Have you ever built a home? Are you currently building a home? Have you ever wondered what you are missing out on? What are you not being told by the salesperson in the show home? Did you know that most show home sales people are independent contractors? This means if problems arise the builders will often use this to say "well they don’t work for us." In the past I have represented numerous clients who are building…Why would anyone use a Realtor when building a home?
- Knowledge and understanding. Many of us have been through the process of building many, many times and we may understand the process a little better. We can also prepare you in a way that will better protect your interests by understanding and explaining things that the builder’s sales rep probably won’t take the time to explain because they may not see it as relevant.
- Third party witness. In one case where I was representing the buyer on a transaction with a major builder, we were having some problems with some construction issues. We had tried the honey approach and were unable to get anywhere so the vinegar approach was employed. I faxed the area manager (fancy title for show home sale rep) 3 times a day requesting a response for 10 days and got nothing. Then one day the sales rep contacted me and said that he’d received my fax and that there was no need to continue sending him these faxes. I said I knew that but when we went to court I wanted to be able demonstrate to the court how we had tried to rectify things with them. The very next day we had a meeting with the area manager, the construction manager, the general manager, and their site superintendent and things were mostly rectified. In the end we did go to court and we did win. This was incredibly time consuming and is a major reason I don’t like to work with builders in the buyer’s agent capacity, but there are numerous Realtors who participate in the co-op program.
-
Errors and Omissions insurance. The agent owes you duties ofReasonable care and skill for which the builder does not. If theRealtor overtly misses something you may be entitled to some ancillarycompensation from them if that error or omission is significant.You’d have to seek legal advice on that matter to be certain.
-
Eliminating the gaps. If your Realtor is involved from the get gothey can consult with you on the pros and cons of the differentbuilders as they fit your needs as well assisting in any possible salesand timing issues that may develop from the sale of your current home.
-
Resale Value. A Realtor can help you make decisions to maximize the resale value of your home – many people inadvertently make poor decisions when they change floor plans, or choose (or don’t choose) upgrades that lower their resale value without even realizing it. A Realtor can help make sure you maximize the resale potential of your home by helping you choose finishings and add features to your new home. Even the simplest piece of advice can make a huge difference when you eventually go to resell the home. It is easy to over-upgrade a home, spending too much money upgrading features that no one else will see value in. One of the benefits of building your own home is you get to building something that suits you personally, but you have to be careful not to over-customize so you end up with a home that ONLY suits you and will be impossible to sell in the end.
The Builder Co-Op Program
There are currently 41 builders of the Canadian Home Builders Association – Edmonton region who participate in the builder co-op program. These are the builders to date that I know of who will allow a Realtor to represent you at no additional cost to you instead of their sales person. Some rules and conditions apply so contact your Realtor. Some, like myself, who prefer not to have the 9 – 12 month headache will not participate but many will. If you are going to use a Realtor, find out if they will be participating in your appointments or just the contractual end. I myself would not hire someone who isn’t with me the whole way through.
Here is a list of co-operating builders:
- Acropolis Homes Ltd.
- Avanti Homes Inc.
- Abbey Lane Homes
- Adair Homes Ltd.
- Balmoral Custom Homes Inc.
- Bedrock Homes Ltd.
- Birkholz Homes Inc.
- Burke Perry Master Builder Inc.
- Cameron Homes Inc.
- Carlton Homes
- Christenson Developments Ltd.
- Concept Homes
- Coventry Homes Inc.
- Daytona Homes Master Builder
- Fairview Homes Ltd.
- Gannet Homes
- Golden West Homes Inc.
- Greenboro Homes Ltd.
- Hawthorne Homes Inc.
- Heredity Homes (St. Albert) Ltd.
- Hillview Homes Ltd., A Master Builder
- Homes by Avi Edmonton Inc.
- Homes by Cassel Ltd.
- Jacob’s Construction Ltd.
- Jayman MasterBUILTTM
- Kensington Master Builders Inc.
- Kimberley Homes
- Landmark Master Builder Inc.
- Montorio Homes Ltd.
- Newview Homes Ltd.
- Pacesetter Homes Ltd.
- Parkwood Master Builder Inc.
- Paulmac Developments Ltd.
- Reid-Built Homes
- Rohit Developments Ltd.
- Royal West Homes
- Stellar Homes Inc.
- Summerhill Homes Inc.
- Sundance Master Builders Ltd.
- Wendy Lynn Custom Homes Inc.
- Urbanity Customer Homes
A few last points…
Believe it or not, a builder’s rep has no obligation to be honest with you. There is an obligation for your Realtor to acthonestly with you. This can save you mega grief when it comes to thegoal of buying your new home.
