Do You Want to Reach HNW Customers?

What Luxury Real Estate Agents Can Learn from Luxury Travel Blogs

Institute For Luxury Home Marketing: High net worth individuals, although known for pursuing a more lucrative lifestyle with high-end taste, have proven to value experiences above all else. While people of affluence are willing to invest large sums of money into items or brands, there are now higher expectations of what the product or brand should give back in return. Occasionally, this could be a profitable return, but often times, luxury consumers are simply looking for an experience or connection that can be a positive addition or improvement to their lifestyle.

Although luxury consumers have the means and capability to spend money fairly freely, they are careful not to invest in anything that won’t benefit or improve their quality of life.

With the increase of travel focused blogs and social media, the public now has an acute awareness of just how luxurious the top 1% are living, and better yet, vacationing. Traveling to beautiful and exotic places are considered a privilege to most, but for HNW individuals, it is a common and crucial part of their lifestyle. Traveling, for people of affluence, is a risk-free investment. No matter what tropical island, European village, or beautiful mountainous town is explored, these experiences are usually worth the cost and are a coveted part of their day-to-day.

With travel destinations and a demand for luxury hotels at an all-time high, luxury travel blogs are thriving in this digital day and age.

In fact, each year, Qosy.co updates it’s list of top luxury travel blogs recommended reading before planning your next lavish vacation. What makes these blogs thrive is how they market and share experiences from their own travel and bring to the table insight, suggestions, and advice for others in luxury looking for their next great experience. From events, hotels, and cuisine to the most secretive and private places to stay, the luxury travel blogging industry has not only raised the bar for traveling and luxury vacations but also guided the way we market to the HNW and UHNW individual.

When marketing to the top 1%, experiences above all should be the main focus. As a luxury real estate agent, your HNW consumer is not just looking for a house, but a home – a place that provides them a higher quality of life and entertainment. By taking a look at what luxury consumers love best about vacationing, real estate professionals can better pinpoint what aspects to focus on when helping HNW individuals purchase a lifetime home.

With evoking imagery, and high-quality media, sometimes even video, these blogs not only have many people wishing to live their lifestyle, they are also showcasing new ways for even the most seasoned HNW traveler to experience surprise and delight on their adventures. For those that think they may have possibly experienced or seen it all, these luxury blogs will help open your eyes to new travel possibilities and a richer and fuller overall experience. As a luxury real estate professional, your goal should be to evoke these incredible experiences and emotions for your clients when working with them to buy or sell a home. A home and its amenities play a large role in the lifestyle they are able to live. People of affluence truly want to feel like they are still being fulfilled, even without leaving their house.

Secondly, these top luxury travel blogs are driving traffic and connecting with their audience not only because of their valuable information but simply because of their trusted status and relationship with their readers. As you try to market and connect with HNW consumers, a firm foundation of equality and trust is necessary.

There is certainly something to be said for the way luxury travel blogs have positioned themselves as experts in their industry and are able to market and connect with the top tier of consumers. Regardless of your profession, it’s important to remember to take notes from other leading luxury professionals and to apply their insights and outlook to help you grow your network and build better relationships with your luxury clients.

Via: Institute For Luxury Home Marketing

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Has Tax Reform Impacted The 2018 Housing Market?

Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of the potential for double-digit price depreciation and suggested that buyer demand could drop like a rock. There was even sentiment that homeownership could lose its coveted status as a major component of the American Dream.

Now that the first quarter numbers are in, the KCM Crew begins to decipher the actual that impact tax reform has had on the real estate market.

1. Has tax reform killed off home buyer demand? The answer is “NO.”

According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,”buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

2. Have the tax changes affected America’s belief in real estate as a long-term investment? The answer is “NO.”

Two weeks ago, Gallup released its annual survey which asks Americans which asset they believed to be the best long-term investment. The survey revealed:

“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.” 

The survey also showed that the percentage of Americans who believe real estate is the best long-term investment was unchanged from a year ago.

3. Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.”

Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data released by the Census Bureau.

