Phase II Builders Endeavor to Prevent Buyer’s Agent Involvement
It seems so long since there has been any meaningful new construction on the Westside, but in Playa Vista Phase II, which is currently under construction, the homebuilders are again showing that they will do whatever it takes to scrape a profit at the expense of their customers. All of the builders that will be selling homes to the public have a policy that the buyer’s agent must be present to register their buyers on the first visit to the sales office. This is a well-known general policy for brokers and it is relatively fair and reasonable to only pay commission to someone who is the procuring cause of the buyer knowing about the property if the policy is made clear ahead of time.
The problem is that with these new homes, the builders are going well out of their way to avoid cooperating with brokers well before completion of the project or even the opening of a sales office, while smiling to brokers faces and issuing brochures proclaiming the broker community “Partners in Success”.
On this registration form from one of the builders received at the recent builder meet-up in Concert Park, it was brought to my attention that not only does the agent need to accompany the prospective buyer on their first visit, as expected, but if the buyer put their contact information on an interest list with the master developer online ahead of time or came to the builder meet-up and put down their name on a form, even prior to the sales office being open, then the agent cannot represent the buyer. There is no mention that signing up will prevent you from obtaining outside representation on the Playa Vista website or on the prospective buyer registration cards. A prospective buyer who merely wants to learn more about a project and who ultimately chooses to buy, will be prohibited from having representation unless they pay for their own. With all the social media coverage of this project, the ease of online interest lists, and the highly-advertised builder meet-ups, it has become almost impossible to prevent people from registering on their own prior to the sales offices even opening even if a broker-client relationship is previously established.
Even if the agent was the one who referred the prospective buyer to the website or the builder meet-up, they now may lose a client with whom they may have worked for a while due to a technicality or dirty trick. This is not only disappointing for agents, but terrible for buyers who now how no help in negotiating, no one (short of hiring an attorney or paying a buyer’s agent themselves) to interpret the hundred plus page developer-written contract and disclosures that are not always in layman’s terms and often contain non-customary buyer fees and passive contingency removals, no one to advise regarding inspections and supervise completion of repairs for the buyer, and potentially no one to provide assistance with closing costs as agents may do, especially if the agent is also representing the buyer on the sale of their current home. Instead that extra 2-3% lines the pockets of the shareholders and corporate execs, not contributing to local small business and being disbursed through the local economy.
For the sake of higher profit for the builders and keeping buyers quiet and ignorant to less than favorable terms, these builders have gone to great lengths to trap all prospective buyers into signing up for information without informing of the implications of doing so. This may sound like a bitter rant from a broker who is ultimately going to lose business from these builder policies, and admittedly there is frustration, those of us who survived the downturn will still thrive in the much more active current market. The builders definitely do deserve to make a profit, however by sneakily cutting out the buyer representative, the consumers are the real ones who pay the penalty for simply signing up on an interest list.