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New Homes Create Four Commission Opportunities

Advisor

Learn how new homes can create four distinct commission streams for real estate agents

Question: If you owned a business that sold nothing but men’s shirts, would you say you are in the men’s clothing business or the men’s shirt business?

If you answered, “men’s shirts business,” you would be correct.

So, would you say that you are in the general real estate business or the resale real estate business? By general real estate business, I mean, are you are proactively selling resales and new construction homes?

The real question is this:

Can you honestly say that you are a professional in real estate if you can not or do not include new homes in your open listing inventory searches? Particularly for prospects who have a price range that fits both the new homes in the area and the resales that your prospect has asked to see?

A study conducted in 2012 by Hanley-Wood for Builder Homesite, Inc. (the parent company of NewHomeSource) said that 19 percent of 984 shoppers who plan to purchase within the next 12 months will insist on a new home. Some 35 percent of these shoppers are indifferent, meaning that they will buy either a resale or a new home.

In other words, more than half, 54 percent, are new home candidates. According to the same study, 84 percent will use a Realtor for their purchase. According to the National Association or Realtors 2013 Profile of Home Buyers and Sellers, 63 percent of all new homes sold in the United States are sold to prospects who are introduced to the home builder by a Realtor.

Before we go any further, do you think these numbers have anything to do, or should have anything to do, with how you think about your real estate business? Are the numbers just interesting news to you?

It should be statistically obvious that new homes must become part of your service if you are to build your real estate business.

Let’s look at four areas where you are missing out on business because you are not a proactive participant in the most profitable and productive sale in residential real estate: new homes.

 
Lost Income Streams

  1. You don’t meet about one of five (19 percent) prospects in your market, because you don’t show new homes, therefore these prospects don’t know you exist and you don’t care. Avoid these mistakes with your prospect when discussing or showing a new home.
  2. You don’t have the opportunity to list the homes of those who need to list, and are buying new homes because you don’t meet them.
  3. You miss new home showing opportunities with more than a third (35 percent) of the homebuyers in your market who will buy resale or new because you don’t qualify them for new. These are prospects that are sitting in front of you, but have not told you that they will consider new homes, and you have not asked.
  4. You miss listing opportunities with those in this segment who bought on their own because you didn’t show new or they decided to wait because they could not get comfortable with the resales you showed them.

Here are some excuses you may hear around the office, usually from the old-school sales associates:

  • “New homes inventory is hard to find.” Really? Then why have your prospective buyers already registered with a builder or two in your market? Why do they tell you about the new home communities they would like to see? They found those communities on the Internet on consumer-focused websites sites like NewHomeSource.com. You can see the same content (as well as additional info for agents including consumer and agent incentives, promotions and events) here at www.NewHomeSourceProfessional.com. Check it out.
  • “They already registered with a home builder. I won’t get paid.” Builders will explain their registration policies and some even post their process on their website. Some policies ask you to accompany your buyer on their first trip to the model homes and sales center. In the rare case where your buyer did visit the sales center and registered without you, call the homebuilder’s sales office. Tell the on-site agent that you are working with a prospect who is registered with them. Explain that you look forward to working with them and ask them to honor your registration if you bring the buyers back out to the models.
  • “It takes too long to get paid for presales.” So, rather than help the prospect buy what they want, you will show them only resales? You are risking having two bad months, according to Myers Barnes. The month you don’t sell anything, and the month you don’t close anything.
  • “I don’t know enough about construction to be comfortable.” I didn’t either and then I figured out that I don’t need to know a whit about construction. I need to know how to find and qualify a prospect for a new home, take him or her to the sales center and introduce him or her to the on-site agent.   
  • “I am afraid the on-site agent will steal my prospect.” Puullleeease. If anything, they (homebuilders) will help you make the sale, be it resale or new. Think about it — homebuilders are doing so much for real estate professionals today. They write the contract, show the model, explain the location, provide urgency tools, coordinate the closing and move in, and pay the same commission as you would earn if selling a resale. Do you really think they are going to turn around and steal your prospect?  

Next Steps:

Now that you know the facts and have clarified important assumptions that are myths, here is what you do to get into the new homes game.

  1. Encourage your office to have sales meetings at a builder’s model center as opposed to having a speaker come to your office. Agents need to see, feel and know where to park. If you need to, go on your own.
  2. Always take your prospect’s new home temperature during the qualifying process by asking “Have you considered new homes?”
  3. Check MLS and www.NewHomeSourceProfessional.com for new-home inventory.
  4. Avoid these mistakes with your prospect when discussing or showing a new home:
    • Don’t infer that you can get the prospects a better deal than they can on a new home. You can’t. Explain why. If you don't know, ask the on-site agent why builders do not negotiate price. It has to do with appraisals.
    • Don’t try to impress your prospects by asking the questions that they should ask like, “What are your incentives?” Incentives are not a feature — they are used to help buyers justify making a buying decision, instead of putting it off. Let the on-site agent handle this.

If you are a resale-only specialist, as opposed to a residential real estate specialist add a new line of inventory, one that up to 54 percent of the market will consider buying — a new home.

David Fletcher is a real estate broker who has specialized in new homes his entire career. He is author of the online certification course, "How to Build a New Homes Niche."
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