In her latest Z Report,Ivy Zelman explains that tax reform didn’t hurt the homeownership rate, but instead, enhanced it:

“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”

4. Has the upper-end market been crushed by new State and Local Taxes (SALT) limitations? The answer is “NO.”

In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

  • Sales between $500,000 and $750,000 were up 4.5% year-over-year
  • Sales between $750,000 and $1M were up 15.1% year-over-year
  • Sales over $1M were up 17.3% year-over-year

5. Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.

Bottom Line

The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

via The KCM Crew

Six Building Product Design Trends

At the International Builders’ Show (IBS), John Burns identified six new home construction and repair/remodeling design trends. For additional detail and photo examples, click here.

1. Internet of Things (IoT) technologies open the door to whole-home connectivity. Amazon’s Alexa and other personal assistants have opened the flood gates for smart home products, especially in home security, plumbing, appliances, and HVAC.

2. Labor efficient products take center stage. Building product manufacturers continue to invest in products that streamline the installation processes, with KATERRA’s large booth the poster child for potential labor disruption this year.

3. Engineered products offer great design and less maintenance. Engineered products look increasingly like their natural counterparts, often at better or comparable prices. We found many examples in commodities (decks, subfloor, siding, doors) and design finishes (countertops, surfaces, interior millwork).

4. Black is back. Black finishes dominated the appliance, plumbing, hardware, and window/door exhibits.

5. Customizing becomes simpler. Customizable product offerings this year focused on minimizing costs and complexity for the consumer. Standouts included private-label hardware options, mix-and-match handle/spout colors and finishes, and appliance panel customizing options.

6. Design has shifted to ultramodern. Exhibitors highlighted ultramodern interior designs, mirroring the home builder shift to ultramodern home elevations.

via Steve Basten: sbasten@realestateconsulting.com 

 

Tips for Appraising Lakefront Property

 

Hidden Lore, Michigan
When determining the value of lakefront property, there’s so much more to the equation than just measuring waterfront space. Here’s what appraisers and agents need to know.

Realtor.com — Rachel Massey:  As summer approaches, activity on lakes—large and small—increases. But in my experience as a REALTOR® and certified appraiser, it is apparent that many agents, brokers, and appraisers have not acquired all the knowledge, skills, and perspective needed to accurately evaluate lakefront property. In the hope of filling in some of the gaps, here are some tips on how appraisers can provide a more defensible appraisal on these complex properties as well as some of the nuances that agents who are new to lake properties should consider.

The Why of the Buy

Both appraisers and agents alike need to be aware of the motivations that result in sales. Appraisers need to be in touch with the vagaries of the different submarkets in order to adequately analyze the properties they appraise, and agents need to understand that there is much more to selling lake property than front footage.

What motivates a buyer to purchase a lake property? Is it the tranquility? The beauty of the water? The excitement of a speedboat and waterskiing, or casting a line into the water in hopes of landing a trophy catch? It is all of these things, and none of these things. The motivations are almost as numerous as the buyers looking for a lake house are, and one buyer’s paradise is another’s hell. Different types of lakes attract different buyers, and the buyer looking for tranquility is going to be very unhappy purchasing a house on a lake crowded with jet skis and powerboats. The same would be true for the avid motorist who buys on a small, quiet fishing lake.

Quality Over Quantity

While some depend on how many “front feet” the property has on the water to determine value, that is not necessarily the best course. The amount of frontage usually relates to space between neighbors and how much area is available for docking and beach toys. But consider the house sitting on the edge of a bluff, with 200 feet of frontage and 100 steep steps down to the water. What if the shoreline is also rocky and reedy? Five lots south, the topography has sloped in to a gentle, almost level lot and the frontage itself is a natural sandy beach. This lot has only 50 feet at the lakefront. Which is more valuable?

The value of a lake property could be tied not only to the ease of the access and the quality of the frontage but also to the lake itself. For a clean swimming lake, the narrower 50-foot lot might be much more valuable than the less accessible 200-foot lot. But for a lake that is picturesque but not good for swimming or boating, the 200-foot lot with the elevated views might be the more valuable site. It all depends on the lake and why buyers might be interested in that particular spot.

