What to do if a builder takes your buyer?

By
Real Estate Agent with M and T property management LLC

Have you ever lost a buyer to a builder? I'll tell you a story about what happened to me. Let me know what you would do.

I was working with a buyer for about a month or so showing and registering them with each builder in town. I gave them a booklet about what to do if they go to a site by them self's. I gave them my card to give the agent on site and all that.

One day they come in and tell me that they found a site they liked, and they wanted to sign a contract. I thought "thank God" after all this work! So I asked where the site is and how they found it.

They tell me that the agent is very cool and he is waiting for them to come in right now! I knew something sounded wrong at this point, so I asked did you tell the agent about me? Yes, they said. They were in a hurry to get there because the agent said the home "wouldn't last!" They needed to get it under contract ASAP. He told them, he would be able to give them a great price for it if, they bought it today!

So now, I know that I will have my hands full.

I called the agent. He tells me that at the end of him showing the home that they told him about me. He said that I didn't do anything to sell them that home and he would not pay me as a buyers agent. The only time he spent on them was about ten seconds. Now What?!!!

I told them that that agent lined them up and he would not let me be a part of the deal. They looked so sad at first and then the BOOM!!! Well, the girlfriend said, "sorry about that but, we are going to get it today! It is a great deal! So I told them I had a contract with them and they have to use me or pay me for the sale.

As I said, I worked my butt off for them. Now, at this point, I know I have lost them. Not only the sale, but two listings as well!

I told my Broker about it. Come to find out that the builder is well known for doing it. Icouldn't believe what happened! All that for nothing!

Matt the MARINE says sound off, and tell me what you think.

 

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Rainmaker
294,842
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

Dear Matthew,

Sorry to read that, it seems unbeliavable, let me tell you my experience on this kind of situations,

1) You first need to have a Exclusive Right To BUY   Always to protect your side and protect the transaction,   do you have it signed by them right? I meant them ( your clients or ex clients )

2) If you asked them ( your clients or ex clients ) about if they told the builder that they had an agent,  builder needs to respect that,  there is not need to be present at that time, at least here in Colorado,  it has happened to me  that my clients go with builders alone, but I advise them when a sale representative ask them something, they need to say,  I have an agent already  and  builders respect that.

3) Remember one thing,   if you explain your clients about how builders work and how you work, they will understand that you need to be your clients side to look for the best interest of them.   builders? if they come alone, it is like a wolf eating a lamb,   they will look just builder's interest.   so that is a good reason that they need to stick with you and you can represent them.

4) If you are 100% that they told that they had an agent,   you can win this situation easly, you can make a good complaint directly with a builder's manager or supervisor about the problem that you have there.

 I do not see a weak case on this one, but of course, the best thing to do it is to tell your manager and see what is the best thing that you can do,

Good Luck and I wish you the best to get them back.

 

 

 

Apr 04, 2007 01:42 AM #1
Rainer
15,237
Suburban Chicago Illinois Real Estate
Suburban Village Realty - Barrington, IL

Matt,

The big question is did you have a buyers brokerage agreement in place with these particular buyers?  Secondly, expose the new home builder if they have a history of snaking buyers from real estate agents.  Third... is it the actual owner of the development making the choice of not paying you or the on site agent?  I've made more then one phone call to the higher ups and have resolved several problems by talking to people who understand that their future reputation is more important then cutting out a professional from a real estate commission.

As long as it's true, have no fear in exposing a builders tactics of not paying REALTORS for their hard work.

SVRPaul 

 

Apr 04, 2007 01:44 AM #2
Rainmaker
294,842
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

James,

Builders do not want to have problems, they want to sell, they earn thousands and thousands, so to share comission with the reaslton, it is not problem, I believe that the problem here, I am right, I am just making my assumption because I do not know more about it, it is that the sales represenative wants to earn more commission,  a greedy sales rep.   It is a matter just to do a good complaint about the builder with a high manager or representative and Matt can fix the problem.

