A client asked a Realtor about buying a new home in the Portland area. He didn’t fully understand the benefits of working with a Realtor when it comes to new construction. I know he’s not the only one wondering “why use a real estate agent to buy a new home?”

Here's why:

It doesn't cost you a penny! Builders know that most serious buyers work with buyer's agents. Therefore, many if not most of a builder's sales are made with buyers who have representation and are not purchasing alone. Because of this, a builder will compensate a buyer's agent for bringing a buyer to the transaction.

If this is true, wouldn't the builder give the buyer a discount if a real estate agent wasn't involved? No. The builder is prepared to pay the buyer's agent. The commission is already built into the sales price (sometimes as a marketing cost). If you purchase new construction without a Realtor, the builder keeps the built-in commission in-house. If you purchase new construction with a Realtor, your Realtor receives the commission, but the price remains the same. Either way, the price will be the price. How would a builder ever succeed if he/she sold one home for "x" amount and the same home later at a discounted price? That wouldn't help the development or subdivision appreciate and the builder's customers/homeowners already living in the development probably wouldn't be too happy.

You get free, committed representation. If you purchase new construction with the help of a buyer's agent, that buyer's agent will represent you, owing you fiduciary duties (such as loyalty, accountability, confidentiality, etc.). If you purchase a new home without a buyer's agent, who is representing you? Often times, this may be the salesperson who works at the model home and tells you where to sign on the paperwork. This is the same salesperson employed by the builder. Think about it.

Builders rely on their reputations within the real estate community. A builder once stated that 70% of his business comes from customers working with agents. Therefore, builders have to have good relationships with real estate agents. Here's an example: Buyer A buys a home without an agent. Buyer B buys the exact same home with a Realtor. Both will pay the same price. Now let's say the deadline for construction is getting near. Which home is more likely to be completed on time? Probably Buyer B with the Realtor… because the builder wants the Realtor to not only bring back future customers, but to speak well of him/her. Buyer A, without the agent, has only himself to deal with the builder.

Again, if the salesperson is working for the builder, why not have someone on your side at no extra cost? Also remember that while builders are willing to work with Realtors, your Realtor must generally accompany you to the model home on your first visit in order for you to establish that you do have representation.

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