BIC TIP #1307: The Builder Referral Form 731

Your buyer just bought a beautiful piece of land and plans to build their dream home on it. You helped with the land, but what about the house? Stephen Long, your Notorious BIC, says if you want to be paid on the cost of the build, Form 731, the builder referral form, is your friend.

The Land Sale Is the Only Sale

When you help a client buy land and they plan to build after closing, the transfer of that land from the seller to the buyer may be the only real estate transaction in the whole process.

Many construction-to-permanent loans allow the builder to draw funds and build the house until it is completed, without another deed transfer. No more transfer means no more real estate transaction for you to be paid on.

Enter Form 731

Form 731 is a form you can provide to the builder you connect your buyer with. It sets up the builder’s agreement to pay you a referral fee based on the cost of the build.

Without something in writing, you are relying on a handshake and good intentions. With Form 731, the expectations are documented before the builder starts work.

Get It in Place Early

Timing matters. Introduce the builder referral form when you are connecting your buyer with the builder, not after the foundation is poured. Everyone should understand the arrangement from the beginning.

As always, be transparent with your client about any referral arrangement, and follow your firm’s policies for how referral compensation is handled. Your broker-in-charge can walk you through the process at your firm.

The Practical Takeaway

If your buyer is purchasing land to build a home after closing, remember that the land transfer may be your only transaction. If you intend to be paid on the cost of the build, use Form 731 with the builder you refer, and get it signed early. It is the simplest way to make sure your work on the front end is recognized.