Apr 04, 2007 01:51 AM #3
Rainmaker
1,375,913
Donna Harris
Donna Homes, PLR - Austin, TX
Realtor, CDPE & ASP - Hill Country Lakeway Austin

I would go around the sales rep to someone higher up in the builder's company, like an area director.  I've had to do that before and they readily put me on the contract.  If that doesn't work, you could also send a copy of your buyer's agreement with an invoice to the title company to have them put it on the HUD for the buyers to pay at closing.  Give your buyers a heads up on this so they're aware of it, and see if they baulk.  In Texas, if a buyer says they have representation and they want representation, a builder's rep cannot deny them representation, especially if they were told up front about the representation.  It sounds as though he interfered with your exclusive contract, and even if your broker won't go forward to fight for the commission, you can still let them know you plan to fight for it and see what happens.

Other than that, you chalk it up to another learning experience.

Apr 04, 2007 02:21 AM #4
Rainer
15,237
Suburban Chicago Illinois Real Estate
Suburban Village Realty - Barrington, IL

Ray,

"Third... is it the actual owner of the development making the choice of not paying you or the on site agent?"

That's the whole point of the above sentence in my comment.  I was the Director of Sales for A Developer and trust me, paying a legitimate commission to a REALTOR was already built in to our marketing budget.

Apr 04, 2007 03:00 AM #5
Rainmaker
294,842
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

James,

Hm... Yes, that's right,  but   matt should get easly that % of comission, it is not hard to claim it,  the work that he did and if he has the exclusive right to buy signed by the (clients or ex clients), he can easly win this situation.   It is up to Matt to fight for his rights. Unless the buyers lied, so problem the problem should be now with the buyers a little more complicated in that scenario.

 

 

 

 

Apr 04, 2007 04:13 AM #6
Rainer
52,384
Jennifer Steck
Rocky Mountain Homescapes, Keller Williams, Denver Colorado - Denver, CO
Denver Real Estate
Is there a grood way to get the information out on the builder/sales rep that refuses to pay commission to buyer agents without getting sued? I would think the pressure put on by you and other agents in the area would do the trick. Especially in this market when they can sell more houses when they honor our buyer contracts. Please let us know how this works out. Thanks.
Apr 04, 2007 07:34 AM #7
Rainer
7,506
Matthew Meli
M and T property management LLC - Detroit, MI

The agent there was a real jerk. He was telling me that he had 30 years doing this and he made the deal work. He stated that he is good friends with the builder. He also said that his homes sold them self's, most of the time buyers agents didn't even know about the homes. He was right in what he said about me not knowing about the homes. I am not sure of how the buyers even found it. What should I have done?

Apr 04, 2007 10:49 AM #8
Rainer
32,051
Ronda Myers-Waters
Willems Realtors, Principal Broker - Chesterton, IN
If you have an Exclusive Buyer Agency Agreement file a complaint with the board.  If you have the EBA signed by the buyers and the date has not expired then you have a right to your commission.  Sounds like this agent needs someone to test him.  I would have written the contract for them then submitted it to the other agent.  But if they went to the other agent I would take you EBA to the board and protest.  Get your commission.  Maybe then this agent will think again before undercutting an agent.  Good Luck!
May 01, 2007 08:56 PM #9
Ambassador
1,106,302
Jim Crawford
RE/MAX Paramount Properties - Atlanta, GA
Jim Crawford Atlanta Realtor - Atlanta Real Estate

I had a builder in town that solicited my buyer directly after they were registered.  I called the buyer, then the builder, and then called back my buyer.  I asked him did he call them ans ask for additional information, and he said no.  They contacted him, and said if he would drop the agent they coould give him a deal.  I asked if they spelled out the deal?  He said they even faxed it to his workplace.  A fully executed contract with attached addendum and plat.  WITHOUT MY NAME!  I then pointed out the buyer, that if he read the small print on the on the survey, the home they were trying to pawn off on him as a minority was in a FLOOD ZONE PER ELEVATION STUDIES AND THE HOME REQUIRED FLOOD INSURANCE!  This got the buyer crazy, because they stereotyped him, and tried to pull a real fast one!

I made an appointment to meet with the head of the company, and he denied everything,  I even pulled out the contract and he still did s a soft-shoe dance around it.  A month later I met one of his on site agents at a continuing ed class, and she informed me that she left the company because the OWNER HAD INSTRUCTED ALL HIS STAFF TO TAKE THE BUYERS AWAY FROM THE AGENTS THAT BROUGHT THEM IN!

So anytime anyone asks what builders would I recommend in town, that company is not one of them!  I know a lot of perople, and I talk a lot one on one!  That deception has caused the builder a fortune in lost business over the years!!

