But Watch Out For That Clawback Provision

If you want to get the attention of Buyers’ agents, offer to pay them more.

Or faster.

carrotThat’s the strategy of at least one local (Golden Valley) builder, whose yet-to-be built new construction homes are listed on MLS now, but won’t be ready for occupancy until closer to Thanksgiving.

Pay Day Lag Time:  6-8 Weeks vs. 6-8 Months(!)

Specifically, they’re offering to pay Buyers’ agents their commission at the time the Purchase Agreement is signed.

That’s instead of at closing, as is customary.

That timing difference doesn’t matter with existing home sales, because the typical lag between the PA and closing is 6-8 weeks.

By contrast, new construction closings can lag 6-8 months.

Commission Fine Print

Which raises this one not-so-little question:  what happens if the builder pays the Buyer’s agent up front and the deal doesn’t subsequently close?

I actually have no idea how the builder plans to handle that unhappy-if-remote possibility.

But, if I were a Buyer’s agent, I’d check the fine print to make sure that any check I cashed this Spring couldn’t turn into a big IOU late Fall, just as most Realtors’ closings (and paychecks) are slowing down for awhile . . .

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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