Present and Future Demand

I live and work in Michigan, a state surrounded by lakes of all kinds. The Great Lakes are a treasure, but not exactly the bastions of privacy and quiet you see on some of the smaller inland lakes. Many of our inland lakes are massive in size, deep, and clean. Some are shallow, reedy, and mucky, making them more of a viewing amenity than anything else. Some lakes allow all the toys and others only a kayak or canoe. Some are merely ponds in buyers’ eyes.

There are many questions that buyers, real estate agents, and appraisers should consider in addition to the present appeal of the lake itself, because these issues contribute to whether the lake remains appealing into the future. Some lakes are manmade in that they are the result of damming a river. Some municipalities are considering removing such dams—in that case, what happens to the manmade lake? Some lakes have been invaded by unwelcome species such as zebra mussels, Eurasian watermilfoil, and other nuisances. Lakes with public access sites tend to have more trouble with these invasive species, though they do also travel naturally through waterfowl and other means. Could a lake with an invasive species problem become less desirable than one without? Is there any guarantee that a pristine lake will remain so? What about the life cycle of a lake? Is it a dying lake, or is it likely to stay in similar condition for the foreseeable future? How is the management on the lake? Is there an active association that seeks to ensure the health of the lake? Are septic systems monitored? Does the association have prohibitions against fertilizers?

But just as bodies of water can change, so too can our perspectives on them. Is it possible that we are starting to see a shift, as our population ages, to the desire for quiet lakes that do not allow gas motors? It used to be that these quiet “no-wake” lakes had less appeal, but in many instances, they are now attracting buyers that would not have considered them 10 or 20 years ago. There is something to be said for the quiet of a lake without loud motors and loud reveling at all hours of the day and night. On the other hand, these lakes have limitations of use, and buyers who want to have it all might find the sportier lakes desirable, in particular if there are limited year-round residents. The lack of year-round residents could mean that the owner has quieter weekdays, with increased activity on the weekends and over holidays.

The Tools at Your Disposal

The Department of Natural Resources maintains lake maps in most areas. These maps show the topography and composition of the lake bottom. DNR maps will also show public access points, existing housing, and other features. Appraisers and agents alike should become familiar with these maps. Plat maps are also available in many areas, and these can be used to examine other features, such as ownership issues where a third party may control the frontage in between a property and the lake shore. Another concern that can impact value is keyholing or funneling, where backlot owners have rights to a parcel on the water. Just being aware of some of these issues can help you be a better advocate for your client and know when to direct them toward legal counsel to help determine whether they have water rights.

Not All Sales Are Comparable

If possible, it’s best to find comparables on the same lake, but remember, lakes also have varied topography, both on shore and to the lake bottoms, and just because the potential comparable property is on the same lake might not mean that the properties are actually comparable.

Appraisers need to understand the lake itself and which lakes are reasonable alternates if nothing is available on the lake upon which we are doing our appraisal. Know your market and write about what is important to the target audience. How large is the lake? How deep is it? What types of activities are allowed on the lake? What are the other lakes that the buyer for our property would reasonably consider and why? Fully describe the topography, frontage, and access to the water at the subject site. Write about whether the beach is sandy, mucky, rocky, reedy, and so forth. Document sunrise and sunset views, parking, and docking. Agents don’t have the same communication requirements as appraisers do here, but they should be aware of what appraisers are considering and what they are reporting, because such factors affect the pricing conversation as well.

Determining logical comparable search criteria is incredibly important in lakefront homes because buyers may consider properties on lakes that are 20 or 30 miles apart, something that might scare some of the most experienced underwriters if not properly explained. A smart appraiser will set the stage ahead of time through the narrative in the report, which will help the underwriter and reviewers understand the thought process for the choice of comparables. Once the appraisers have spelled out the reasons that have drawn a buyer to the subject lake, discussion follows about the lakes that are competitive and why they are competitive. This can justify the use of sometimes very distant comparables.

Agents can help by providing appraisers with information about the lakes that the buyer considered and why they considered them as competitive. If your buyer would only consider one lake, explain why. While it might not be possible for the appraiser to stay on that lake due to lack of recent sales data, the buyer’s motivations to that lake over others can still be helpful.

