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smlindberg

'marketing fee' in building contract ???

smlindberg
14 years ago

Hi folks. My boyfriend and I just got back with a meeting with our builder. We just got the bids from the subs, and everything in the spreadsheet of costs looks good. Except... there is a "marketing fee" (3% of total building contract). Our builder's explanation was that it pays the real estate agent's brokerage fees, which were not recouped from the seller upon purchase of the land. Has anyone encountered this?

Aside from this one thing, our builder seems very good and on the up-and-up. But this fee was totally unexpected and has thrown us for a loop. As you might imagine, it's a sizable chunk of cash and it seems odd to be paying the realtor at this juncture.

Thoughts?

Comments (35)

  • swampwiz
    14 years ago
    last modified: 9 years ago

    It sounds like you are using a builder, and he would be buying the lot and building the house, and then selling it to you. It seems that what he is saying is that the lot costs another 3% (or is he saying the entire project cost?)

    Consider it part of his markup. If he charged you 20% fee without this 3%, it would the equivalent (roughly) of him charging you a 17% fee plus the 3%.

    Now the question is whether you had already signed an agreement with him (and put down a deposit, etc.) If he neglected to tell you about this fee, then he would guilty of fraud, and I wouldn't do business with him.

    You need to explain more of what your entire situation is.

  • srercrcr
    14 years ago
    last modified: 9 years ago

    The seller always pays any brokers fee. He has a marketing contract that calls for the broker to get paid on any sale. He can attempt to get it from you so he doesn't eat it. He should have buried it in his overhead and profit number, you'd have never seen it.

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  • creek_side
    14 years ago
    last modified: 9 years ago

    If nothing else, the builder is "tone deaf" to what his proposal looks like. Is this a cost plus build? I ask because you would not normally see the subs bids on a fixed price contract, except possibly for items that are characterised as allowances.

    If the builder is trying to get you to pay this marketing fee, I wonder just how much plus he would pack into his cost plus builds.

    This reminds me of how car dealers operate. They advertise a price, and when the buyers go to sign the contract, they find all manner of fees and expenses tacked on, including advertising and marketing fees. In reality, they are all nothing more than added dealer markup. So it this particular marketing fee.

    If you have a sour taste in your mouth from this marketing fee, you probably have good instincts.

    Follow them and look elsewhere.

  • david_cary
    14 years ago
    last modified: 9 years ago

    Hold on - the builder is being honest here and not hiding a cost and it is all his fault? Developments require marketing fees and they are one of the costs of a house - he itemized it. I don't see the issue.

    Around here 6% of a new house in a custom development goes to marketing. 2.5% to each broker and 1% to development company. We bought the land separately (no realtor on our side) and had to pay part of this based on average cost of a house in the development. We basically paid $20k and we would have paid $48k if we did it the usual way. Either way the development agent and the developer got their share - just a little less than usual.

    If this is a cost plus - marketing is a cost. I see this as completely appropriate. Just like interest and closing costs on construction loans.

  • creek_side
    14 years ago
    last modified: 9 years ago

    David, consider how you would feel at checkout if the supermarket tacked on a marketing fee for that bunch of bananas you just bought. After all, it cost them some money to advertise the banana's sale price in the Sunday paper, and they have to recover their expenses to market those bananas, don't they?.

    Marketing costs are an expense of doing business. They belong in the base price of whatever it is the business is selling. When they are piled on top at the moment of sale, it is a hidden charge and nothing more than a rip-off.

  • tooskinneejs
    14 years ago
    last modified: 9 years ago

    i agree with creek side. Imagine buying a shirt at the store and the cashier says, "the shirt will be $30, and then there is an additional $1 for our electricity costs, $1 for our payroll costs, $1 for our security costs, etc."

    That is not the way business should be done. I get the feeling this was a way to try to attempt prying some more money from your wallet. They advertise for price of $X and then see if you'll pay $X plus $Y.

    I also think this is shady because if the fee relates to a commission for the land sale, then why is the fee a percentage of the cost to build? The two are unrelated. I smell a rat.

  • mdmomof3
    14 years ago
    last modified: 9 years ago

    We bought a lot with a development fee. If our builder purchased the lot, I would expect to pay the 3% fee based upon the cost of the lot, not the build.

