Quote:
Originally Posted by krazycanuck
I would suggest that you actually have more leveraging power without a realtor to negotiate the price on a new home. Most builders will pay 3.5% of the first $100,000 and 1.5% on the remaining amount to a realtor. That's almost $10,000 on a $500,000 home. That money either comes from the profit of the home, or in some cases part of the sales person's commission. While the rule is they won't markup the home if you use a realtor, they also will factor in that they are probably losing $7,000 to $10,000 in their profit margins, and will be less likely to want to lose anymore by negotiating down in price.
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Amazing how this differs in market to market; product to product.
I deal extensively with new condo presales in Vancouver, and this couldn't be further from the truth.
All developers budget separately for Realtor commissions as they know about 80-90% of their sales will include a buyers agent.
They also know how important that relationship is; so they not only cooperate with agents, they actually give us extra incentives and early access for our buyers when new developments open.
I just recently got a buyer $40,000 off a new condo, in a development where the average buyer would come in and only get $15,000.
Strictly due to my relationship with that developer and the repeat business I bring them. Well worth the commission they offer me to ensure a continuous stream of buyers to their various communities.
Having said all that, I could see smaller joe shmo Calgary builders thinking differently. Some of them have a hard time thinking big picture and understanding that strong relationships with Realtors will bring them many buyers for years to come; hot or cold markets.