The nation's homebuilders are beginning to pick up a trend started more than a year ago on the real estate brokerage side of the business, initiating efforts to maintain contact with customers throughout their ownership of a home, rather than part company right after the sales transaction.

So-called concierge services on the brokerage side - which have been adopted by both major independents and large franchises - attempt to provide consumers everything from utility hookups to landscaping contracts in an effort extend communication between the consumer and broker.

Often, brokerages establish "preferred vendor" agreements by which the brokerage collects a referral or advertising fee from the service provider.

More and more builders are now experimenting with the same types of services - and believe they may even have a leg up on brokers.

According to ToolBase News, an NAHB newsletter for the building trades, some builders not only have begun offering basic concierge services, but they have gone high tech as well - offering Internet, cable and telephone systems throughout new developments.

Builders also have the advantage of developing neighborhoods that cater to specific lifestyles - such as empty nestors - and building-in extended services from the beginning, such as providing dry cleaning pickup and delivery, dog walking and handiman services.

Brokers got into concierge services because they were, and continue, to feel pressure on their bottom lines from narrowing profits on the actual sales transaction. Extended services are thought to be new profit centers.

According to ToolBase, builders are looking at such services for the same reason - because profits on the sale of new homes have become quite narrow.

"Those figures usually range between 4 and 6 percent, after a significant investment in the land and the houses built on the land," said ToolBase. "When (builders) get into related businesses like pest control, lawn maintenance and security systems, the company can garner more revenue from the initial investment of time and money in the land and the house."

Other builders say they are preparing to enter the extended services arena less because of profit potential than as a continuing source of referrals to new potential customers.

ToolBase also speculates that publicly held, large builders are under even more pressure than brokerages to add new sources of revenue to their bottom lines outside of the sales transaction. "The stock market is telling the publicly held home builders that they should improve their relatively low price-earnings ratios by moving away from basing their business on single transactional sales," the newsletter said.

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Published: February 9, 2000

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