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Steve McLinden, the Bankrate.com Real Estate AdviserBroker's commission can be buyer's discount

Dear Real Estate Adviser,
I am contemplating buying a condo directly from the builder. The builder advertises "Brokers Protected." What exactly does this mean? If it refers to a cut of the commission, can I get the same discount? I plan to use a real estate attorney regardless.
-- Annie V.

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Dear Annie,
A promise of "brokers protected" or "agents protected" on signage or other marketing space usually means that the seller -- the builder in your case -- is willing to pay a commission to a broker or agent who brings in the eventual buyer. Property listing agents and rental management companies often make the same "protected" offer as an incentive to broaden the buying universe, meaning they will share commissions or pay a set fee if an outside agent brings a buyer or tenant to them.

You will probably see this kind of offer more frequently in the coming months, should the current, flat housing market that prevails in many parts of the country continue as expected. These days, many for-sale-by-owner, or FSBO, home sellers are also offering similar protections to encourage buyers' agents, who can earn a normal commission -- or close to it -- if they can produce a buyer.

The reason the word "protected" is used is because there are numerous ways to weasel services, leads and other information out of an agent before callously cutting him or her entirely out of a final deal. Most residential agents who have been in the business for a while can recount such tales.

Since you are coming to the builder on your own here, the "broker protected" issue is not really relevant. But you have wisely picked up on the fact that the builder is ready and willing to make price concessions to sell condo units. Try telling the builder you are willing to proceed without an agent if you can receive -- as a discount off the price closing costs -- a hefty chunk of those commission monies that would have paid a broker who may have represented you.

But be wary. A few builders may try to nick you with extra fees and assessments to offset your potential gain. For that reason and many others, your plan to use a real estate attorney to review the fine print is a sound one. Having some type of advocacy in a major purchase such as a new house is usually worth the peace of mind, if not a substantial sum of money.

Good luck in your negotiations. I sense you will fare well.

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "buying, selling a home" as the topic.

Bankrate.com's corrections policy -- Posted: July 15, 2006
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