I am not advocating this option for everyone, but if you are busy or a first time buyer that is building or building for your first time, then it maybe in your best interest to seek out a Realtor who participates in the "Builder/Realtor cooperation program".
Oh Birkholz homes. What can I say. A year late on my condo. Grr
Great info to know. You would think the governments would have ‘builders’ required to use a real estate agent.
I read your blog regularly and find it informative. I am dissappointed with the “use a realtor when bldg a new home”. I am a new home sales person and feel insulted by this blog. Myself and many other sales people are every bit as honest as a realtor.I sell my new homes with honesty and integrity. I would assume that as with all sales people (whatever industry) some are good and some are bad. The new sales person makes much less per sale than the realtor. Odds are we would find more bad guys where more $ is involved. You have insulted me and my industry. I have to wonder if realtors are trying to cash in on the new home market with their greed.
Thank you for your comment. First of all it is not intended to insult. Honesty is not related to the profession but to the person in my opinion. While I am certain that you and many in your industry are honest and reputable. The point of the article is not to suggest dishonesty in your profession but suggest there are alternatives for buyers.
The facts are, to sit in a show home and be a new home sales rep:
•You are not regulated. There is no oversight and no independent complaint mechanisms.
•The forms you use are not regulated and are biased to act for your employer.
•You have no fiduciary duties to the people you represent.
•You have no mandatory education requirements.
•No criminal checks or licensing are required to be a new home salesperson.
•There are no mandatory disclosures owed to the buyers by you.
Considering the sums of money that people are spending this option shouldn’t be dismissed.
These are just a few of examples of why someone might consider using a Realtor. No I think even you could admit there are situations, circumstances, or people that would best be suited to a higher level of representation. As I said in my post this option may not be for every one but it shouldn’t be construed as an insult to you or your profession just a representation from my perspective.
Please explain how you would help to facilitate the sale of a new home.Further, what would fees average? Are they paid by the buyer or by the builder? What more can you offer than the lawyer, Ab new home warranty and the regular recourse methods? My company is one of those you have listed as a co-op yet this is the first I have heard about this.
Yes Sheldon you point out some facts. But when one can sell their home without a realtor for $700 rather than $17000, One has to wonder if the realtors qualifications matter.
Laura,
It is clear from your perspective you are threatened by what you don’t understand.
If you think a realtor is not necessary in some instances then you truly don’t understand the breadth and diversity of “REAL ESTATE”.
If you think the average commission is 17000 and that every seller who sells on their own saves that amount of money that is your opinion. No matter how misinformed it is.
It’s interesting that your own company is a signatory and yet you are UNAWARE of the program.
Again read my lips “Its not for everyone, but perhaps based on the new home industry being largely responsible for the majority of Mortgage Fraud it would be a good thing to have minimum regulations in your industry as well.
To clarify, the fee is paid by the builder. The agreement is that the price will not change.
How many so called hostess do you know of who sit in show homes collecting basically minimum wage? It speaks to the qualifications to sell new homes.
However once again you have completely missed the point. I know many professional new home sales people. They have integrity and do what’s best for their customer even though they have no obligation to do so.
As for the types of people I have helped. Out of town people not familiar with areas or builders. I have helped professionals who trust my knowledge and experience to assist them due to their busy schedules. I have had clients have their children use me or they won’t assist them with the down payment and I could go on. I have hired consultants to discuss construction issues up front, floor plan changes and modifications; guaranteed the sale of my client’s homes and so on. I have on numerous occasions assisted my clients in taking a couple of major builders to court to have certain breeches remedied. Btw we’ve won every single time and each of them will tell you my experience and knowledge made the difference to them getting an equitable solution.
Do you recommend independent inspections for your buyers? The number of new homes that I have sold and the crap that we have found through independent inspections should make it mandatory? (For your company as well)
Not every builder has new home warranty and it’s not always easy to get a claim processed through new home warranty even if they do have it.
Thanks again for your comments. I am confident in the level of service, knowledge and experience I bring to my clients so I am worth more than $700. Just in case you cared. By the time I clear expenses I don’ come close to netting the figures you spew out on an average sale.
Sheldon,
Did you breath at all while you blogged that? Because this is your blog, based on your opinions and you get quite touchy with any negative comments, I have no further desire to blog wrestle with you. For anyone reading this blog, I would just ask you to ask your lawyer if a realtors assistant is required.
Please share with us where your info regarding mortgage fraud was aquired.
For the record a “hostess” makes about 3 times minimum wage, about $25 per hour. This is a great wage considering they are not near as informed and bright as realtors according to yourself.
I have spoke to a few of my realtor friends about this article.They have not heard of this practice and don’t find it neccasary. In fact they would rather not bother for the hassle with no renumeration. They are very surprised that you would insult the new home industry in this manner.
