Since CA is not a “Designated Agency” State, you wouldn’t see that there. It can be used effectively, but only if the “builder paid Buyer Agent” is free to promote any property on market equally with the builder’s product, and even recommend that the buyer NOT buy the builder’s product. That’s where the concept fails, if the Buyer Agent is not free to do that.

But in the end it becomes a “Buyer Agent” like Redfin, where the Buyer Agent doesn’t necessarily discuss IF the buyer should buy it in the first place. So it may be “of value”, but not a 3% value to the buyer.

I totally agree with you on the builder part in your Par 2, what I don’t get is why a consumer looking at a 50 lot site plan, who is not in a hurry, doesn’t seem to see more than 2 available lots. I just say, well I want one of these five that are not available, and stop in often and wait until one of the better ones can be had…which is someday…just not today. I don’t question the builder’s tactics, I’ve been around the block and know how that goes. I question a consumer not understanding that “as tactic”.

As to “there’s always another builder to…”, not really. Limited close in “land” issues. If there were plenty of land to build on, yes. But Seattle Area, both in Seattle and in “the Zone” near Microsoft…no real vacant land to speak of. No “builder after builder” scenarios like further out in Monroe and Sultan and some other further out areas.

On your last paragraph, the buyer is paying the commission, not the builder or seller (new mindset) so yes, the buyer WOULD want to pay a commission for THAT. The seller does not get to pick the buyer’s agent, nor does the seller get to have the buyer’s agent do what the seller would want a buyer agent to do. Otherwise, how can you call that person “a buyer’s agent”.

The system as it exists now wants to rationalize that a “Buyer’s Agent” exists for the seller’s benefit and is paid by the seller. That has to stop. It makes no sense at all, and never did. The Buyer Agent Fee in the price is the fee for buyer representation. The Seller can take it out of the price and sell to buyer direct at 3% less, or let the buyer use it for a buyer’s agent of buyer’s choosing. But calling someone hooked up with the builder that buyer’s agent, is deceiving, unless that agent is free to say “don’t buy this builder’s house”, which would be a difficult position for that agent to be in, if they are hired by the builder to be in that space.

On the other hand Ardell, in a slow market a builder isn’t going to build all of their lots at once. There isn’t much that’s worse for builders than standing inventory. So they (at the least the privately held companies) will slow the pace of building to minimize standing inventory. Some lots will be more desirable than others, and if I were the builder, I’d sure mix in the dogs with the good lots and try to control supply and demand to create urgency.

EconE, you can’t blame them for that. Just wait to buy that diamond. If consumers could keep their pants on and wait, demand would fall and prices will be reduced to stimulate sales. That’s what happened here with the market slowdown. Otherwise, shop around. There is always a builder more motivated to move homes. If you have to have it now, you pay the price.

One other thought on registration, just to play devil’s advocate. The builders in our area require registration on the client’s first visit in order to avoid the scenario where a buyer plugs in a friend or family member late in the game for an unearned commission. Even when the agents are good, they have little to do given the way builders price. They have an annoying (to the builder) tendency to look busy and justify their commissions by stirring sh*t up during the transaction, ultimately creating an unhappy client for the builder. Would you want to pay a commission for that?

If I would guess which property it is from the clues of other being available and 8-9 sold, I would think Camwest’s Tyler Creek in Redmond.

The factors that I’m aware of that would drive the builder to build out at a steady pace is holding costs …not only of the land, but also of their sub contractors. I have no clue how agreements between builder and their subs are written, but if the builder has to go idle for whatever reason (waiting for permits or curing problems with the city) …then I imagine they’re still paying for the subs..regardless if they’re doing work. So it’s in the best interest for the builder to keep a steady pace of construction. If this isn’t the case with the subs, ..they’re still paying interest on the unimproved lots.

The flip-side to this is…if they build out too fast and flood the market with too many new homes (a concern of mine up here in south snohomish county) then the builder has got not only holding costs of the land, but now they’re paying interest on the homes themselves. It’s a game of balance for each builder …balance between how fast they want to build and how fast they think they can sell.

