Builder preferred Realtor: Who are they working for?
It has been brought to my attention by a past client that she would like to purchase a new build. Her friend & past neighbor has moved into this wonderful retirement home. She invited me over to give her an idea of value & discuss commission. When she told me about her friend she mentioned that she had used he builder's preferred Realtor to buy & sell her home. The preferred Realtor was going to list her home for FREE, why was I not offering that? When I left her home I was a bit set back & went home to figure out how I was going to justify my already discounted commission since I was going to help her buy her new home.
My first step was to figure out her comps, I wanted to see time on the market & efforts it was going to take to market her home. I ran across the friends sold comp. This comp sold a month faster & was listed for 10K less then the other 3 homes that sold within the time frame. So after a bit of "PI" work I figured out what is widely known (assumed) by most : Builders preferred Realtors will list for free because they take the 2% they would charge for the listing & deduct it from the price. It all works for all parties Buyer, Seller & Builder! House sells fast for seller, Buyer can move quickly into new build & Realtor just closed a property they didn't have to prospect for. So what's the problem? Does this type of pricing impact the home values for the seller's house? And the neighborhood comps as well? Was the seller made aware of how the builder preferred Realtor is able to sell it for free?
I'm really curious how the Realtor community feels about this- as I am really torn!
My husband also wrote a blog that discusses this in a possibly different way. Real Estate Values: Are some Realtors pushing us "below the bottom"?