch into a discussion of divorced commissions, where buyers would pay their own agents, but the net effect to the bottom line price is the same as the buyer sacrificing their incentive in order to use an agent.

These folks sacrifice enough. They shouldn’t be asked to sacrifice the right to have someone work to protect their best interests as well.

[tags]Phoenix real estate, new builds[/tags]

No Comments

  • Sarah says:

    Dear Mr. Dalton,

    I wanted to comment on your post in regard to builders and incentives.

    I work for a builder now on the production/operations side. I’ve done so for 5 years but have worked production/ops for a total of 15 years. Both on the builder side of the market and retail side of the market.

    Incentives can have many different stips. For ex. some builders won’t grant the incentive if the buyer chooses an outside mortgage lender. Other builders won’t grant the incentive if the buyer chooses an outside insurance agency and so on.

    When you’re writing about various builders be specific as each builders incentive options and under what terms they are extended. This creates less confusion to your readers, this also cuts down on generalizations in the market overall and removes fear.

    Indeed it’s about the power of choice for buyers. For example they don’t want to use a builders inside mortgage company, that works for them. However, if they are wanting to use their own lender they have to accept the idea they can’t have their cake and eat it too. Meaning, they won’t get that incentive from that builder.

    With knowledge up front they can compare apples to apples. Under which scenario overall incentive or not works best for their pocket book, not just for tomorrow but for the future number of years they want to be in that home.

    I agree with you it’s a shame that some builders won’t allow buyers to have representation via an agent. Still it’s up to the consumer, the buyer to ask the critical questions up front.

    The buyer has to be willing to data gather upfront and do some leg work so that they empower themselves to make the best decisions and choices long term.

    If a buyer isn’t willing to do that research, investigate the ins and outs on their own behalf then maybe it’s not the right time for them to buy.

    Thanks for reading,
    Melanie

  • I agree that buyers should research their options, Melanie, as incentive packages vary from one builder to the next.

    While I understand why many builders tie incentives to use of their in-house lenders (and that has caused problems for some, such as Beazer, who know use outside preferred lenders rather than their in-hose brand), I see this as a little less onerous as forcing buyers to elect not to be represented.

    By tying an incentive specifically to not using a real estate agent, the builders are encouraging buyers not to have independent representation to protect their best interest. Most of the contracts are clear that the sales agent on site is representing the builder and NOT the buyer.

    Why should a builder be so concerned that there may be someone to represent and help a buyer? Next thing you know they also will not want the buyer to hire a professional home inspector to review the property.

    Oh wait … builders don’t want that either.

    Why is that?

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