May 01, 2007 09:54 PM #10
Rainmaker
146,327
Chris Webster
Island Palms Realty - North Myrtle Beach, SC
Myrtle Beach Real Estate, Foreclosures and Short S
You need to let the board know about this. An agent tried that here, but lost!
May 01, 2007 10:00 PM #11
Rainer
4,170
Tish Shaftner Mosteller
Lincolnton, NC

YES! I am very familiar with a builder taking a buyer.  One of my agents listed a gorgeous home for a builder, one of several he "was going" to list with our firm.  My agent promptly promoted the home in every fashion possible.......then a couple who wanted to buy the house came to her ready to buy.  All parties understood the agency in this situation, Buyers and Sellers came to an agreement, Viola' , we're under contract, proceeding on. 

One afternoon, the buyers were cruising the development of the home they were to purchase and ran into the builder, they did not tell him who they were, only told him they were interested in looking at a home in his development.............NOT the one they had under contract, mind you.  Jeff (the builder) proceeded to show the couple the respective house and told them he could save them money on it since he wouldn't have to pay a "Realtor commission" on this house.  The couple took the bait and were hooked........BUT they told him that they had to get out of another contract first.  That was when the builder found out that the "contract" they were referring to was on HIS other home, the one he had LISTED with an agent, my agent.  Suddenly I was getting bombarded with phone calls saying how 'bad' our agent was and lies after lies as the buyers were trying all they could to be released from the contract and from their agency agreement.....this agent all of the sudden was the worst person in the world.  The buyers assumed that from their complaints and apparently if they complained enough,  that they would be released from the contract, I told them that was not going to happen. 

Immediately after my conversations with the buyers, they contacted the builder and he contacted me.  Both parties basically lying profusely.  Jeff, the builder, said he was releasing the buyer from the contract.   I very kindly told him that regardless of the release, he still owed the agent her commission. "Tish bottom line is ethics or money, and I'm going to sell this house and make money, I'm in it to make money". I responded by saying, "thats obvious, but you still owe our agent a commission!" "Well if you're going to play hard ball, just come and get your signs and lock box", he said.  I informed him that I had already sent someone to take care of them, that I would not work with someone like him.

After consulting with our attorney, he said in the end, yes, he was contractually obligated to pay us a commission, but of course, if he refused, as he did, our only alternative was to take him to court, which would end up costing more than the earned commission in the end. 

You know, we do our job and do it well, morally and ethically........then someone like this comes along, sorry to say it, but it just makes me sick.  

May 02, 2007 11:06 AM #12
Rainer
33,138
Alan Lacey
Alan Lacey- - Grand Rapids, MI

Since you are in Michigan I would say that you should call your local board. i would imagine your builder is a member or at least an associate member and as such is boundby those covenants. If nothing else filing the complaint will make you feel better. Finally take action in making sure other agents know the tactics used by this builder either word of mouth or anonymous postings at area online communities. The last thing you want to do is just go away especially if the builder is part of the local board. I am a mortgage guy in Grand Rapids, so I am not an expert in real estate agent protocol etc, but I have seen agents go to the local board here for all types of complaints and get cash in arbitration or from other brokers with the threat of arbitration.

 

If nothing else consider prepaid legal it is kind of ascam but for $30/ mo they will write a lot of letters, and attorney letters sometimes open doors the best reasoned arguments will not 

May 02, 2007 03:11 PM #13
Rainer
27,445
Suzy Britz
Nextage Lincoln Ray Realty - Keller, TX

Hi Matt,

Here in Texas we have what is called a buyers representation agreement.

This is a protection for the buyers agents commission for situations like this. If a builder would not pay here in Texas with a buyers rep.The buyer has choices the buyer can pay the Broker who will pay the Agent at closing or the buyer can back  up as his or her buyers agent.  So the buyer and agent would go to the build and say if you want to build this home for the buyer then you the Seller/Builder much pay the realtors commission because the buyers rep reads that the Broker will first seek commission from the seller and if the seller will not pay the commission then is the buyers responsiblity and may need to look into adding the commission to his or her mortgage or paying the buyers agent out of pocket. 

Do you have a buyers rep in your state protecting your commission?

Have a great night!