  • flseadog
    14 years ago
    last modified: 9 years ago

    DH is a real estate professional. Here is what he tells me: run away. He has never heard of such a condition or fee under any commercial or residential development context. Especially in this economy to try to tack 3% on to the entire cost of the build would be outrageous. I hope you don't have any down money at risk on the lot.

  • albertb
    14 years ago
    last modified: 9 years ago

    He's just trying to get 3% more, simple as that.

  • david_cary
    14 years ago
    last modified: 9 years ago

    Example - Development company develops 20 lots for $500,000 homes. They expect to make $100,000 as the houses are sold or built there. It is an expected part of the deal. When you use a buyer's agent and buy a spec house they get 2.5% of the cost of the house. If you custom build it they get the same 2.5% of the cost. The realtor of the development get 2.5% of the cost of any house sold in the development. This applies to developments with sales offices or realtors - ie larger developments.

    The only thing you might be able to complain about here is that you weren't told this upfront.

    To the banana analogy - I didn't contract with the banana farm for his cost+15% - he came up with a price that made sense to him and I was willing to pay. The relationship with a builder is not the same as a relationship at a retail store.

    When anyone meets with a builder and he itemizes the costs, they should include marketing fees (unless it is a rural area or non development). Here is another consideration - the marketing fees are not the builders - ie not his ads on the radio - it is the development. He is not getting that money.

    I basically think every other poster in this thread is flat out wrong. The only thing I can think of is that they (other posters) think this money is basically additional builder profit when it goes to a different entity entirely and was negotiated many years ago.

    Hey - maybe it is a regional thing but around here is it the way it goes. Buy a house from Pulte - 6% is going to marketing. Buy from a custom builder and 6% is going to marketing. Build a house with a custom builder in a planned urban or suburban development and 6% is going to marketing.

  • creek_side
    14 years ago
    last modified: 9 years ago

    There is a nasty trend in this country toward outright fraud in advertising prices. Companies advertise one price and charge another. Cell phone companies are a perfect example.

    Auto dealers, and now apparently developers it seems, are also practicing this form of deceit, probably because it works particularly well on high dollar items in which buyers invest a lot of emotional capital.

    Once an individual and/or family commits to something like a car or a piece of property, they usually have anguished over whether it is the perfect car or lot for them. Often in family situations, there is a lot of emotional give and take involved.

    Then at the last minute, the sales team jacks up the price a significant amount by inserting fictitious fees and expenses knowing full well that the buyer(s) probably won't have the emotional reserve to walk out on the deal. These charges are nothing more than additional seller mark up. I guaranty they are reported to the IRS as income. The only exceptions are mandated fees that are remitted in full to the government, such as car licenses and sales taxes.

    The real estate developers doing it count on the fact that it will be extremely difficult for the buyers to walk away from that "perfect" lot, especially after the whole family sat around the dining room table excitedly making plans for their new home.

    This despicable practice needs to be stopped, ideally by statute and jail time for the scum doing it. In the meantime, I suggest doing what I do when I shop for a vehicle, demand to know up front what all the fees and charges are -- and make it clear that if anything at all is added at signing time, you will walk.

    And if you do pay the fee, know that you have been had. Just don't help spread the practice by claiming the bogus fee you paid was legitimate. It wasn't

  • emilynewhome
    14 years ago
    last modified: 9 years ago

    "Our builder's explanation was that it pays the real estate agent's brokerage fees, which were not recouped from the seller upon purchase of the land"?

    Doesn't the owner of the sold property pay the agent's commission for bringing them a buyer?
    Is your builder the seller or buyer of the lot in question, at the present time?
    Do you know who the real estate broker was?
    It sounds as if whomever now owns the lot is selling it to you thru the builder, and they would be paying him his 3% commission for bringing a buyer!

    Have you checked with city hall as to when the lot was purchased and the price. You can then check that with what your builder is charging you.
    If it turns out your builder has not been transparent and upfront with you, just imagine how the rest of your build will go!
    If you think it is a fair price even with the 3% go for it.

