You are allowed to work with your own realtor when you buy a new build home, directly from the builder. The show homes in Calgary are all staffed by sales people, who work in the best interest of the builder. Sales people in show homes are not licensed like realtors are, and these sales people are not bound by certain codes and ethics, like realtors are. Also, builders use their own contracts, created by the builders and their lawyers. So always bring your realtor when buying a new home from the builder.
RECA is the governing body that creates, regulates and enforces the standards of real estate in Alberta. This same RECA always recommends you bring your own representation when you buy (or sell) a home or condo.
Builders require that your realtor is present during your first visit in their showroom
Most builders require that your realtor is present with you, as soon as you first step into their show home. In other words, you, as buyer, waive your right to have a realtor help and represent you in the purchase, when you enter the show home without your realtor, on your first visit. Some builders require you to sign in when you enter. Builders often pretend this is for safety reasons, but this can be untrue as we have experienced. You write your name on that piece of paper, and you have just waived your right to bring your realtor.
Written agreement with your realtor is important
When you have your own agent representing you, make sure you have a written agreement with your realtor. This agreement outlines several things, including the commissions. In most cases, builders pay a commission to your realtor (brokerage), which means there is no money out of your pocket, while you are protected with your own agent. But be aware that not all builders pay the full commission, and very few builders don’t pay any commission at all. Discuss the commissions upfront with your realtor. Therefore you must have that written agreement in place with your realtor, that outlines commissions. These agreements are mandatory since July 2014.
On some occasions a builder wants to deal with you as a buyer directly, but, where you can, consult with your buying agent behind the scenes, to make sure you are treated correctly, and you don’t get fooled.
Discount without a realtor?
Believe it or not, while in the showroom, some sales people whisper in your ear that they will give you a big discount, if you get rid of your realtor. By whispering, we literally mean ‘whispering’. Obviously, this is not to be allowed, yet it happens. Also, it’s a fact that several years ago, we dealt with a sales person trying to bribe us, as realtors. Know that builders have set prices for their homes. Often in the end, you are not getting any money off; the sales person just made it appear as such. Also a builder ‘throwing in’ upgraded appliances is a well known sales tactic.
Always get a home inspection done, also on brand new homes
Get a home inspection on a brand new home
At last, the question, should you perform a home inspection on your brand new home? Our answer is YES! Always have a home inspector come in, before waiving that condition! Builders will tell you it is not necessary, but our experience teaches it is very necessary.
The bottom line is there are three important pointers when buying a new home and dealing with builders:
- Think twice before entering a show home on a sunny afternoon, without your realtor. You may waive your rights of having your own representation.
- Always get a home inspection done, also on brand new home.
- Discuss commissions with your agent. Make sure you know upfront which builders pay full and/or partial commissions as compensation to your realtor.
This article is an introduction to buying a home, directly from the builder. If you have any questions or need legal advice about buying from the builder, seek a licensed realtor or a lawyer for the best advice.