The early phases of a development is usually testing the market. Release a handful …good idea to mix in the good lots with the average lots (or they’ll throw in a thing called lot premiums) …at a price and see how they do. If they sell too fast …. raise prices. Like you said in one of your posts …builder’s trying to create a mini-cartel. If you’ve got a highly desirable development, you can keep turning the price dial up gradually.

Now…it can backfire and this is where the buyer and hopefully the buyer’s agent needs to make an educated purchase decision. Two developments about a mile apart from each other came onto the market last year at basically the same time. Both developments had similar homes. Both off of major streets, Plat A was next to more commerical/multi-family areas while Plat B was closer to other residential. Plat A came on market probably average $30k more than they should have. Plat B came on maybe $10k under where they should have. Plat A floundered and prices fell. In that situation, any early buyers just got screwed. Poor decision…especially with a very similar development so close at a lower price. So…don’t take my …buy early in the development for the lowest price statement as law …you still have to be smart about it.

As for your question about reselling while the development is still slowly being built out. It depends. From a buyer’s perspective…let’s say the builder now has 5 other lots available and your house just came on the market. You most likely can’t price yourself at the builder’s current price…for one..you have a house that’s been lived in, whether or not the builder’s warranty is trasnferable becomes a question cause all the other homes will … most likely..have some sort of warranty ..will yours? and the fact the new homes are …well…new and yours is used ..maybe just for 6 months but it’s still not the same as brand spankin new. …so if prices haven’t climbed much since when you bough it, …i can imagine it definitely negatively impacting what you can sell yours for. I know of someone who bought a house in a high-end new construction development (lesson on how NOT to flip homes) and put it on the market for $50k more than when they bought it …right after they closed on it. Sat for I think 6 months till their $50k premium was whittled down to only a $15k premium …it was barely enough to cover just the excise tax ..let alone the 3% SOC they were paying plus whatever the listing agent was gonna get. Their problem, ..they purposely tried to create the situation you described EconE. They bought early and then wanted to sell while the builder still had a bunch of unbuilt or in-progress lots. Now…why would anyone in their right mind pick a resale that is obvious someone is trying to flip over something that is priced the same or maybe even lower (depending on any buyer bonuses the builder might have) but new. So it sat and sat and they ended up taking it off the market…selling the house they lived in at the time and moving into the house they tried to flip…and then having to underprice the house they lived in just to sell it quick …I guesss 6 months of double payments took a toll.

As for the mail issue ….in my development I was #3 or 4 to move in of 50+ homes and our mail was being delivered right away. ..just had to pick up the keys from the post office. In fact…I haven’t heard of any of my clients having to go to the post office to get mail..but then again…none of the developments were bigger than like…40 or 50 homes… so I don’t about some of those 100+ communities.

“The incentive to buy early in a development is usually they are priced lower. The side-effect is…you may not get the best choice of lots. Trade-off. Buy lower price and get so-so lots…. or buyer later at higher price and take a shot at a better lot.”

How long could this person potentially sit there in a lone house before others are built….and during this time even after another house or two is built…how would this affect resale value if the person needed to relocate and by this time there were only two or three houses on the land? It would seem like a ghost town to me.

Thank you because I found your post to be educational and full of possibility that I did not think about. I was thinking on a bigger builder scale and did not even think about phases. I will make a mental note of that for future reference. I agree with your views on agency and disclosure.

Hats of to Ardell for this learning experience!

This builder is trying to artificially control supply and demand. In a way…he is acting as a mini-cartel. Think about diamonds. The only reason they are so expensive is that there is a controlled supply. DeBeers is quite powerful and basically are a cartel in a way. There have been many instances throughout recent history where both Australia and Russia threatened to flood the world with diamonds…DeBeers put a stop to that from what I understand.

So…basically…you don’t have a choice…if you want a diamond…you are going to pay through the nose for it…there are no alternatives. (don’t bring up CZ…lol)

In this case however…there are different builders…and different lots.

It seems similar with some of the Downtown condominiums also.