  • flseadog
    14 years ago
    last modified: 9 years ago

    Cost of land is cost of land. Cost of construction is cost of construction. There is no reason to ascribe a percentage of the cost of construction to the land. Some folks will add all sorts of custom fittings---stone, plumbing fixtures, fine wood trim, expensive roof, etc.---when they build. Others will go bare bones to hold cost down. Marketing fees for land, if any, should be attributed to the land and not to the construction. And, as mentioned above, why should the buyer and not the seller pay the marketing fee. We all know that ultimately the buyer pays for everything in higher prices (think business/corporate taxes)but once the price of anything has been agreed adding a marketing fee can be called outrageous/criminal or some other description that is not complimentary.

  • swampwiz
    14 years ago
    last modified: 9 years ago

    I agree with creek_side that this is an ethically challenged sales practice. But buyers have to be aware that until a deal is offered on paper, it's not a deal yet.

    It would be nice if smlindberg would describe the complete history of what has happened. It sounds like the builder offered to build them a house for cost C + X%, with the lot for Y - for a total of C*(1+X)+Y, and it's only now that the builder is saying that the total is (1.03)*(C*(1+X)+Y)). She and her boyfriend need to tell the builder that they need to reconsider the project and look into other avenues. They can then go search out other builders and see what type of fees they charge. It may turn out that every subdivision they would want to go to has a similar arrangement.

  • david_cary
    14 years ago
    last modified: 9 years ago

    My message - don't blame the builder. Most likely it is the development. Ethically challenged? I don't know - when you buy a spec house, the charge is there. When you have a fixed price contract the charge is there. You just didn't know it - disclosure in a cost plus contract is not the problem.

    Hey - I think the real estate agent monopoly is disgusting and my personal history is I am on my 4th house - used 1 buyer's agent (discount) and 0 seller's agents (ie all FSBO).

    But - the model where a developer gets 1% of cost of house sold isn't so bad. The developer is committed to keeping everything looking nice until all houses are sold. Lots can be bought by builders for a little less money to minimize their risk. And ... Most importantly, if everyone is doing it then you pretty much have to do it.

    To those that don't like the model (well I don't like it but it is reality) tell us where you built - there are a lot of rural builders on this forum. No problem with that but the rules are different. I bet they won't pay the $11k in permits that I had to either.

  • smlindberg
    Original Author
    14 years ago
    last modified: 9 years ago

    I forgot to clarify this point...

    At no time will the builder own the lot or the house. The sale of the lot would be directly from it's current private owner to us. All financing for the lot and construction loan would be ours.

  • emilynewhome
    14 years ago
    last modified: 9 years ago

    So, the realtor is asking you the buyer to pay her a 3% marketing cost, for purchasing property through her instead of/or in addition to the seller?

    Why doesn't the seller just add that 3% to the price, or would that bring the lot price higher than recent sales?

    If you're paying the contractor $33k for his work, who would be receiving the 3% on that?

    Why would the lumber yard, plumbing and electrical supply require an additional 3% to what you'll already be paying them?

    Paying 3% over the cost of materials encourages buyers to just purchase cheaper materials.

    If you have any sort of contract, since they've changed it (by adding the 3% marketing fee) it it null and void and I imagine you'd be entitled to your earnest money returned.

  • david_cary
    14 years ago
    last modified: 9 years ago

    Suburban development here. No mention in covenants etc. about these fees. Did you have a buyer's agent?

    Sounds like you are in a similar situation to where we were 8 months ago. We almost walked away from our lot because of the marketing fees. But in the end, we negotiated our way out of some and sucked up the rest.

    Is it possible the builder thought you should have known about these fees? Of course, when you bail on this deal, what are your alternatives? In my area there is an alternative but it involves living out of city limits - which we decided wasn't worth it.

    We bought the land from a builder and paid the "fee" at the time of closing. So then we owned it free and clear and the build went from there. So in our case, the builder was not involved. But in most cases the cost is paid at move in closing time.

    A friend of mine recently bought a lot from a private owner in a suburban development (no agent involved). He isn't building yet but he had to go ahead and pay off the realtor that represented the development and the developer - it was over $50,000!

  • swampwiz
    14 years ago
    last modified: 9 years ago

    Well, since you cannot come to an agreement with the builder, since he is adding on this marketing fee, you go back and say that you could not come to an agreement and get your money back. Or try to find another builder who does not kick back this marketing fee.