Suzy 

May 02, 2007 04:45 PM #14
Anonymous
Anonymous
New home sales rep

Matt, if you had taken them to every home builder in town, how did you miss the one in question?  I work for a builder and I am so sick of re agents running in after the fact trying to get commission on something that they had no hand in.  Why would you expect a full commission from the builder for doing nothing for the builder?  So what if you spent time with the people, that is the cost of doing business.  If you want compensation, sue the buyers.  That's like selling cars for a GM dealership and then when the people you have spent time with buy off a Ford dealership you run over and demand commission because you sent time with the buyers.  And just having your clients tell the sales person that they have an agent doesn't cut it...even if your clients did do that and trust me the majority do not. 

 "He also said that his homes sold them self's, most of the time buyers agents didn't even know about the homes. He was right in what he said about me not knowing about the homes. I am not sure of how the buyers even found it. What should I have done?".  I will tell you what you should have done and that is you should have, as a professional real estate agent, known every new home builder in the area that your clients were searching in and registered them at each one.  In other words, do your job.

A buyer's contract is only binding for the parties who signed the contract...the rest of the world does not owe you a living.  The sense of entitlement of most agents really make me ill.

 

Aug 17, 2010 08:10 AM #15
Anonymous
Anonymous
Nancy Bailey

Has anyone run across a denyal for buyers commission with a new build because your client went up on a yahoo builders site and registered to recieve more information. 

Here is the real time situation: 

This buyer also registered online (Jan 2011) with the builders "prefered" lenders, again, doing his due diligance during his investigations, expecting a relocation within the next 8 months.

After the resignment of the buyers job from Arizona to California, in May 2011, the buyers Listed their home in AZ and began working with their referred CA agent to help find them a rental or a home.

The buyers decided, after visiting their CA town of choice, and all the rentals and all the new builds neighborhoods in the area, that they were wanted to purchase not rent.

An appointment to go to CA, and have their REALTOR go to the site with them for their first visit, was made.

In prepration of the AZ clients arrival, the CA REALTOR went to the site and registered his clients.

While the buyers agent was registering his clients the site agent informed him that due to the AZ couples internet visit, the buyers were now the builders clients and there would be no commission paid to the buyers agent by the builder.

The site agent denied becoming a dual agent by virtue of denying a builder paid co-broker fee and causing this young couple to enter into contracts without representatiion (they can not afford to pay on their own).

The site agent was able to pull up the buyers name and the date of yahoo maps real estate site and sign in date.

The argument form the site agent (most likely schooled in by the builder) was that once the buyer entered on any of the properties, walked on, visited, signed onto or rode through the neighborhood, the buyer belonged to the builder, the builder would not pay a co-broker fee. 

The site agent went on to say that of course the builder would no stop a buyer from paying for their own rrepresentaion, siting the buyers right to have representation, however the builder (due to the new "visiting the site" rules) would not be paying for the buyers commission. 

Realy? Come on now!

Has anyone run across this policy of buyers signing onto a builders site negating the buyers represenative being denyed a builder co-broker commission?

Help! this is a real time situation, referring AZ listing agent, CA buyers referred agent, site agent and now the buyers are all aware of the website regrestration diminishing their capasity to seek protection of their "best interests".

Most buyers can not afford to heap another cost onto the rising costs of a home closings. 

If you have run across this situation....is the site pointing out any consumer disclosure? or need there be? 

Do the buyers rights, to have representation, paid by the "ethical" co-broker builders agreement, be given away by a visit to a builders on line site?

The question is not, do the buyers want to pay for their own buyers agent, the question is where does the "ownership" of the buyer begin.

What is understood a "regristration" by the builders?  On sit used to do it, internet investigation/internet information gathering, does it now count buyer brokers out and leave buyers paying out of pocket that which is already built into the price of the new home.

Update: (real time) I just heard from my AZ clients from CA.

Due to the confllicts and stress connected with this issue with this particular builder, my clients, with the help of their CA REALTOR, were able to find a better home in a better neighborhood at a better price. Contracts are being drawn on this new community right now.

The 1st site agent, lost the sale by pushing the buyers too far.

What have you heard?  What do you know about this?

Nancy A Bailey, Keller Williams So AZ Realty

Jul 04, 2011 02:02 PM #16
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Rainer
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Matthew Meli

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