Six months ago, many (most) new home builders were slicing commissions paid to Realtors representing buyers. Why? Simple. They didn’t need Realtors to bring them buyers. As reported in this blog and ThompsonsRealty.com, the builders had ridiculous waiting lists—people were clamoring for lots to build homes on. Builders weren’t selling to “investors”, they weren’t paying real estate agents (many cut the commissions to ZERO). They had plenty—too many—buyers for new homes.

 

Fast forward to today. Most builders are not only back to offering buyers agents the “normal” (3%) commission (also called a co-broke) but many have raised the co-broke to record levels, particularly on spec homes. Here’s a sampling of mailings I’ve received in the last month:

Feb 7: An invitation to Realtors to view a new development where we can “Enjoy hors d’oeuvres & desserts, a wine & soda bar, autographs…”. Autographs???
Feb 8: “In the past two weeks, 50 more subdivisions have returned to the traditional co-broke!”
Feb 11: “Homes by Towne is Offering 4% Co-Broke on Specs and GREAT Buyer Incentives!”
Feb 13: “US Homes is offering 6% Co-Broke on Select Inventory Homes!”
Feb 23: “We stuck by Realtors all of 2005 with 3% Co-Brokes. Now offering 4% on 56 Specs in 22 Communities!”
Mar 1: “4% Co-Broke & Huge buyer Incentives By Courtland Homes”

And it goes on and on and on.  So these builders and developers greedily sliced real estate agent’s pay checks to nothing, and jacked up their prices to buyers. Just six months ago they offered NO buyer incentives and turned people away. Now these same builders are all scrambling like feral cats after a rat to attract buyers. Agent incentives, buyer incentives, you name it. Heck, they’re wining and dining us just to get us to come out and LOOK at their new model homes!

Can you say “overbuilt”? Can you hear the builders saying, “Holy crap, we built a jillion of these things! People we lining up around the block for them six months ago, offering tens of thousands more every week!  What are we gonna do now?!|?!” Can you say “panic”?  The builders and developer’s greed has lead to a glut of new homes on the market. These dolts skewed the market when it was in a frenzy and now their greed is helping shove the market the opposite direction.

 

Sometimes I just wish they’d all pack up their pretty model homes and just drive away to the next market they decide to whack.  Laugh at me when I bring you a buyer six months ago and now you’re going to kiss my ass to bring them to you? Gimme a break!