In all fairness Sheldon, if I needed a realtor, I would call you first. Such aggression is certain to get top $ for my home.
Alright, lets make up now, play fair.
I feel obligated to speak to some of your other comments, in this somewhat heated blog. In order to be fair to anyone reading this blog please take the time to review my points and of course my PERSONAL opinions.
Regarding appraisals. The mortgage lender, usually (about 95% of the time) a large, trusted banking institution, always has an appraisal performed on the propery or a like property. They do this for new and used homes.It is in their best interest. They to are monitoring for mortgage fraud. Perhaps more than any other individual or institution.
Yes, I do agree that sometimes a realtor is required. But I also know that most times a realtor is not required. A decent comparable price, phone call ahead to your lawyer for advice, a condition of sale to be your lawyers approval, the somewhat standard forms that are easily available, common sense and full disclosure keep you as safe. Title insurance which I know little about, other than it protects the buyer and can be had for a few hundred $.So buyers should enquire about this insurance.
This is the free and helpfull advice my visitors get. Notice I said visitors. All who came were given lots of resources to further educate them to the market. They left with web addresses such as CMHC, ANHW,EREB, and directed to any other resource they may have needed.
I to have had parents helping their children trusting and believing in my property, as well as my thoughts and explanations.
Most importantly though, what does fiduciary mean? Or do you have to be licensed to get that privileged info?
Myself and many others would not buy a new home that was not covered by a New Home Warranty Program. At least you have some recourse. I would would think the 5 year warranty should be a piece of mind one can’t get purchasing a used home. Best of all its free, there are no fees to be covered by this warranty.
To clarify, I personally spoke to perhaps 20 agents who were by enquiring what the referral fee is. They were quite dissapointed to hear it was only $500. They seemed to think that because they knew the home merely existed, that should be worth much more. With todays technology,such info is available, free. Further, not one asked me if I knew about the CO-OP. Not one. Are they UNAWARE that it would be good business to promote this “service” when they visited my showhome? Not one.
I’m sorry I didn’t understand the CO-OP, had you mentioned the word referral, then I would have clued in.
It is clear you are frightened by real estate progression. Your industy is changing, losing some ground to the FSBO market. Previously I was at tax consultant, my industry as well dried up with the invention of tax software for the do it yourselfer.What was once a complex task, became a user friendly, quite manageble task for the average Joe.
Now please don’t be insulted I know that many in your industry are decent human beings and some very good at what they do…….. sound familiar?
Your blog has been my first to join in and your website, knowledge and opinions are one of the sources I regularly rely on. I will still check you out a few times a week and occasionaly I send your link to others as I think it is a wealth of info. But on this I guess we will differ. You must back your industry.
You may be interested to know as of very recently, I am no longer working in the industry. I am enjoying tracking the market and even out of the industry, I will still protect it and all joy and peace of mind a new home brings.
Thankyou for your thoughts.
Ok ok….down boy…down girl. I’ve told Sheldon not to blog after 10pm but I guess he can’t help himself.
I’m not going to get into all the details of each of your arguments. I would like to pose a few simple questions:
If you were buying a home, and you could have representation at no additional cost to you, would you consider having that representation? What if you thought it through and realized that you can have a licensed real estate associate represent your best interests when buying a home? What if you further realized that the sales rep in a builder’s show home works for the builder, not the buyer, and a Realtor works for the buyer, not the builder? Who is going to best look after your interests? What if you further considered that an agent, under common law, has fiduciary duties to you (undivided loyalty, confidentiality, full disclosure, obedience, and full accounting) and if your Realtor doesn’t carry out those duties you have recourse?
BTW, to answer your question about fiduciary duties here is an explanation (as a tax accountant you should know about these duties as you had them then too):
“The essence of the agency relationship is that the Agent has the authority to represent the Client in a real estate transaction. The complex and important nature of a real estate transaction requires the Agent to exercise discretion and judgment when carrying out duties on behalf of the Client, which means that in common law the Agent is also a fiduciary. Fiduciaries are obligated to protect and promote the interests of their clients as they would their own.” (Source: Alberta Real Estate Association pamphlet “Agency Relationships.” You can find more information on Agency at http://www.edmonton-homes.ca/Agency_Explanation/page_1735539.html.
Ok, back on topic. Sheldon is not trying to insult the new home industry. He is just saying that for some individuals, having an agent to protect their interests when purchasing a new home is a wise choice. Many people are not aware that this is an option, which is part of the reason we posted this article. Why would you work with an agent to purchase a resale home, but not a new home? The dangers and pitfalls are the same in each case. Many people walk into those show homes and think the “advice” the builder’s sales rep is providing is as sound and unbiased as the advice someone who was working for them would provide. This is simply not the case….the very fact that you don’t know what title insurance does except you think it protects the buyer and costs money shows the advice you provide may not be all that reliable.
