New Development On Oahu and Brokers Commisions

Many people looking to buy or sell a home hopefully realize the benefits of using a licensed real estate agent to help navigate the process. It is also widely understood that the agents will be compensated per the agreement at the closing of a sale. Now, if you are a buyer, this commission is usually paid by the sellers and there is no cost to the buyer for the services. The sellers do negotiate this fee up front and pay the commission at closing from escrow.  Some of the new construction projects from developers like Haseko or DR Horton pay a brokers fee to the agent that brings in a buyer. This will only occur when the agent brings the buyer into the sales office the first time and registers the client. Meaning, if the clients are driving around on any given day and stop and tour a sales center without their agent or without mentioning their agent then the development will not pay the agent a commission. Most clients believe that if they do not have an agent they will save some money on the purchase and this is simply not true.

The developers will not pay a client a fee or reduce the price in most circumstances if the buyer has no representation. So basically the client would not save any money, get any rebates or have any stronger negotiating if they are unrepresented. The salespeople in a development work for the developer. They are usually very friendly and helpful, but at the end of the day, they do not usually have the best interest of the buyer at heart. It is usually best to get representation from an agent who is working on your behalf and not for the developer. They will have the ability to analyze the lot, location, property or building in an effort to make sure that the purchase makes sense.

Most developers will raise the price of the properties as they sell. So in a townhouse, for example, they might start selling one phase or building at a certain point and price and then the last building or phase may be right next door, have the same square footage and view but might be the last building sold and the prices might be drastically different from the neighbors. This can present a problem down the road with possible resale. If the neighbor bought for much less and in some case, this can be tens of thousands, they will have more equity and room to sell at a lower price then someone who bought at a higher price. This can be very tricky and cause lots of problems for a buyer who were not educated on the phases, process and the possible market condition. This is why it’s always best to have an agent that can represent the buyers best interests.

You want someone that can do the research and really make sure the purchase makes financial sense. It’s very easy to walk in and fall in love with a developers model. These are usually full of extra upgrades and can have some small tricks to make the rooms seem larger. If you look around you might notice a daybed instead of a full-size bed, smaller furniture, doors removed and a collar palate that makes everything seem larger. So you must really be careful and understand what you are getting, the real size of the area and what might be an expensive upgrade.

The best advice is to always be represented. I am happy to help answer any questions to make sure that a buyer or seller is making the best decision possible.