Summer is coming and lake buyers will be out in force again soon. Be prepared to have a lake appraisal take longer and be costlier than a regular subdivision job. Take the extra time necessary for these lake deals to research the lake and the site, in addition to the improvements on the site. Hopefully the extra effort will pay off and you’ll be better able to enjoy your next lakeside sunset or cool dip in the water.

via Rachel Massey… An AQB Certified USPAP instructor and began her career as a real estate agent in 1984. She has been appraising full-time since 1989. She is a certified residential appraiser in Michigan, specializing in review work for various clients, as well as lake properties and other residential properties in and around the Washtenaw County market.

Want To Be A More Confident Speaker? Tell A Story

Telling A Story

You might get stage fright when you have to present, but chances are you’re already a natural storyteller.

Don’t like public speaking or giving presentations? You’re not alone–most people don’t. We’re fighting our primeval fear of ostracism whenever we stand up and begin to regale an audience. But chances are good that you like telling stories and sharing experiences a little more than you like delivering a keynote or running through a slide deck; after all, some 65% of our daily conversations are made up of personal stories (and, well, gossip).

So if you could use a bit more confidence for your upcoming speech or presentation, storytelling can give it to you. Not only do stories make for more effective, memorable experiences for the audience, they can also make delivering them easier on you. Here are five reasons why.

1. YOU’RE ALREADY GOOD AT IT

Quick check: Are you a human? Yes? Great! Your ancestors have been sitting around campfires for tens of thousands of years telling stories. Our brains are wired for story; it’s part of who humans are as a species. Marketers know this, Hollywood knows it, and neuroscience bears it out.

We are all natural storytellers, and when we deliver stories, we smile, show emotion, and radiate authenticity. Not only is authenticity engaging and persuasive, but you’ll feel infinitely more comfortable and confident when you’re up there just being yourself.

2. IT WILL STOP YOU FROM RAMBLING

Stories provide structure. Nobody likes a presentation or speech that lacks focus or a point, but every story, by definition, has a natural, built-in structure that can anchor the rest of your presentation. Stories follow a natural, linear progression of A leading to B and then, uh-oh, a crisis at C! Followed by recovery and success at D. As the late novelist Kurt Vonnegut pointed out decades ago (facetiously yet correctly), stories are effective because they follow recognizable arcs:

Beyond being compelling, these fundamental narrative structures make it easy for audiences to follow along and comprehend your message as they listen to you. We’ve all sat through enough bad presentations to know that good ones are the exception, so anything you can do to make your audience’s brains work less hard will make them love you.

3. STORIES ARE EASIER TO REMEMBER (AND BE REMEMBERED)

It’s for the same reason–their comprehensible structures–that stories are easier to remember than a series of points or ideas. Stage fright often stemsfrom fear of making a mistake or forgetting to say something. Telling a story, especially a personal one, doesn’t take a lot of memorization or practice; you already know it and you may have already told it dozens of times.

Stories are also much “stickier” than facts, words, or even visuals. We’re much better (according to one Stanford researcher, 22 times better) at remembering figures, stats, and corporate jargon when it’s incorporated into a narrative. So don’t ditch your data–just wrap it up in a story.

4. STARTING WITH A STORY WILL RELAX YOU

So, it comes naturally to you, provides structure, and is easy to remember and share. Sounds like a great way to open your presentation, right? The very start of your talk is the time when you’re most likely to be nervous or stressed, but it’s also when you need to hook your audience.

When we tell stories, we’re conversational: We smile, use good body language, make eye contact–everything that builds trust with listeners. If you start your presentation like that, you preempt any chance of anxiety or presentation jitters to get the better of you. Instead, your audience immediately starts to give you positive feedback; when you see them smile, react, look engaged, and lean forward in their seats as they listen to your story, your own confidence will inevitably rise.

5. YOU HAVE PLENTY TO CHOOSE FROM

We all carry around a lifetime’s worth of stories–both personal and professional–probably more than you’re even aware of, and you can draw on just about all of them. At its most basic level, a story is “something that happened to somebody,” so think about all those “somebodies” you can tell stories about: yourself, your customers, your company, your product, your colleagues, or your competition.