    I would also contact the state Attorney General's office. If there was no mention of this on the contract to buy the property, this sounds like an illegal kick back. If the seller balks at giving you back the deposit, tell him you are going to get the AG involved. (Call him up anyway.)

    Now it may turn out that there is some registered covenant that allows this baloney, but since it was not disclosed to you, you are not liable for it.

  • creek_side
    14 years ago
    last modified: 9 years ago

    Another avenue is contacting the local media. The TV news programs often have consumer protection segments, which expose rip offs. It wouldn't hurt to shop your experience around the area stations.

  • gary1227
    14 years ago
    last modified: 9 years ago

    Did anyone refer you to this builder? A realtor perhaps? There may be an undisclosed referral arrangement and this builder is trying to pass the fee on to you. I'm broker and I know of these types of arranges with builders.

  • david_cary
    14 years ago
    last modified: 9 years ago

    Swamp and Creek - you are feeding fires that don't exist. I challenge you to show me a suburban development in the US that doesn't have a marketing fee. It needs to be a decent sized city and a decent size development.

    smlindberg - did the five homeowners mention the fee? Have you found an alternative?

    You are paying the GC $33k. Does it really seem realistic to have him suck up the 3%? - I am guessing it is around 1/2 his fee.

    This is a development fee and really is not the builder's fault. I feel like putting this in all caps because other posters don't seem to realize this. You can argue about disclosure but where I come from - it is the norm and you should know about it if you had researched building.

    If the city you are building in charged a 3% tax on all new builds - would you blame the builder for that?

  • susan3733
    14 years ago
    last modified: 9 years ago

    David Cary, a tax is clearly sanctioned by U.S. law - a "marketing fee" is clearly NOT sanctioned by law, so it's a different animal. To compare a "marketing fee" in a contract (especially one that apparently hasn't been disclosed from the start) to a tax is off-base and ridiculous.

    There are valid questions here about the ethics and legality of the issue...for you to brush off this fee as "the norm" doesn't mean it's right. That's representative of how this country got into some of the financial mess it's in. Things that are "the norm" aren't always right. The fee is especially not right if they weren't informed of it up front, which seems apparent.

    Nobody is feeding fires here - as far as I can tell, they're just trying to help the original poster figure this out and help them come up with the right solution, which could involve walking away or could involve working it out.

  • david_cary
    14 years ago
    last modified: 9 years ago

    Susan - a tax and fee are the same in that they are out of the builder's control. I don't believe there are issues of ethics here and as far as legality - there is absolutely no issue.

    They are feeding fires as far as going the AG's office or local media.

    The only options for the OP are to walk away or pay the fee (most likely) - giving options such as reporting this to the AG's office is inflammatory and not helpful.

    MARKETING FEES GO TO THE DEVELOPER AND REALTORS AND ARE OUT OF THE BUILDER'S CONTROL.

    I continue to challenge anyone to find a suburban development (of sufficient size) in the United States that would not charge a marketing fee to an outside builder. Maybe I'm wrong but I don't think a development would be sold as FSBO or would rely just on land commissions. That would never pay for a model home or a realtor to sit there 40 hours a week.

    Susan - I don't exactly like the system and I hate realtors but this is the reality in suburbia. The vast majority of people (maybe not on this forum) want to live in a development - some might disagree but all you have to do is look at resale values. Around here there is at least a 10% price disparity so paying 3% is frustrating but worth it.

  • creek_side
    14 years ago
    last modified: 9 years ago

    So we know what we are talking about, I have linked a PDF listing these charges. It is for a development in North Carolina. I assume is similar if not the same as what is being discussed here.

    Note that these fees are assessed to the builder, not the home owner. If the builder is trying to pass them on to the homeowner, instead of paying them out of his pocket, he is required to disclose them up front.

    If this stuff wasn't disclosed to the OP in the original documentation that they signed, there is no way the builder or anyone else is entitled to retain the earnest money.

    Here is a link that might be useful: The Hamptons Builder Information Sheet

  • david_cary
    14 years ago
    last modified: 9 years ago

    Creek side - if you assess a cost to a builder and you are doing cost plus, then the owner pays. Now - I totally agree that if this wasn't disclosed, then the earnest money should definitely be returned.

