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Chad Helms
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New Build / Realtor Commission Question

Chad Helms
Posted Sep 6 2023, 05:04

I'm a builder in Tennessee and was contacted by an investor who owned a lot for sale.  He asked if he could feature one of our homes on his listing to generate online traffic.  A couple weeks later, a realtor dropped by telling us her client was making an offer on the lot/house.  Her client wanted the lot and they had already created the offer for both the lot and house, but had questions about finishes in the new home build.  We discussed meeting with the buyers which we did a couple days later.

During our meeting, we discussed the build and determined we would draft them a different house with an approximate budget of 1 million dollars.  I also suggested they resubmit an offer for the land only since it was the only component involving the investor and then recommended they could put down a small deposit so we can move forward separately with designing drafts.  I then received contact info for the buyer from the realtor so I could reach out to setup a follow up meeting to discuss drafts.  As discussed, I then followed up directly with the client to setup the draft meeting.  I have since received a text from the realtor asking for all information to flow through her.  Her husband is also a realtor, but also a builder who builds 2 homes per year.  She then told me that both of them plan to attend our draft meeting.

Here are my questions - am I obligated to pay full commission to the realtor?  I'm looking for a genuine answer which is fair.  The investor pointed the buyers to us by including one of our homes on their listing to help buyers visualize a house on the lot and listed us as their a preferred builder.  The realtor is making commission on the lot which is now under contract.

Points to consider - we have a sales team and process that doesn't require realtors, but usually work with them on land deals.  We are a fixed cost builder and don't negotiate price of homes, but work with buyers to value engineer plans and make selections that fit within their budget.

During our initial meeting the realtor didn't say anything, but gave me some standard paperwork for construction specs and allowances.  I informed her we have our own process for this and wouldn't need to use her paperwork.

The realtor hasn't reached out to me to discuss her commission so there has been no conversation.  We're scheduled for our follow-up draft meeting tomorrow, but would like to have a separate conversation with her first to address commission details.

Should I expect to pay commission? If so, I believe a smaller percentage is fair considering the fact that she won't have much involvement in the process aside from her presence and desire to direct communication which can become sticky during a new build.

Thanks in advance for feedback/comments.

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