if I own the land, and work directly with builder, why is RE agent involved?

Question

My situation is this: I own a piece of property in a subdivision that will not allow me to use my own builder. I must chose from a list of 8 approved builders. I found the one I like but was told that they will use a real estate agent (and offered to have that agent double as my own for the sale). So, my question is this:

1. Why are we involving an agent at all? The builder and I will discuss the construction, my lawyer will and the builders lawyer will review all documents. So, why does anyone else need to make 7% on this deal for doing very little.

2. For a nominal fee, I can get a license myself in this state (I meet all prereq's). Is there any benefit to me acting as my own agent? I understand seller pays out the commission, so if an agent is forced into this deal can I then demand 3.5% of their commission? seems kinda jerk move, but I do like to save money.

Thanks for your help.

Wayne Brooks · Answer

Watch out for the "industry standards for material and workmanship, with imperfections to be expected". Obviously, don't let them get ahead of you with the money, if you're paying in draws.

Matthew Paul · Answer

Go do a search on "propane complaints" on the internet and decide if you still want propane heat . If you do ,,BUY THE TANK you will have a small amount of leverage , in purchasing from multible companies

Tom Goans · Answer

It is also very important to check with the local government agencies to know the setbacks for the water well, septic system, and all building sturctures.

Karen Margrave · Answer

Jean Paul Valley Nobody on here can tell you whether or not to have another inspection done, as we have no idea what the history of the area is, etc. Since you aren't using an agent, it might be wise to hire an attorney to go over everything with you and advise you. There are many questions and much information that you didn't address. Such as how the whole process is going to work. You have to hire one of the builders approved by the developer. Who is doing the financing? Who approves the bids? Who pays the contractor, subs, and suppliers? Who is it that controls the construction loan? Make sure EVERY detail of the transaction is spelled out, and there are no hidden fees etc. Talk to others in the subdivision and ask how the process worked. Unless you are experienced in contracts, understand all the CC&R's, and any HOA information, you can easily miss something that will cost you far more than a commission or attorneys fees would.

Jean Paul Valley · Answer

There are no utilities hooked up to the lot. We will be putting in our own well, septic, propane heat. The land owner already tested the well potential during the planning phase - this particular town demanded extensive tests, and everything came back ok. Would you recommend I hire out and conduct my own well inspection, or is a "certification of proper welling" from the developer suitable to cover my behind in case of future problems?

Jean Paul Valley · Answer

So, I firmed things up with the land developer and we will be able to purchase the lot directly from them. This will allow us to proceed with the build without any sales agents. We have set up a meeting for early next week to put down the deposit and sign the purchase contract. Does anyone have any tips before we sign on for the land? Thanks so much for all of your help!

Steve Babiak · Answer

I would tell the "buyer" - in this case the builder - that they can pay the commissions, or pay a higher purchase price to you if you are forced to pay commissions. You don't have a listing agreement with anybody, so you don't have any obligations to have a real estate agent at all - not even to represent you should the buyer prefer to have agent representation. You might find that this buyer's real estate agent might be family or friend ... I've sold houses without agent involvement for me as seller, including even when the buyer chose to have an agent and I did not pay any commissions.

Wayne Brooks · Answer

To clarify, are you using the builder to build a house for you to live in/resell? If so, there is no "sale" of the lot involved, and the builder has no ownership. Is the builder buying the lot from you? Unless you are JVing with the builder and selling after complete, I don't see where an agent would be involved.

Tom Goans · Answer

I would suggest reading all of the legal documents pertaining to the land and subdivision, including, but not limited to, Homeowners Association By-Laws, Covenants and Restrictions, Deed to look for Deed restrictions, etc. Somewhere in all this there may be a requirement to use a real estate agent, even an approved one for the subdivision. If not, ask your lawyer for an opinion. There may be a local or state law that is coming into play.