    I couldn't open the sheet but was this in Raleigh? I (and a friend) briefly looked at building in there but oh so lonely....

  • creek_side
    14 years ago
    last modified: 9 years ago

    Chapel Hill.

    The document referred to discusses builder's fees due from builders who purchase lots in the subdivision. Those are the costs to the builder and are part of his basis in the property. In that case he is reselling the lot and selling the house he builds on it. He can't legitimately tack those costs onto the build. All he can legitimately do is to price the lot and house so that he doesn't lose money on it.

    The document does not discuss lots purchased directly by investors or future homeowners.

    I should add that my wife and I considered investing in a then new high end water front development in the Knoxville area. In reviewing the literature and talks with sales people, these sort of fees and costs were never mentioned.

    In the end, we decided that it wasn't a good time to invest and the prices were too high anyway. We turned out to be right on both counts.

    I know a builder that worked in the development. When I get a chance, I will ask him about these fees and see if they exist around here.

  • swampwiz
    14 years ago
    last modified: 9 years ago

    OK, it looks like there is a covenant for the subdivision for these fees to be paid. I would say that if these fees were not disclosed at the time of the contract signing, then there would be a case of non-disclosure fraud. However, I have a hunch that the contract was written such that the covenants were discussed in "fine print".

    It doesn't seem to matter. The contract stipulates that the buyer can get out of the contract by simply stating that he could not come to an agreement with a builder. The buyer can define a satisfactory agreement as "cost plus $5K", etc.

    smlindberg, you just have to realize that the property you thought you were buying for $X is now $Y, and decide if you want to proceed.

  • tooskinneejs
    14 years ago
    last modified: 9 years ago

    Despite david cary's attempt to quickly sweep this issue under the carpet (why that is, I can't guess), this still doesn't make sense.

    Why is the fee based on the total cost to build rather than on the cost of the land on a stand-alone basis?

    What is the buyer getting in exchange for this fee?

    Why should the buyer have to pay the seller's real estate commission? That commission results from a contractual agreement between the seller and the realtor to which the buyer is not a party.

  • susan3733
    14 years ago
    last modified: 9 years ago

    I also don't understand why david cary chooses to sweep this under the carpet, although since he's already disclosed that he's a builder, it makes sense that he would defend the builder's perspective on this. Still, a builder who is more in tune with today's economy would figure out a way to either absorb this type of fee into his proposal to the customer, or would push back on the realtor.

    In any case, the only thing that makes sense is for the poster to (at the very least) question and challenge this fee, and if not satisfied with the answer, seriously consider walking away. No one should be shy about doing so. Why is this even being discussed as such a bad thing? It's a normal part of negotiations. Especially in this economy, it's perfectly acceptable to question and challenge fees that are far more reasonable than this one.

    Also, to say that this fee is the norm and is a given in any part of the country is absurd. Everyone thinks their own area is more competitive in terms of difficulty in finding a great builder or lot or house or whatever, and that it's somewhat immune to what the rest of the country is dealing with in terms of economic downturn, but unfortunately, the housing market is in a downturn everywhere. Some of us only feel that our area is more immune to price pressure because we are in the midst of trying to build homes and no matter what the economic realities are in our area, we still feel like we're paying high prices for our builders, lots, homes, etc.

    Bottom line is that we're all living in a brand new economy, especially as it relates to real estate, no matter where you live. Doing things the same old way just isn't relevent anymore and, worse, could get you into big financial trouble. Those marketing fees were probably stuck in those contracts years ago during the boom times, when money was easy and many people didn't even need to provide proof of income to buy their house so another 3% was very easy to come by and no one questioned it. Clearly, times have changed...these are the times when those types of fees will all of a sudden become atypical instead of typical. Sure, there will be some who don't know any better and may still pay them, but those who are paying attention and are aware of economic realities will be at least questioning them and negotiating the best they can to get them removed.

    In this economy, those who don't question absolutely everything and think long and hard about paying the price that's presented will be sorry in the future, and perhaps very sorry.

