If you are a REALTOR® looking for some unusual but timely business advice from a banker, E.J. Achtner, Senior Vice President of Bank of America, has some for you.
"Education, training and relationship-building is essential to tapping the new homes market."
Why is a banker suggesting new home training to Realtors?
According to Achtner, "many builders, regardless of their size, are taking a much more collaborative view of partnering with Realtors than in the past," he said. "And we encourage our builder customers to do so." The timing for this advice couldn't be better.
According to the National Association of Realtors' 2013 Buyer Profile Survey, 66% of all new homes sold in 2013 were to prospects introduced to the homebuilder by a Realtor. To clarify, Realtor prospects purchased twice as many new homes as those who shopped for new homes without a Realtor.
The implication is clear: Realtors bring ready, willing and able buyers to new homes sales centers. Hats off to homebuilders who placed consistent commission policies over the temptation to reduce or eliminate co-broker programs when the market improved. Marketing consultants and the Realtor community expected just the opposite.
Historically, homebuilders have greatly reduced or eliminated sales commissions in good markets, but not this time.
Tim Costello, Chief Executive Officer of Builder Homesite Inc, a builder-advocacy consortium of 30 production homebuilders, said that their 2012 studies show that 84% of potential homebuyers will contact a Realtor to help them with the buying process.
NAR's 2013 study said that the number was 88 percent. Costello says that home builders are realizing that existing homes are their main competition and that Realtors control the home buyers, whether for new homes or resales.
As home builders stabilize their commission policies, they are looking for lenders who will offer the same consistency to them.
"In a growing housing market, such as we are in now and I believe will be for years to come, home builders are constructing model centers, opening new phases, buying and developing land- all in the face of sales, weather, and economic variables.
"They need to know that through it all, they have a lender that will consistently perform on time and on schedule."
To this end, Achtner said Bank of America provides a wide array of builder services and products for both the builder and buyers that goes far beyond mortgage loans.
His advice to local home builders is simple and straightforward: Get to know your lender's local builder representatives but don't go in thinking there's a one-size-fits-all solution.
"The biggest mistake builders make with lenders is to believe rumors they hear on the street about what a certain lender is offering or not offering," Achtner said. "Financial products change, sometimes dictated by the market, sometimes by 'the regulatory environment'."
According to BHI studies, 19% of all shoppers will buy a new home, 46% will purchase a resale, but 35% are indifferent, meaning they will consider purchasing a new home or a resale. In other words, 54% of the market will either purchase or might consider purchasing a new home.
Realtors and home builders alike can expect a growing number of home shoppers to request visiting new home sales centers, thanks to the multimillion-dollar marketing campaign - Start Fresh, Buy New - rolled out by Builder Homesite, Inc. to convince home shoppers to buy 'new.'
In August, Realtor.com began listing new home inventory side-by-side with resales. Approximately 20 MLS groups around the country are now providing the same services, with more expected to do so in 2014.
The builder/Realtor gap is closing fast.
Achtner's position is clear and benefits both Realtors and builders. He strongly recommends that builder customers reach out to local Realtors, but also rightly advises Realtors to learn how to work with new home buyers and home builders.
"Learning about new home credentials via certification and new home courses represents added value to today's home buyers who are actively looking for new homes help from their Realtor," he said.
Unusual, but much needed business advice, for sure.