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How Much Commission Does a Realtor Make on New Construction?

When it comes to buying or selling a new construction property, many people wonder how much commission the realtor will make. The commission structure for new construction can vary from traditional resale properties, so it’s essential to understand how real estate agents are compensated in these situations.

Typically, realtors earn a commission based on a percentage of the final sale price. However, with new construction, the commission structure may differ. Instead of receiving a percentage of the sale price, realtors may earn a flat fee or a reduced percentage due to the unique nature of new construction transactions.

The commission amount for new construction varies depending on several factors, including the builder, the location, and the specific agreement between the realtor and the builder. It’s crucial for both buyers and sellers to discuss and negotiate this aspect with their realtor before proceeding with the transaction.

Here are some frequently asked questions regarding realtor commissions on new construction:

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1. Is the commission paid by the buyer or the builder?
The commission is typically paid by the builder as part of their marketing and sales expenses.

2. Is the commission negotiable?
Yes, the commission is negotiable, and both the buyer’s and seller’s agents can negotiate their fees with the builder.

3. Can the buyer’s agent negotiate a higher commission?
In some cases, the buyer’s agent may negotiate a higher commission if they bring in multiple buyers or have a strong relationship with the builder.

4. Can the buyer’s agent receive a commission if the buyer purchases directly from the builder?
Usually, the buyer’s agent must be present during the initial visit to the builder’s site to qualify for a commission. However, this can vary based on the agreement between the agent and the buyer.

5. Can the buyer’s agent receive a commission if the buyer uses the builder’s preferred lender?
Yes, the buyer’s agent can still receive a commission even if the buyer uses the builder’s preferred lender, as long as there is a prior agreement in place.

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6. Can the buyer negotiate a lower purchase price if they don’t use a realtor?
It’s possible, but it’s recommended that buyers use a realtor to ensure they have proper representation and guidance throughout the transaction.

7. What happens if the buyer’s agent doesn’t show up during the initial visit to the builder’s site?
If the buyer’s agent doesn’t accompany the buyer during the initial visit, they may not be eligible for a commission. However, this can vary based on the agreement between the agent and the buyer.

Understanding the commission structure for new construction is crucial for both buyers and sellers to ensure transparency and a fair transaction. It’s recommended to consult with a realtor experienced in new construction to navigate these specific nuances successfully.
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