Before your next presentation, set some time aside to brainstorm the stories you already have available from your life. Find one that ties into the topic of your presentation–and, ideally, look for one that’s personal. Talk about overcoming a hardship or about a life lesson you learned, and build that into the presentation.

You’ll feel great about it, and your audience will, too.


via Darren Menabney.  He lives in Tokyo, leading global employee engagement at Ricoh and teaching MBA students at GLOBIS University. Follow him on Twitter at @darmenab.

Homes That Make a Good First Impression Have 5 Things in Common

House Staging

NEW YORK – Jan. 17, 2018 – It takes just 26 seconds for a guest to form an opinion of your home when they walk through the front door. What does your space say about you? While we try to resist the urge to judge, there’s no doubt that first impressions count.

Whether you’re expecting guests or you’re hoping to transform your spare room into a rental, experts agree there are five key areas that friends notice first about your house. Thankfully, it takes minutes to correct them. Here, Miranda Cresswell, brand director at OneFineStay, and Ariel Kaye, CEO of Parachute and the newly opened Parachute Hotel, explains the most effective ways to update your home before guests arrive. Got five minutes to spare? Make these simple changes for a home that makes a lasting impression.

A styled entryway

“A clean and welcoming entryway is crucial in leaving a good first impression – it’s the first thing a guest sees!” says Cresswell. When transforming a home into a OneFineStay property, she says it’s crucial that the entrance introduces a design theme. “A good first impression – that moment when a guest’s breath is taken away – comes from stepping into a home with striking, deliberate design,” she says. “Think bright, organized and neutral. There’s a place for the eclectic or quirky, but the entryway is not that place.”

Instant fix: If you don’t have time to restyle your entryway, Cresswell says updating wall decor is a simple way to unify the space. “Rather than cobbling a bunch of different frames or odds and ends together, choose a few specific things that pair perfectly. A precisely placed mirror can make a space look much bigger and brighter.”

An uplifting scent

If you only pay attention to the look of your home, you’re missing one of the most important factors that influence guests: fragrance. “Scent can be one of the most immediate factors in making a first impression, and it is often overlooked,” says Cresswell.

A Trulia study suggests it could also increase the value of your home; 30 percent of real estate agents said scent was the single most important sense during an open house and named vanilla and fresh scents as the most popular among house hunters.

Instant fix: Light a vanilla or citrus candle in the living room or near the entrance to infuse your home with an uplifting scent. If you’re turning your home into a rental, be sure to use a tall lantern to shield the open flame. “Flowers always add an elegant but subtle fragrance, and baking cookies is another great way to get a welcoming air on arrival,” says Cresswell.

A lack of clutter

It’s time to address that discarded pile of magazines or strewn shoes – when it comes to first impressions, clutter counts: 73 percent of real estate agents said cleanliness is the most important sight-based feature during a viewing, possibly because unnecessary furniture and decor can make a space feel small.

“A foyer should have absolutely no clutter,” says Cresswell. “Everything, from decorative knickknacks to practical things like shoes, should have a designated place. Keys should be hung neatly on a key rack, and shoes should have a rack or boot tray. As for cleanliness, dusting and vacuuming go a long way.”

Instant fix: Use decorative baskets to mask mess. Position them by the doorway, under a coffee table, or beside a sofa to fake a cleaner-looking home without removing any items.

White paint

The color you choose to paint your home can have a big impact on its value. A report by Zillow Digs found that slate gray was among the most disliked colors among guests and cut the value of a home by over $1000. If you’re painting a guest room, real estate agents told Trulia that white, ivory, and eggshell are the most appealing shades to create an inviting space.

Instant fix: If repainting your home isn’t an option, pay attention to lighting. A carefully chosen floor lamp with the right colored bulb can subtly change the intensity of paint and is a perfect way to make a slate-gray room feel bright and fresh.