As for the new home warranty program…We’d never recommend a buyer to purchase a home without a full new home warranty – some builder’s reps tell buyers there is no need for it “it’s a brand new house, what could go wrong?” New home warranty isn’t the only answer though….I’ll let Sheldon share some stories on that.
My last thought…we are absolutely not afraid of the progression of real estate, in fact we embrace it. This very blog is evidence of that… I look forward to leading and adapting to change in this industry that will benefit home buyers, sellers and owners in the years to come. There are still plenty of tax accountants out there, even after that incredible tax software was invented…
Thanks so much for your posts and interest in this blog. Presenting different sides of the story makes this blog so much more informative to readers and we really do appreciate your incite and opinion.
Put another slant on things: The builders are quite happy to sell me a house that is in a maximum density nieghborhood,with vinyl siding over OS board, but so are realtors. You guys both care about who gets what money, but really, really, would that fire have happened if realtors had been advising thier clients not to buy into that firetrap? And do builders care? No. So the only person looking out for me is my Lawyer (hopefully) Just my thoughts. I enjoy the blog.
Glad you enjoy the blog Richard! How about this slant….would a builder recommend that you have one of their homes inspected? I don’t think so…we do though. We’ve had inspectors find all kinds of mistakes on new homes that the city inspector missed. Inspectors also help home buyers learn about their new home and how to maintain it properly…that’s a whole other can of worms though.
I don’t think your lawyer would know anything about vinyl over OS board either, unless he also has an engineering degree. While I’m on the topic, we also recommend our buyers get independent council instead of using the builder’s lawyer – I mean, who is the builder’s lawyer really working for? Same person the builder’s sales rep is working for! Anyway, we don’t claim to be experts on construction methods or building code, we recommend our buyers get advice from someone who is an expert.
I don’t know much about the fire in MacEwan, but I do believe those homes were up to code. Sometimes it takes a tragedy to change things, perhaps the building code will be improved because of the fire.
To clarify,
I don’t know all the details of Title Insurance. I absolutely know that it protects the buyer and cost little, and has been quite necessary in the fast moving market. This is the advice I shared with all visitors. So it is not important for me to know the details, only that it is available and then pass this info on. Further, most lawyers were and are, advising their clients to obtain the title insurance.Especially when land titles was so behind. Because of the media attention and the good advice lawyers were giving, the public is more aware of this service.
What are your #’s like? Say how many out of every 10 of your sales used Title Insurance?
I think you spun my comment, so please have another look.
Also to consider, Title Insurance is needed more in the used market. If you are building with a reputable company, a member of ANHWP, a member of the Home Builders Association, a recognized builder by your financial institution then you are really quite safe. So quite likley thats why you are more informed about it than I am. It’s not a necessary or common, practice with new homes.
Also, as previously requested, I am curious about the source that Sheldon used implying that “the new home industry is largely responsible for the majority of mortgage fraud”. Was this just your personal opinion? If so. I think a statement like that should read….. In my opinion. Yes I read your disclaimer.
Actually, this blog wrestling is fun. I am going to make a point of researching blogging etiquette. I’ll send a good link if I find one. I think we all could use some info on that!
Bet you checked this blog more then any other today. LOL
Richard you made good points. Slapped all 3 of us!
To be honest title insurance has its place, but on a very limited basis. In our Torrens system of registry a purchaser is better served by a RPR with compliance.
My source on the new home industry being the largest source of mortgage fraud (Edmonton being one of the worst) is CMHC / Fintrac. This has been well publicized.
Using a good home builder is a great idea. Using a Realtor in conjuction with that builder is a better idea. Why not when it doesn’t cost the consumer any more. The consumer than has the ability to be protected by the Realtors errors and ommissions insurance, which I’m very certain is something you don’t carry. And no i havent checked this post more then others. You have made me realize that the industry you are in should have higher standards for education. That’s alot of money you are handling on behalf of people. I don’t doubt your clients trust you but you don’t owe them the say level of care that anyone else who handles that kind of money for their clients. Lawyers,Realtors, Stock Brokers all have high levels of fiduciary responsibility. New car sales people and new home sales people both work in show homes / show rooms and work for their employer.
hmmmm…looks like the new home sales person is really the dinosaur.
You are sounding quite desperate. As I read through the blogs commenting on your other posts, It is clear I am not alone with my opinions.
If it wasn’t for your superior attitude, I would almost feel sorry for you.