Do Realtors Get Commission on New Construction in the USA?

Understanding Realtor Commission on New Construction Homes

In the United States real estate market, new construction homes have become a popular choice for many homebuyers seeking modern design, energy efficiency, and custom features. However, one question arises frequently in both buyer and agent circles: Do realtors get commission on new construction homes? The answer is yes—realtors can earn commission on new construction, but the process and structure differ from traditional resale transactions.

How Realtor Commission Works in New Construction Sales

When a homebuyer chooses to work with a real estate agent during the purchase of a newly constructed home, the commission is typically paid by the home builder, not the buyer. Builders view cooperating agents as valuable partners who bring qualified buyers to their developments. This commission is usually built into the builder’s overall marketing budget and does not increase the purchase price for the buyer.

In most cases, the standard commission rate for new construction mirrors that of traditional home sales—ranging from 2.5% to 3% of the purchase price. However, this rate can vary based on the builder, the region, the level of inventory, and the negotiation at hand. Some builders may offer bonuses or higher commission rates during slower sales periods or for quick move-in properties.

Builder Policies on Realtor Commissions

Each builder operates with its own set of policies regarding agent commissions. While some national builders are consistent and transparent, others may vary depending on the local market. Generally, the commission process follows these steps:

1. Agent Registration: Realtors must register their clients with the builder during or before the client’s first visit. Failure to do so may result in forfeiture of the commission.
2. Sales Process: The builder’s on-site sales team typically facilitates the transaction, but the buyer’s agent assists with negotiations, inspections, upgrades, and contract reviews.
3. Commission Payout: Upon successful closing, the builder pays the agreed-upon commission directly to the buyer’s agent’s brokerage.

Why Builders Pay Commission to Realtors

Homebuilders benefit greatly from cooperating with real estate agents. Here’s why:

• Increased Buyer Traffic: Realtors bring qualified buyers who are actively searching.
• Smoother Transactions: Agents help manage buyer expectations and coordinate the complex new construction process.
• Reduced Marketing Costs: Builders can reduce advertising expenditure by leveraging agent networks.

In return, builders are often willing to invest in competitive commission structures to attract agent participation.

What Realtors Do During New Construction Transactions

Unlike a resale transaction, the purchase of a new construction home involves a series of unique steps. Realtors play a critical role in guiding clients through these complexities:

• Builder Comparisons: Agents provide insight into various builders’ reputations, pricing structures, and construction timelines.
• Lot Selection and Upgrade Negotiations: They assist clients in choosing the right lot, floor plan, and negotiating potential upgrades or incentives.
• Contract Review: Builders often use their own custom purchase agreements. Realtors help ensure that buyers understand all terms and contingencies.
• Construction Oversight: Throughout the build process, agents often check on progress and help resolve any disputes or delays.
• Final Walkthrough and Closing: Realtors assist during final walkthroughs, help ensure punch-list items are addressed, and support buyers through closing procedures.

Challenges Realtors Face in New Construction Sales

While there are opportunities, selling new construction comes with its own set of challenges for realtors:

• Registration Policies: If agents are not registered at the buyer’s first visit, they might be denied commission—even if they played a major role in the purchase.
• Limited Negotiation Leverage: Builders often have less flexibility on price, preferring to offer incentives or upgrades instead.
• Delayed Timelines: Construction delays are common, which can impact agent scheduling and cash flow due to postponed closings.
• Sales Agent Control: Builder representatives sometimes act in the builder’s interest, requiring the buyer’s agent to be extra vigilant in protecting the client.

How to Secure Commission on New Builds as a Realtor

To ensure fair compensation and smooth transactions, real estate agents working with buyers on new construction should follow these best practices:

• Register Your Client Early: Always accompany or pre-register your client before they visit a model home or development.
• Get Commission Agreements in Writing: Request a written agreement from the builder specifying the commission structure.
• Communicate Clearly: Maintain regular communication with the builder’s sales agent to stay informed about deadlines, decisions, and required documentation.
• Document Everything: Keep a paper trail of communications and registration forms to protect your commission claim if disputes arise.

Are Commissions Negotiable on New Construction?

While builders typically set standard rates, commissions on new builds can sometimes be negotiated, especially in slower markets or during overstock periods. Agents with a strong track record or multiple clients may have more leverage in negotiating better terms. However, these negotiations must be handled with professionalism and prior to signing any purchase agreement.

Can Buyers Purchase Without a Realtor?

Yes, buyers can choose to purchase new construction homes without a real estate agent. However, this decision should not be taken lightly. Builder sales agents work for the builder—not the buyer—and their goal is to protect the builder’s interests. Without a realtor, buyers may miss out on:

• Expert negotiation support
• Professional guidance through construction
• Access to comparative builder analysis
• Help navigating upgrades and inspections

Despite this, some builders may offer additional incentives or discounts if the buyer comes unrepresented—though these are not always better than what a skilled agent could negotiate.

Final Thoughts on Realtor Commission in New Construction

In summary, yes, realtors do receive commission when selling new construction homes in the USA, and their involvement can provide immense value to both buyers and builders. While policies vary by builder and market, agents who follow proper registration procedures, understand builder contracts, and advocate for their clients can benefit from solid commission structures while providing a critical service in a complex transaction.

For buyers, working with an experienced realtor on new construction is a smart move that ensures expert representation throughout the building process. For real estate professionals, understanding the nuances of builder relationships and commission rules is essential for maximizing income and client satisfaction.

Always ensure that commission agreements are documented clearly, and advocate professionally to protect your client’s interests and your rightful compensation.