    And, I don't think most of us are suggesting that the original poster just walk away or refuse to pay at any cost; basically, we're just saying, ask lots more questions and push back. Otherwise, it's like leaving money on the table, which most of us don't want to and/or can't afford to do, especially in this economy.

  • david_cary
    14 years ago
    last modified: 9 years ago

    I don't know where anyone got the idea that I was a builder. I just "built" a house but I paid a builder to do it. I agree that challenging the fee and looking at options is a good idea. But blaming the builder is totally misdirected and claiming this is unethical in really unfair.

    I still have not found (ie no one has given one) an example of a subdivision that is represented by a realtor that allows a lot to be sold and another builder brought in ... that doesn't charge a marketing fee.

    I was so quick to sweep this under the rug to counteract the numerous posters who thought this builder was borderline criminal.

    I want to go back to one issue. I think the OP has bought the land. When we were in the same situation, it was completely disclosed to us when we purchased the land - in fact it was paid then. It maybe that the builder negotiations are going along with the land purchase. In that case, work on the land price. It is the fault of the land and contracts tied to the land.

  • athomewithchuck
    14 years ago
    last modified: 9 years ago

    Hi,

    I didn't read everyone's responses or the additional follow up's and you may not really want my two cents, but I am a realtor, we have a building company and I work very closely with several top-notch builders in our area and I just wanted to quickly share how one of the build's we just completed in our subdivision worked out that may help see why we're not all bad and those who think all builders & realtors are just snakes will just have to agree to disagree with me ::

    Our family owns a 50 lot subdivision that we are developing in phases. We have a construction company that can build up to $500k per our general contractors license limitation. We also have the lots listed thru our real estate firm and I am an agent at that firm.

    I had some clients very interested in our community who didn't have any clue of what they were doing in terms of building so obviously they wanted us to help them get a great builder to gc their build ... and since the house they wanted to build was about $650k without the $100k land we were more than happy to do so b/c they needed it and we couldn't do it on our license.

    I as a realtor helped them acquire their dream lot and they actually bought two and decided to put the house in the middle. We helped them interview a few builders who we felt they could work well together and who we knew were top-notch and could be trusted to work with our very first new owners in the community.

    When we approached the other builder - we told them we would be collecting a 3% of the total cost to build the house itself as a referral to them and we actually helped keep the majority of the books on this particular build b/c it was the first in our community and we wanted to make extra sure it went smoothly.

    The builders in our area typically profit anywhere from 12% to 20% depending on the complexity of the build and the amount of detail work they'll have to handle with the design, etc. Before we entered into discussions with the other builders we established with the homeowners that we would help them find a builder worth their weight in gold that would build the house for cost + 15% and they were ecstatic b/c like I mentioned the house was over 6,000 sq.ft and had a guest cottage and 3 levels and had blueprints that looked like you were building a skyscraper, etc. It was a complex build and we helped negotiate a cost + 15% which was a little lower than what a typical house of the nature would be which was more like the cost + 18-20% range.

    When we talked with the other builders up front we laid out that we were referring this and that we had already worked out a cost + 15% and we'd be collecting a 3% referral/marketing fee for bringing them the fee. I think you can see that these owners got a great deal to have the build at cost + 15% and the builder was happy to have the work which made him 12% of the eventual $700k cost to build.

    There was no snaking and regardless of whether we had been collecting the referral/marketing fee or not, they would have paid cost + 15% or possibly higher for this house. In the end, they have an absolutely phenomenal home that they love ... the build went super smooth, and we all made a little money for bringing it all together.

    Again, this was built into the builder's fee from the start, the folks new about it and b/c we were involved, they were able to negotiate better overall terms than on their own and they could have cared less who got the final 3% in the end b/c they agreed it was worth it for the quality they got in their final and their dream home they've wanted to build so far.

    This is what I think is a typical and probably most acceptable manner in which a real estate agent can get paid even on a custom home build. But, if the builder is agreeing to pay the agent the 3% b/c he didn't and/or couldn't collect from the original seller and the then added it on top of what was already established or what would be the norm in your area for a cost + contract to build then I'd look for another builder or tell the realtor they'll have to talk to the original seller to try to get compensated. Sounds like the seller either wasn't offering a commission to the agent at all and they wanted one b/c they didn't have a buyer agency agreement that spelled out that the buyer would pay them directly b/c the seller wasn't paying or it sounds like the agent needs to take the seller to court if they did in fact offer them a commission and then didn't pay.

