Realtors Need to Establish Preferred Builder Networks (Part 1)

Written by Posted On Monday, 21 January 2019 05:00

 Demand for new-construction homes should continue strengthening the next five years if the last five years are any indication.  Competition for saleable listings will remain extremely tight. More resale  prospects will consider new homes or at least become 'indifferent." 

According to two studies, one released by Builder Homesite Inc in January 2013 at the International Builders Show and the National Association of Homebuilders third quarter 2018, Housing Trends Report, home shoppers for both resales and new home stayed about the same. Why is this important to Realtors? 



What the above pie charts mean:

Existing means % of the market is going to purchase an existing home, not going to consider a new home.

New means % market is going to purchase a new home and not consider a resale

Indifferent is the % home shoppers that will consider a resale or a new home. 

What this chart means to homebuilders is clear: They need to continue targeting the indifferent shopper to convince them to buy "new".  

What this chart means to Realtors is that competition among your association members for resale listings and sales will remain strong, and the time to start adding new homes inventory and prospects to your resale initiatives now could be perfect.

The following recommendation is directed to broker/owners and those responsible within your offices to build your new homes presence. 

We need to take a page from the builder's book when they market to their preferred Realtor network and develop what we may refer to as a Preferred Builder network. Keep it simple, informal and fun. Use it as both a recruiting and retention tool, while building a reputation among your builder community that you and your office are in the new homes sales business for real.  New home shoppers would soon hear about your office and start calling. 

Here's is how it could work:

Establish a 'new homes team' or division within your office.: The purpose of this team is to serve the members of your Preferred Home Builder network. 

Members of your Preferred Builder network would be your sole discretion based on the criteria you establish, such as:

1 The builder should attempt to keep 'buy now' inventory in the pipeline

2. Pay market rate commissions

3. Allow a licensed home inspector to accompany your buyers on walkthroughs if buyers so desire

4. Provide internet/concierge services (smaller builders may not offer this service, but could still qualify)

5. Keep your office advised of builder events 

6. Have a reputation for fair dealing.

7, Feature his homes in MLS 

You as the broker would provide an in house structure of those agents who want to be on your office new homes team: To be a member of your new homes sales team, your agents would be willing to:

1. Make the comitment to add new homes to their resale business

2.  Attend sales meetings or lunch and learns at preferred builder events

3. Add the builder internet consultant or builder's name to phone contacts

4.  Research targeted  builders to recommend network membership

5.  Take new homes training required by the broker 

6. Offer something special after first new homes sale, like add agents name to a list of Preferred New Home Agents in a company directory.

You get the idea. Make it what you want, but add a statement that would disqualify agents from being members of this team. There is no membership form, and builders may or may not know they have been selected. Although it would be obviously beneficial for their selection to be made public. While it helps the builder, you are also letting the public know that your office is involved at a high level with new homes. 

What does the builder need? He needs qualified, motivated prospects.and he needs to know that he is getting Realtor support at the important 'brand' level, which helps build his most important asset. His reputation. 

What do REALTORS need? They need saleable inventory,  And the Preferred Home Builder gives them a compass of builders who are not only constructing quality homes but will treat them and their prospects with respect, with mutual trust between the two growing with every prospect and sale. 

According to NAR, Realtors control 90% of all home shoppers. "Builders understand that their real competition is not the builder across the street. It is the resale. And who controls this buyer? Realtors.." BHI CEO Tim Costello said in a speech at the 2013 International Builders Show. 

Once home shoppers learn that you are offering a preferred builder network and home builders understand the new homes production your office is generating, both the builder and home shopper will be contacting your office and agents. Guaranteed. 

Author's note: We have had great feedback from the few broker/owners we shared this idea with before writing this piece. In Part 2 we address what we believe to be the fundamental reason builders don't get the Realtor support they deserve and should expect.

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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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