Why Realtors Don’t Need To Know Construction To Sell New Homes

Written by Posted On Monday, 31 August 2020 05:00

With new construction in high demand, more and more Realtors are discovering how easy a new home sale is to make. But many Realtors are ignoring the new home market, for reasons that are no longer valid.

For years, Realtors were told by builders that Realtors needed to learn construction. Nothing could be further from the truth. This false assumption has kept thousands of Realtors from earning millions in new home commissions. 

Onsite consultants remind Realtors that the consultant will do all the work, and they mean it. 

Over the past four years, I had the opportunity to facilitate 52 “new home’ seminars attended by more than 2500 Realtors. 

These Realtors want to learn how to add new home inventory and new home shoppers to their resale business. They have no interest in working for a builder as an onsite sales consultant. 

But in every seminar, the question “Do I need to learn construction?” is addressed.

The answer is evident to anyone who has sold a new home in the last five years. The answer is, ‘No.”

 My standard answer is, “Learning construction is too far from the money. You do not need to learn construction.” What you need to do is make sure the builder or builder’s representative answers construction questions. 

Today’s homebuilder for the most part are all in for working with real estate agents. They will always wish they could sell their homes without paying a commission, but don’t we all? 

Homebuilders, especially production builders, are caught somewhere between absorption rates and profit margins when dealing with what they refer to as ‘co-brokers.’ 

 On the one hand, they would make more profit if they did not pay a sales fee to Realtors. But if they did not pay a commission, they would lose sales.

 They have opted for paying Realtors a sales fee that is built into the base price of the home

Even in rising markets such as we are in now, builders find themselves with more competition than ever, so they need qualified shoppers.

 In slow markets, there may be less competition, but fewer qualified buyers are looking for new homes. Thus, builders have learned that regardless of market conditions, they need to work with Realtors.

So, how much weight does a builder put on the Realtor’s construction knowledge? 

Builders do not ask or care what Realtors know about construction, financing or the market. 

They do care if you do or say things to impress your client, like asking about incentives upfront during the introduction, criticizing their products, or rushing through the models, but they handle it. 

Today, homebuilders pay Realtors to what amounts to a referral fee for Realtors introducing home shoppers who convert to a purchaser. They expect the Realtor to be supportive and assist with issues that may arise during the construction process. 

The builder writes the contract, manages the transaction, answers construction questions, assists with mortgage applications, and in some cases, sets showing appointments for the Realtor. And, yes, many will register your prospect online. ! 

There is an important exception, one that, if not considered, has cost Realtors thousands of dollars in lost sales because they decided, without knowing what they were getting into, to list a subdivision or condominium community.

The exception? 

If you become the broker of record for a single-family homebuilder, your onsite sales team must have a good grasp of construction. Unless the builder agrees that s/he can and prefers to answer construction questions. 

This builder, usually, the smaller local builder, will expect you to train your onsite team or partners to learn the construction process, when to present incentives, and how to answer construction questions. 

Some Realtors will seek and find opportunities to represent a builder, a group of builders, or a condominium community as the broker of record.  These Realtors will need to understand the construction process and have some construction-related facts at hand. They will need to know the builder’s change order policy, explain warranties, and more. 

A local, small volume builder may list with a Realtor, but if sales are not as good as expected or exceeded, the builder will tend to blame you because you don’t know construction. The builder will start making comments like, “I am a better salesperson than you are.” 

So, as a Realtor, do you need to know construction to sell new homes? For about 99 percent of all Realtors, the answers is ‘No.” 

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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. 

Learn more and enroll.com



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