Upon entering the model home sales office (is this really going to be converted back to a garage someday?), you are greeted by a well-dressed, personable sales consultant, who asks you a few basic questions and ushers you into their first model home. You have received some appropriate literature and have started your tour. But who is this person? Are they the same as the agent who sold your house a few years back? How are they paid, and do they need to have a real estate license? Who do they work for; themselves, or the builder?

Believe it or not, these are very commonly asked questions. They can be answered in generalities, but it must be understood that all builders pay and hire agents differently. Usually, the agent of a new home subdivision must be licensed in the state in which he or she sells, the same as a re-sale agent. Some agents entering the world of new home sales have had an exposure to residential sales, and some may have had no experience at all. Many start off as new licensees in secondary, or support positions to learn the ropes from a veteran agent, and this type of sales does differ significantly from other types of real estate sales. Sales hosts, or greeters, may be unlicensed, but are there to assist the lead agent in the distribution of brochures and answering of very general questions. Usually, they are not permitted to quote prices for homes or interest rates on loan programs.

Builders who hire in-house agents (employed and managed by the builder) are usually paid a percentage of the closing revenues from each home he or she sells, or may have participated in selling. This can range in today's market from .50% to over 2.5% of the total sales price, depending on whether the builder pays a base salary, and if the subdivision is single or dual agents. There are many variations on this theme, as I have mentioned.

In general, the compensation per closed sale can be significantly lower than the re-sale agent's average commission, but is (hopefully) made up in numbers. One of the major differences between the two positions has to do with product knowledge of the particular homes the agent sells. In new home sales, as with other types of tangible sales, the new home consultant is expected to know just about everything there is to know about the land, construction materials, neighborhood, and the builder he represents. The concern here is with the product, assisting the builder in marketing and selling its homes effectively on the front lines. Much of our economy is affected by new housing starts; you may hear this statistic quoted periodically in the news. New home construction is one of the "straws that stir the soup", so to speak. But listing the industries and lives affected by this industry would take too much space to address here.

Another way new home consultants are employed may be by independent marketing and consulting firms. These firms may have several builders as clients, and have arranged to provide their builders with effective sales personnel, help plan new communities, create advertising campaigns on their behalf, and even furnish the model homes, so that the builder's main focus is on building homes, not managing the marketing and sales of them. These companies offer services such as feasibility studies, (what product may be appropriate for a particular area?) forward planning (assistance with land acquisition) and keep builders apprised of the competitive market surrounding their new homes. Salespeople in the employ of marketing firms may be moved from builder to builder, depending on available projects, inventory, and the best agent/builder match. Payment to agents employed by marketing firms is similar to in-house employment compensation. There are, however, other differences that have to do with liability issues in representation, with the builder and marketing firm usually kept exclusive of one another.

Re-sale agents encompass a much broader base of real estate sales. They may represent buyers seeking both new and re-sale homes, but also represent sellers of existing homes. They must have expert knowledge of many neighborhoods, and network with appraisers, inspectors, lenders, and other agents in a position to participate in their livelihood. They create their own incomes by the leads, relationships, referrals, and marketing efforts they performs themselves. Commissions are paid almost exclusively at the close of escrow on all their transactions. The variables involved in bringing a re- sale transaction to its close may be much more involved than in new home sales, and the liabilities for their actions rest with both their own agency and their broker-managers.

Personable, ethical, well-versed real estate agents, whether they sit in the garage of a model home, or and open house in an established neighborhood, are usually well known in their industries in a particular area. Although their commissions and loyalties are important to them, they usually have one commonly outstanding trait that generates their success -- putting their clients' interests and needs ahead of all other considerations.

Published: September 25, 1998

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A veteran of the real estate and homebuilding industries since 1986, Dena Kouremetis first joined Realty Times as a new homes writer in 1998. Since then, she has authored four books, written consumer columns on new homes issues for websites and newspapers all across the country, contributed to builder trade magazines, appeared as a guest expert on several radio shows and even created a ten-chapter podcast for LendingTree.com’s homebuilder website, iNest.com, now available on iTunes, entitled Uncharted Waters; Navigating the Purchase of a New Production Home. Kouremetis recently joined her local Folsom, CA Coldwell Banker office as a broker associate while continuing to write for the real estate industry. For the past three years, she has been training real estate agents for both the resale and new homes industries, putting her experience, research expertise and gift of expression to work to help others entering the business.