Waiting Game

With so many homes for sale, brokers struggle to find buyers, no matter what commissions builders pay.

In June, Port Richey, Fla.–based Lex-ington Homes raised its broker commissions a percentage point, to 5 percent, as an incentive for Realtors to deliver buyers in markets that are “swamped” with excess resale inventory, says Eric Boyer, Lexington's marketing coordinator.

As builders scramble for business, broker commissions in some markets have more than doubled above the 3 percent that real estate agents typically fetch. But brokers can only be so effective in markets rife with unsold inventory. In April, there were 3.38 million existing homes for sale nationwide. In the first quarter of 2006, resale inventory hit a five-year high in metropolitan Denver, at 15,872 units, according to The Genesis Group, a market research firm headquartered in Englewood, Colo. Meanwhile, Van Metre Homes in Burke, Va., has reduced the price of its homes by $10,000 for buyers having trouble selling their old home, “so they have that in their pocket” to negotiate with, says Patricia Leader, Van Metre's executive vice president, sales and marketing.

In some markets, builders are competing with themselves. ICI Homes' community in Port Orange, Fla., which when built out will have 1,400 homes, usually has 20 active listings. In early June, it had 60, says Rosemary Messina, ICI's vice president of sales and marketing.

More builders are placing new homes on multiple listing services alongside resales. “About 18 months ago, we started noticing that our data for existing-home sales were being polluted by new homes,” says Walt Molony, a spokesperson for the National Association of Realtors. “This is symptomatic of what's going on in the market.”

Still, builders keep turning to brokers for help. Carol Kiel, director of sales and marketing for Syncon Homes in Minden, Nev., was thinking about partnering with agents in the Lake Tahoe area and paying them a specific commission if they sold a Syncon home in the valley 20 miles from Tahoe. She's not sure, though, whether this would work, because “brokers have told us before that ‘we'd love to bring in customers, if we had them.' ”