The real estate world is teaming with hundreds of independent and national chain discount brokerages and business models. The newest, in my experience, to flash on the scene is SnapAcommission.com. I found this company on google in a sponsored (paid) link which raised my level of skepticism. Here is what makes snapAcommission new and possibly a viable option for buyers.
The Model:SnapAcommission’s business model is based on representing buyers who are set on purchasing property from a home builder. Home builders are an attractive solution to many buyers for their willingness to negotiate upgrades, floor plans, add-ons, and in some cases provide the buyer with options in financing. Consequently snapAcommission only works with customers who are going to purchase from a home builder. According to snapacommission.com: “Many people are not aware that builders allow you to be represented by a Real Estate Agent for the purchase of a newly constructed home.”
In my opinion, snapacommission does have a viable point. The majority of new home buyers really do not understand some of the advantages and disadvantages to buying from a home builder. The savy home buyer may be best served by investigating snapacommission first for their value proposition-to be outlined below. The idea would be to use snapacommission as a “bargaining” tool when interviewing an “open” Realtor. The Realtor may be worth the extra commission monies if he/she can demonstrate and justify their capabilities.
The Pitch: SnapAcommission says that (in general) most home builders factor in between 2 and 3% sales commissions into the sales price of a new home. They then offer this commission to the selling broker/agent for bringing them (builder) a buyer. Here is where things get interesting according to snapacommission “We enjoy sharing 40% of this commission with our clients as they inevitably are and active part in the search for new homes. . . and we reward them for this.”
The following is the example savings provided by snapacommission:
I. Purchase price: $1,500,000
Commissions offered by builder: 3%
You get $18,000! ($1,500,000*.03*.4 = $18,000)
II. Purchase price: $1,500,000
Commissions offered by builder: 2.5%
You get $15,000! ($1,500,000*.025*.4 = $15,000)
The example is interesting and confusing to me because of one statement made earlier on snapacommission’s home page of their site: “Snapacommission.com will refund you up to 40% of this commission if you use one of our experienced agents to represent your transaction. ”
Where did those two ugly little words, up to, come from in this pitch? The entire site gives examples of a 40% savings on a 2-3% agents fee. That means that savings are on a sliding scale with the best that the home buyer can do is 40%. What are the rules constituting a savings less than 40%? That would require the buyer to make a through investigation.
The Rest of the Story: Snapacommission has page of conditions that I will abbreviate here. If you are thinking of using this service remember to review the conditions page in it’s entirety-please do not rely upon this summary to suffice your legal requirements. With that moment of “cya” let’s get to it.
1. Condition #1 is that a snapacommission Real Estate agents must, first, meet you and register with you at the sales office for the property the buyer is interested in purchasing. This notifies the builder that the buyer is being represented by an outside Real Estate agent.
2. The home builder has to offer at least a 2% commission to the selling broker/agent who is representing the buyer.
3. The snapacommission “rebate” must be approved by the buyer’s lending institution.
4. Buyer Agency Agreements with snapacommission must be in writing in accordance with California laws.
In my opinion, snapacommission is worth investigating. Always remember that a full service Realtor or Real Estate agent with experience in a specific market will be able to show you a much broader array of properties than a home builder with one site in one area. Also remember that the really solid professional Realtors, The Harper Team, earn their commissions through their expertise and knowledge of the “deal”, the area of interest, school systems, climate, building plans for an area, and many of the nuances that are valuable intangibles in purchasing a home.
If you have further questions please contact Dean Guadagni firstname.lastname@example.org