Realtors Need to Establish Preferred Builder Networks

Realtors Need to Establish Preferred Builder Networks

In the last five years, January 2013 to January 2019 many things changed, while what home shoppers want stayed about the same. Realtors still need a lot less competition and a lot more saleable inventory.

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 2019, Housing Trends Report, home shoppers for both resales and new home stayed about the same.


These two charts and data collected five years apart suggest that the segment percentage of new homes/resale home buyers will remain about the same over the next five years.

These two charts tell an important story and beg some serious questions that cannot be ignored.

What the pie charts mean:

Existing means 46% of the market is going to purchase an existing home.

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

Indifferent means home shoppers will consider a resale or a new home.

There is very little difference between the five- year results.

So as a Realtor what does this mean to you?

First, let’s understand your competition for each segment:

How many members do you have in your Realtor Association? That’s your competition. Ok. Maybe not every member, so cut the number in half, and half again.

That’s your competition, generally speaking for resales and resale shoppers moving to and within your market. What percentage of those homes listed are in saleable condition? The larger your association grows, the more competition you will have. Not good.

Five years ago, 19%-let’s call it 20% of the market- shopped new homes to the exclusion of resales. Within a five- year period the number dropped 1% to 18%

If you are in a market where new homes are a factor, and not meeting any of one out of five prospects for new homes in your market you might need to rethink your need to learn how to better serve this market segment.

What do you think the competition to reach this buyer might be in your market? My guess, less than 4 percent of the resale agents in your market ever think about marketing to these buyers. Most are not trained to do so.

Five years ago, 35% were “indifferent”. This segment increased to 38% in five years. . If they are shopping resales, they will consider a new home. If they are shopping for new homes they will look at resales.

The BHI study called them “Indifferent”. The NAHB report called them “Either New or Existing.”  Are you qualifying your resale buyers shopping at new home price points for new homes?

 It is probably safe to assume these numbers won’t change enough in the next five years to make a difference in your marketing strategies. Competition for listings, especially saleable ones, will continue to be extremely tight.

Can we as a profession continue to ignore addressing ‘new construction’ as an important ‘add on’ to our resale inventory? 

We must do a lot more than think outside the box.  What we must do is quit staring at a box that will look about the same in the next five years and do something about it.

My suggestion- meet home builders at their point of need, not yours.

Most homebuilder/sellers deliver saleable inventory every single time, ith urgency hooks to encourage a buying decision (incentives).

Yet few Realtors are trained to work with home builders or new home buyers.

What does the builder need?

He needs qualified, motivated prospects. According to NAR, Realtors control 90% of these 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.”

Builders want to work with Realtors who understand the process.

Builders don’t expect Realtors to understand construction.  In fact, many builders have a professional team from sales through closing to answer every question prospects can possibly ask. The best advice you can give your new home shopper is to ask questions during the model tour.

What both the Realtor and home builders need is a new way of doing business. The business is there for Realtors to do. Builders need Realtors in all market conditions.

Here is a short look at the long view.

Throw the box away so you won’t be tempted to think outside of it. Then reimagine working with new homes builders as partners, on your terms.

For a change think “strategic plan”, then technology. Technology cannot do what is needed to build a new homes niche. What is fundamentally needed is a structured, measurable framework and process to encourage Realtors to work with homebuilders and the training to help them do so at a high level.

1. Start by doing for builders what builders do for Realtors. Think “Preferred Builder” network within your office.
The network is an informal but structured group of home builders in your market who meet specific requirements set by your office. No membership fee.

Such standards might require the builder to:

a. Build ‘buy now’ inventory
b. Provide internet/concierge services
c. Allow home buyers to hire licensed home inspectors to represent the buyer during walkthroughs and such
d. Have a reputation for fair and consistent commission policies.

2. Announce to the builder that they have been added to your office’s preferred builder network. Do you think this might help build a trust-based relationship?

3. As a solution for your office, you might want to form a ‘new homes team’ and require agents who want to participate to meet certain requirements, such as:

a. Recommend at least two builders that meet network requirement to the team
b. Attend builder opens and lunch and learns
c. Take as many qualified buyers to your network builders as possible
d. Earn their New Home Co-Broker designation
e. Be willing to have a network member explain the process
f. Attend monthly new homes training from the agent’s perspective
g. To add their names to a new homes directory you might want to offer, they may have to sell at least one new home and earn the New home Co-Broker designation.

New homes inventory is accessible to one and all. And nine out of ten buyers are looking for Realtors to help them to find the right inventory and help them through the process. Many of these sales lead to listings.

Don’t stay boxed in. See yourself working with builders you know and respect and them working with one they know and respect. YOU!



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