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Realtor Commission on New Build?

Goodoer

Well-known member
Feb 20, 2004
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GTA & Thereabouts...
To start this question, I'll state that I have nothing against the Realtor.

We're still within our 12 month Buyer's Representation Agreement with our Realtor (initialed) at 3%. We signed the papers 7 months ago on the way to visiting one particular house with the Realtor. We were in no rush, the thought being that we'd be looking at resales this year... Recently, we ended up seeing a Builder's development in the paper (within the agreement location), put our email address in, got a call and bought the house. Took us about 30 minutes to sign the papers with the Builder. There was no help from our Realtor and I didn't call him as he wasn't needed (and I incorrectly thought the agreement expired).

Using approximate numbers, do I owe now owe our Realtor $20,000 in commission fees? I'll be waiting about 9-10 months for the new house to be built. The Realtor spent about 3 hours taking us that one house 7 months ago... I realize a deal is a deal, but to me, this just seems insane to pay this type of money for such little time spent. We would've bought this house anyways as we really liked it - I just do not want be 'taken'.
 

Rono

Average Sized Member
Oct 21, 2005
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I have not heard of paying commission on a purchase, just on a sale. Maybe I am missing something here.
 

Thunderballs

New member
Sep 18, 2002
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Toronto
Typically the buyer (you) doesn't pay anything to your realtor since his commission comes from the commission that the seller pays to their selling agent. Usually the two agents split the selling commission. However, I would give your agreement a close read within the context of this situation to see if you agreed to something different. If that is indeed the case , I would go see a lawyer prior to cutting a big cheque. Having a lawyer review the agreement and advising you on a strategy would not be that costly.
 

Anynym

Just a bit to the right
Dec 28, 2005
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Just because you chose to not involve your realtor doesn't excuse your commitments through your contract, assuming you didn't include a clause saying "only if I need you".

Still, the realtor might be willing to reduce the amount as a show of good faith, as no additional efforts were required of him.
 

Barca

Active member
Sep 8, 2008
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12 months??? Geez that's a long time, I usually see 3 month agreements. And like Rono asks...normally its the seller that pays, usually for a listed property. New builds aren't listed.
 

Goodoer

Well-known member
Feb 20, 2004
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Here is a link to the 'standard' fill-in-the-blank agreement:

http://www.norfolk-mls.ca/PublicSitesIncludes/documents/Simcoe/Buyer_Representation_Agreement.pdf

I read the Builder to be the "Seller" in this case and that having it MLS listed is not a factor.

It didn't bother me about the term. The Realtor seems like a good guy - we would've entered into an agreement at this time anyways (making the term irrelevant in our grand scheme/timing). I do not believe the seller always pays (thus the clauses in the OREA form). From what I heard, the developer just adds the fee to the price...

I understand that I could be very well be 'caught' in the contract. It just riled me up a bit that a brokerage could make that kind of money for such little required service. While the fee is still 'high', the expectation would've have been to see the Realtor working to get us our 'dream home'. In our minds at least, we moved quickly to snap up a lot & plan that seemed to be desirable.

I do understand that the Realtor is not making all the money - he has a brokerage to pay, etc. $6Kish an hour seems unreasonable.

Thanks for the feedback.
 

Moraff

Active member
Nov 14, 2003
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Looking at the standard contract from the link above there's a couple of clauses that jump out. In Section 2:

"If, during the currency of this Agreement, the Buyer enters into an agreement to purchase or lease any property of the general description indicated above, the Buyer agrees that the Brokerage is entitled to be paid a commission of.......................% of the sale price or ..................................
The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated above."


And in Section 4:

"The Buyer agrees that, during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer that came to the Buyer’s attention from any source whatsoever, and all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller. If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above that came to the attention of the Buyer during the currency of this Agreement and the Buyer arranges said agreement during the currency of this Agreement or within the Holdover Period after expiration of this Agreement, the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 of this Agreement, payable within (5) days following the Brokerage’s written demand therefor."

