- Buyer’s agents bring qualified and interested buyers to new home models
- Builders spend a lot on marketing to bring buyers
- So builders pay buyer agents instead of marketing expenses
Everyone knows that when buyer’s agents are involved in a resale real estate transaction, they get a commission, and that comes out of the sellers’ and buyers’ pockets somehow. So how can it be that it cost the buyer nothing to have a new homes specialist Realtor representation?
The answer is because the buyer’s agent is built into the overall marketing budget.
How builders attract customers using a buyer’s agent
Developers and builders market to potential buyers several ways, including media and Internet advertising, sponsorships, expos, promotions and events. Their goal is to get buyers to come to their models. They know they have to spend marketing dollars to do so, and they spend a lot.
When Realtors bring homebuyers to those same models, that accomplishes the same goal. So while Realtors earn commissions on the sale, it comes from the builders’ marketing budget, not from anything the buyers pay. It’s just a different kind of marketing expense to attract buyers. So paying the cost of the buyer’s agent is just another way marketing strategy to bring them qualified buyers.
You know this because builders don’t lower the price for buyers who have been attracted to the models by traditional advertising, and they don’t raise them because they are brought by a Realtor, which to them is just a different marketing tool.
You pay the same – sometimes less – using a buyer’s agent
But without it, buyers don’t have an expert on their side more knowledgeable about competitive models, builder incentives and the like.
A good new home specialist buyer’s agent also will keep track of the builders’ standing inventory – move-in ready houses they have to sell quickly because another buyer fell out of escrow or a development is almost entirely sold out. Buyers without agents are not likely to find those deals on their own.
So that’s why it’s in the best interest of both the buyer and the builder when a buyer’s agent connects the two.