NAR/NAHB Should Provide New Home “Best Practices” - Part 4

Written by Posted On Thursday, 05 July 2018 09:41

The following is Part 4 of a four-part series.
Part 1: Builder/Realtor Relationships Poised for Long-Term Win-Win
Part 2: What Experienced Realtors Like Abut Selling New Homes
Part 3: Build Your New Construction Commissions on Referrals, Not Skills 

Today’s piece is addressed to the National Association of Realtors (NAR) on behalf of its 1.4 million members and the National Association of Home Builders, on behalf of the thousands of onsite sales consultants trying to work with untrained NAR members.

Our purpose is to suggest a few “Best Practices” as a start, assuming there might be a need for such guidelines.

Here are a few practices that might stand another look. If you were the listing agent for these builders what would you recommend that the builder do?

• A Realtor walks into the builder's busy sales office and sees a couple waiting for the builder’s onsite agent. The Realtor pulls up a chair and asks if she may represent them. They say “yes.” The builder’s sales manager says “no,” and privately asks the Realtor to leave and never come back.

•   A Realtor gives his prospect a handful of business cards with instructions to let onsite agents know they are working with the Realtor. The prospect buys a home without telling the onsite agent he is working with a Realtor. The day before closing escrow, the Realtor contacted the builder demanding a commission.

•   A Realtor takes his resale prospect to look for resales for three weeks. Every day they drive by a builder’s subdivision near the Realtor’s office, without even a hint that the prospect should look at the builder’s homes. The prospect visits the builder on his own and buys a new home. The Realtor demands a commission on the basis that he sold the prospect on moving to the area. Does this builder owe this broker a commission?

•   A prospect visits a builder’s sales center, before meeting her Realtor, whom she had met online months before visiting the area. After is meeting the Realtor; she asks her Realtor to add a second visit to the day’s showing schedule to include a second visit to the builder’s model. The Realtor knows that the builder has a commission policy that requires Realtors to introduce their prospect on their first visit. When the Realtor walks into the builder’s sales office, the onsite agent recognizes the prospect and greets her by name.

The onsite agent quietly informs the Realtor that the Realtor’s prospect has already visited the community and if she buys the Realtors® will not be paid. The prospect bought one of the builder’s homes. The Realtor was not paid. The Realtor later announced to his office that he would never take another prospect to this builder’s models.

•   Coming in late to a seminar, the Realtor interrupted the speaker and announced to about 100 Realtors that she just came from a closing naming the builder, and was not paid a commission on upgrades. She was hurting a defenseless builder’s reputation, and he had no idea it was happening. Should she have been paid a commission for upgrades?

These types of scenarios are not uncommon. Few people do things wrong on purpose. In the case of Realtors, they are not trained to work with homebuilders. Some may say the issue is greed. However, it is not greed. It is a need - for training and education.

When a profession ignores its own, what else can be expected?

Recommendations to start the discussion from the builder’s perspective:

1.   Make some of the exceptions to your commission policy known to local Realtors. Many homebuilders protect the agent’s commission if they call first when dealing with a pre-visited prospect.

Our surveys of 277 Realtors show that:
50% faced with this issue have no idea how to handle it
4% will recommend other communities
24% will ask the prospect to insist the builder pay the Realtors the commission
22% did not answer this question.

2.   Help Realtors understand that your Internet advisor will be happy to help them register their prospect, suggest the homes to show and, in some cases, set the appointment. Our surveys show that only about 5% of the Realtors in your market ever heard of this service, which has been around for about 15 years.

3.   Start asking a different question when you get a walk-in without a Realtor. “Are you working with a Realtor?” “Do you plan to work with a Realtor?” suggests what could be the truth:

They plan to be one of the 90% of home shoppers who prefer to work with Realtors when buying a home and may have one to sell. They need a Realtor.

The fact is homebuilders, especially production builders, are reaching out to Realtors like no time in history. Homebuilders understand that their competition is not the builder down the street. Their competition is the Realtor because Realtors control 90% of the qualified home shoppers at any given time, according to NAR.

Builders have seen the studies that show that 19% of all home shoppers will buy a new home, and that 35% of those shopping for resales will consider a new home. They know that, according to NAR, about 40% of those buying new homes are buying as an option to not wanting to renovate a home.

These are the reasons; they are open to working with Realtors and are competing aggressively for their business.

Realtors recognize the demand for new homes.

Timing is everything, and there is no better time for NAR and NHBA to recommend the ethical and best way for both groups to work together.

Best Practices guidelines are a win-win for both groups because the results would be more sales and therefore a higher retention rate for both associations.

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David Fletcher, NHCB

David Fletcher is a co-founder and CEO of New Home Co-broker Academy LLC., an online e-commerce business. Visit David's website to take his famous 3-hour online course, How To Build  A New Homes Niche, to become a certified New Home Co-broker (NHCB). More than 5,000 graduates. Content is based on his long career and onsite sales success working with both builders and Realtors to list and sell more than $3 billion in new construction. If you are a broker who wants to offer your agents a way to add new homes to their resale inventory and home shoppers, this is your solution. 

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