Builder/REALTOR Partnerships Poised To Become The New Normal

Written by Posted On Sunday, 16 August 2020 05:00

Drum roll, please. 

The Builder/REALTOR culture is changing because the residential market has changed in many significant new home markets around the country. 

 Homebuilders are looking for long term relationships with Realtors. 

Realtors are learning how to work with homebuilders and are no longer intimidated by onsite sales staffs. 

"I used to hate showing new homes because I was so nervous I could not stop talking," said one 16-year veteran. 

Resale inventory, at least saleable resale inventory (yes, there is a difference), is beyond 'tight,' and new home construction is moving as fast as it can to meet a woefully undersupplied housing market. 

Focusing exclusively on resale listings and sales is so yesterday in markets where new home construction is booming.  

Realtors know that when resales come back on the market, many many homes will need renovating or have serious deferred maintenance concerns. 

Realtors would rather not sell a preconstruction home because Realtors have to wait for months to be paid.  But in today's world, it is  a poor business decision because saleable resales as an alternative are not available.  One might argue that a commission in six months or longer is better than no commission at all. 

Mary Carpousis, a 10-year vet with Berkshire Hathaway, Results Realty in Orlando, Fl said once she learned the value of selling preconstruction and how to work with the builder's internet advisors, she sold 24 new homes in three years, including six prebuilds. She did not sell a new home or show one of her first six years in real estate.

Realtors as a professional group no longer have an excuse not to train or at least encourage their agents to learn how to find new home prospects, work with onsite agents, and become favorably known in their market by home builders as a new home co-broker they respect.  

Homebuilders understand that they need Realtors to bring their qualified home shoppers to the builder's sales office. 

There are only three things left for builders to address. 

One, clarify the myth that Realtors will not get paid if they do not bring the prospect to your sales office first. We both know many builders make exceptions on a case-by-case basis. Why not say so upfront?

Two, stop telling Realtors they need to learn construction because nothing could be further from the money or the truth. There is not a bit of evidence that supports that assumption.  Remind them that the onsite agent will see that all construction questions are answered to the home shopper's satisfaction. 

Three, start reminding Realtors that you write the contract. Our studies show that Realtors like this service and understand why this must be.

To their credit, Realtors seem to understand the times. They know their agents should be working with new home shoppers. But they seem to be leading from behind, by leaving the choice up to the agent, to 'get involved' with new homes or not. 

 It is just easier to not change a thing, even in the face of the tightest listing market and most liberal new home commission polices in recent memory. 

Even so, home shoppers will continue to expect their Realtor to provide the same high level of service they provide new home shoppers. 

What caused builder/Realtor relationships to evolve from mistrust and disdain to a growing dependence on each other?

The most important event, by far, happened in August of 2012, when Realtor.com and Builder Digital Index (BDX) announced a partnership whereby BDX would feed its national inventory of new homes to REALTOR.com.

Homebuilders now had what they had long needed and lacked- access to the Realtors' Multiple Listing System (MLS).  Realtors had access to new homes in inventory floorplans and descriptive details. 

"Millions of new home shoppers were drawn to this new service," according to Senior Vice President of Channel Sales and Operation, Tricia Smith, speaking at the 2018 National Association of Home Builders International Builders Show in January.

In December 2013 the headline below appeared in Realty Times:

Bank of America Urging Home Builders and Realtors to Work Together.

"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 are essential to tapping the new homes market."

Why is a banker suggesting new home training to Realtors?

According to Fichtner, "many builders, regardless of their size, are taking a much more collaborative view of partnering with Realtors than in the past, and we encourage our builders to work with Realtors."

It would be safe to assume that other lenders started encouraging their builders to do the same thing,

According to a study commissioned by Builder Homesite Inc, "nearly two-thirds of Realtors believe that builders are not offering useful training about how to sell new homes."

The Builder Homesite study nailed it with this statement:

"There is a sizeable portion of Realtors that would welcome an outreach effort to engage them in a sales process and increase the proportion of new homes that they sell."

Which brings us to August 2020, with resales in short supply.

Why then is the builder/Realtor partnership rapidly becoming the new normal? 

Builders need qualified prospects, which Realtors control. Realtors need saleable inventory which builders provide.  Home shoppers expect their Realtor to provide home buying services for both resales and new homes. 

Is it time for the National Association of Realtors to recommend 'best showing practices' to their members when dealing with new home shoppers?

It is a thought. Maybe worth millions in commissions and thousands in retention. 

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David Fletcher, NHCB

Lifetime Achiever David Fletcher is Founder and CEO of New Home Co-Broker Academy LLC, home of the New Home Co-Broker (NHCB) designation. More than 4,500 real estate agents have completed the  Academy's three-hour online course, How To Build A New Homes Niche, and earned their NEW HOME CO-BROKER (NHCB) certification. 

If you are serious about wanting to learn how to better serve new home shoppers, work with onsite sales consultants, and market your brand with credentials to new home buyers, this is the course you need. Money-back guarantee. 

Learn more and enroll.com

 

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