New Home Sales Up... Due to a 10% Secret?

Cnn reports that new home sales are actually up for the first time in 5 months while actual median price is down 1.3% over last year. I suspect part of that reason may be due to the builder aggressively courting real estate agents again... and I mean aggressively.

There are some projects where builders are offering up to 10% real estate commission to agents for their home buyers. I don't have to tell you that agents will "highly suggest" these properties to their buyers do I?

Let's see... sell three houses at 3% commission or sell one at 10%?

Do you think it's fair for a home buyer to pay a 10% premium on a new home to subsidize the cost using of their real estate agent?

Why are builders offering so much? Simple, to keep home prices up for as long as possible. It's easier for builders to offer 10% commission to agents and a $20,000 credit towards flooring than allowing prices to come back down.

Also, in many projects the builders are competing directly against investors who purchased a previous phase and now want out. These investors may have the properties listed with an agent and offering 3% commission, so to insure that the builder gets the buyers they are keeping the price the same and just pumping up the commission.

This is also the same reason why many real estate agents are saying real estate commissions are actually increasing.

If home buyers were aware of this, would they still purchase? Do you think there should be proper disclosure as to buyers agent commission back to the buyer?

For prospective home buyers reading this... I will be posting a "how to" guide on how you can save yourself thousands of dollars when purchasing a new home, so stay tuned.