Strategic Points Group: Buying Homes: New home agents vs. resale agents

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Have you ever entered a model home sales office greeted by an agent? Have you ever wondered; Who are they? How are they paid, and do they need to have a real estate license? Who do they work for?

These are very commonly asked questions. All builders pay and hire agents differently, but usually, the agent of a new home subdivision must be licensed in the state in which he or she sells, the same as a re-sale agent. Some agents enter the world of new home sales and have had exposure to residential sales, and some may have had no experience. Many agents start off as new licensees in secondary and support positions to learn the ropes from a veteran agent. Sales associates, or greeters, may be unlicensed, but are there to help the lead agent in the distribution of brochures and answering of general questions. Usually, they are not permitted to quote prices for homes or interest rates for mortgage programs.

Builders sometimes hire in-house agents that are employed and managed by the builder. They are usually paid a percentage of the closing revenues from each home they sell, or participated in selling. This can range from .25% to over 2% of the total sales price, depending on whether the subdivision is single or dual agents and the builder pays a base salary. There are of course many variations on this theme.

A home consultants compensation per closed sale can be significantly lower than the re-sale agents commission, but is (hopefully) made up in more numbers. One of the major differences between them is product knowledge of particular homes the agent sells. In new home sales, the new home consultant is expected to know everything there is to know about the decor, land, construction materials, neighborhood, and the builder he represents. Thy assist the builder in marketing and selling its homes effectively in the marketplace. A good part of our economy is affected by new housing starts; you may hear this statistic quoted periodically.

Other ways new home consultants are employed may be by independent marketing and consulting firms. These firms usually have builders as clients, and have arranged to provide their builders with effective marketing, sales personnel, plan new communities, create advertising campaigns, so that the builder's main focus is on building homes, not managing the marketing and sales of them. These companies offer many services such as feasibility studies, (what product might be appropriate for a particular area?) forward planning (assistance for land acquisition) and keep builders informed of the competitive market surrounding the area of their new homes. Payment made to agents employed by marketing firms is like in-house employment compensation. There are, however, other differences such as liability issues in representation with the builder and marketing firm which are usually kept exclusive of one another.

Re-sale agents encompass a much larger base of real estate sales. They sometimes represent buyers seeking both new and re-sale homes, but also represent sellers of existing homes. They must have a superior knowledge of many neighborhoods, and network with appraisers, inspectors, lenders, title companies and other agents. They create their own incomes by the leads, relationships, referrals, and marketing efforts they perform. Commissions are usually paid at the close of escrow on all their transactions. There are many variables involved in bringing a re- sale transaction to its close.

Courteous, ethical, well-versed real estate agents are usually well known in their industries in a particular area. Although commissions and loyalties are important to them, they usually have one outstanding trait that generates their success -- putting their clients' interests ahead of all other considerations.

Try these other related FAQ sections:


			New Mortgage

			Refinance

			Home Equity

			Debt Consolidation

			Construction

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