    But, either way I don't believe like some folks that realtors have no business being involved in a custom build cost to build as a marketing fee at all b/c I think I described a situation that I've been a part of on multiple occasions that has always worked out well b/c I bring value to my clients in helping them negotiate with their builder and get the lots at good values.

    I hope this helps and sorry if this has been said before but there were many posts that were as long or longer than mine and I could see most were just opinions from folks who weren't on my side of the fence.

    We (realtors) aren't all the same and us good ones that are honest and would never do anything to harm our clients are not like used car dealers like I saw in one comment above. Yes, some are and I'll give that to whomever posted that comment, but blanket stereotypes are part of why people in general have such a phobia about real estate and insurance agents and used car salesman - but I could introduce you to several agents/salesman in my area that I know and love dearly as friend/colleagues that would change your mind forever if you'd be open enough to really listen and work with them and let them work for you.

    Yes, we work on commission, but I'm the type agent who wants to build a trusting and lasting relationship with my clients so that I get multiple transactions over the years that keeps me in a job that pays my mortgage and other bills, etc... rather than one who does whatever they have to in order for you to buy one time and then you realize you got screwed and don't use them again. If I sell you a house or a tract of land, etc... I want to make sure it's something I'd help a family member of mine purchase or something that I wouldn't have a problem putting my money into if I were in your shoes and that in itself has been why my business has been successful and will continue to be. I want to resale the property I sell you and know it's a great listing to have in my inventory and I want to then sell you your next, bigger home that will yes help me in the long run as well. It's not greed when you're genuinely helping folks accomplish their goals and doing so in a manner in which they see brings value.

    Real estate isn't hard, but it's time consuming and it takes years of grinding out in a job where you wake up every day not knowing where your next paycheck will come from or if it even will come, but we do it anyways and the good ones do it better and more often than the one-hit wanders who only got into it b/c there was a boom ongoing and they thought it was and I quote "Fun to show people houses". Yes, it's fun, but that's about 10% of our job and it is the "FUN" part.

    My point for this rant at the end is ... please don't be so quick to judge realtors and builders and anyone who works on a commission or performance based pay system b/c there are sometimes things that may not make sense to you but aren't out of the ordinary and therefor may take a little research on your part to learn why and how the situation works before they make sense, but if you ask others who aren't in the know you can and often will get the "all salesman are evil greedy monsters who are out to get you for all they can" comments (not that the original poster of this comment was, but I did see a few that were and were what sparked my comments tonight so I thought I'd share the other side of the fence for a change)

    Have a great night and if I've offended anyone please accept my apologies and know that I do see there are many sides to each story and am not saying this builder & realtor are in the right. I am urging you to research it with the right folks in your situation and then make the best and most informed decision you can. Maybe even look at a few other builders in your area and one of the best ways to get builder recommendations is ... dum da da dum ... local realtors ... because they see the homes the local builders build and they shouldn't have any problems telling you the quality of any of the local builders & for free. Just remember to return the favor if they do help you get in touch with a good builder who does a good job for you. Hey, maybe even a marketing fee ... but only after they help you negotiate a lower cost + contract than you had before!!! ;)

    Goodnight!

  • swampwiz
    14 years ago
    last modified: 9 years ago

    I've heard of a situation like athomewithchuck is describing. There is nothing wrong with it, other than the fact that this was not disclosed at the time of the earnest money was put down; had that been done, this whole exercise would have been academic. And in any case, it does not matter, since the purchaser can simply say that he could not come to an agreement with the builder.

    The purchaser just has to realize that the cost to buy a home in this new subdivision is the price of the land + the percentage of the construction times the fee rate. IF the buyer thinks that it is too much, the buyer can simply not buy and build.

  • robin0919
    14 years ago
    last modified: 9 years ago

    All I can say is that 21 GRAND is one hellava fee for a few hours of work!!!! Even if it took a month to interview those GC's!!!!!!!!!!!!!!!!!!!!! The folks already HAD the lot AND plans. WTH 'work' did yu do besides a few interviews to 'earn' that kind of monies????