But as has been said, if your contract is not the standard you may want to review it, but it does seem that a call to your agent is in order.
 

james t kirk

Well-known member
Aug 17, 2001
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Never sign anything with a realtor if you are a buyer.

If you like them, you keep using them and if and when you put an offer in, you can sign some damn paper.

If they refuse to do that, find another realtor. There are plenty out there.

Real Estate Agents and their respective companies remain the greatest scam of all time.
 

gymbum1

Member
Dec 27, 2006
883
1
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Take the paper work to your lawyer. He must reviewed the agreement from the builder. You have 10 day for this. Get his opinion on this. Just make sure your lawyer is a real estate lawyer that closes lots of homes and specializes in real estate.
 

DanJ

New member
May 28, 2011
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It used to be that all realtors worked for the seller, even the one you brought along. That's why buyers agency and sellers agency was created. Now you can tell your buyers agent things and they don't have to disclose to the selling agent. It used to be that if you told your realtor "I'm offering $300,000 but I'll go to $320,000", the agent was required (whether they did or not was another matter) to tell the other agent this. Now they don't because the buyer's agent is working on your behalf. Most agents will require you to sign a buyer agency form before spending any time working with you, as a form of protection for themselves. Any realtor can tell you stories of time wasters, or people wanting to see a place quickly and they just grab the first agent they can find to let them in the door, and then never call them again. It is very important when you sign buyer agency papers that you specify their fee will be the specified selling agent's share of the commission on whatever property, not a flat fee, and not a specified % of the selling price. That money is paid out of the proceeds of the sale by the seller. You can also specify exclusions, such as property you looked at previously, or even if you end up buying directly from the seller without involving a realtor.

You also should never deal with a builder direct. We did for our first home and never again. Our second home, which was also a newbuild, we had our agent involved and there were a lot less issues later. The builder is going to do whatever they can for themselves and are certainly not looking out for your interests. Not a lawyer and not a realtor, but from the little we see here, I think the OP owes his realtor.
 

Tangwhich

New member
Jan 26, 2004
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Never sign anything with a realtor if you are a buyer.

If you like them, you keep using them and if and when you put an offer in, you can sign some damn paper.

If they refuse to do that, find another realtor. There are plenty out there.

Real Estate Agents and their respective companies remain the greatest scam of all time.
I second what the captain says (except that I think bottled water is a bigger scam). NEVER sign a BRA, there are absolutely no upsides and can only work against you.
 

Tangwhich

New member
Jan 26, 2004
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You also should never deal with a builder direct. We did for our first home and never again.
This might be true for a house, but I couldn't disagree more if you're purchasing a condo since you get 10 days to back out. Get your lawyer to check out the contract and throw back amendments you want to the builder. An agent brings nothing to the table in this transaction. In fact it works against you as I've received discounts for NOT using an agent.
 

red

you must be fk'n kid'g me
Nov 13, 2001
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why would u sign such an agreement?

likely the realtor will never know.
 

Goodoer

Well-known member
Feb 20, 2004
2,752
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GTA & Thereabouts...
Dealing with the Builder hasn't been an issue. You have 5 days to review and send it to a lawyer for their input. The Builder already had the changes implemented as if they were expecting it.

In my case, the BRA was signed over a quick coffee on our way to see that one house. It never even dawned on me that it would apply to a new build as buying from a Builder is as simple as can be. I'm not a lawyer. Looking back on things, I was naive and stupid and should have refused to sign on the spot and went home. Hindsight is 20/20. I would not be writing this if our Realtor was busting his hump trying to find us a place and we bought a new build instead.

If anything, perhaps this thread helps out others? I've learned a lot.

I'm pretty sure the Realtors have access to see if someone has bought a home - as the Builder deals with their own Realtor behind the scenes and things are recorded.
 
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