Thoughtful touches

To turn a good first impression into a lasting one, Kaye says personal touches matter most. “A well-made bed is the most important thing you can offer your guests. It is the key to making your visitors feel completely comfortable, cozy, and relaxed!” When creating the brand’s first-ever hotel, Kaye channeled five-star vibes with a few expert touches. “You should always provide at least two pillows of varying firmness per guest and dedicate a few sets of towels and sheets for guest use only. This will allow them to last longer than if you added them to your daily rotation of linens.”

Instant fix: Caught off-guard by unexpected guests? Try this hotel-approved towel folding method for a thoughtful guestroom touch. “First, lay the towel flat on a surface, and smooth out any wrinkles. Then, starting with the long side of the towel, fold the length in thirds,” says Kaye. “Grasp the short side, and fold the towel in half. Repeat this step,” and you should be left with a neat square.

Get the latest on home decor trends, design ideas, shopping guides and food news, and take a look inside your favorite celebrity homes on DomaineHome.com.

Copyright © 2018, Clique Media Inc., Sophie Miura Domaine. All rights reserved. Distributed by Tribune Content Agency, LLC.

Selling New Construction For Rookies: Part 2

‘BURG Development, LLC, St Petersburg, FL

This article is part two in a two-part series from David Hakimi, Realtor Magazine, on how to sell newly-constructed homes. Read part one here.

In my last post, I discussed the buyer’s agent’s duties in a new construction transaction and the sales process. Now I’d like to touch on hurdles clients may face buying new construction, as well as contracts, financing, and agent compensation.

Selling new-construction isn’t without its own set of unique hurdles, all of which can prove to be sufficiently challenging.

In most states, challenges arise largely from the differences between the builder’s contract and the normal re-sale contract that agents are more familiar with. Many states allow builders to circumvent the normal re-sale contract provided by your state’s real estate commission or REALTOR® association, and substitute a proprietary contract of their own instead. These proprietary contracts are typically crafted by the builder’s attorneys and they normally contain extensive language that heavily favors the rights of the builder. Additionally, a typical builder contract is often 60 to 80 pages long, compared to the 3 to 15 pages found in most states’ resale contracts.  A smart agent should always ask the builder’s sales person for a copy of the contract a day or two in advance so that they can carefully read it in its entirety—highlight any crucial dates or clauses that a buyer should be particularly aware of. This will also lead to a much smoother signing once the buyer is present, because you won’t have to read and explain an entire 80-page contract on the spot. Many experienced agents keep a file in their office containing example contracts from every active builder in their area. This allows you to quickly re-familiarize themselves with each builder’s contractual nuances in advance, so you’re prepared when a buyer asks you to go see a that builder’s model homes.

Financing can be particularly tricky when dealing with builder transactions.

Most mortgage lenders typically cannot cost-effectively lock-in an interest rate for more than 90 days in advance of a closing. Therefore, when dealing with an unfinished (or dirt-start) home that likely won’t be completed for 4 to 18 months, this can pose a substantial risk. If a buyer’s debt-to-income ratios barely qualify them to purchase the home at the time it’s contracted, then there’s a risk that they may no longer qualify to buy it at all if mortgage rates increase before they’re eligible to lock-in their rate. Because none of us own a crystal ball to predict which direction the rates may go, it’s always very prudent to make sure your buyers will still qualify even if the rates increase. A good rule of thumb is to make sure they would still qualify even if the rates climb by 1 percent. If not, then they are taking a major gamble buying new-construction. If a buyer barely qualifies for the amount they are trying to spend, then it makes more sense to find that buyer a home that they can close on within the term of their rate-lock. None of us wants to hear the lender tell our buyer that after waiting 13 months, they no longer qualify for enough to close on their new home.

Most builders also have an ownership stake, or affiliated business arrangement of some kind with a lender and a title company. Additionally, most builders will tie their incentives and/or discounts to the requirement of using this lender and title company. While they cannot force a buyer to utilize these service providers, they will routinely withhold discounts and incentives from buyers who insist on using an outside lender or title/escrow company. Often, these incentives are substantial enough that most buyers will comply with this requirement in order not to lose them. Therefore, it is prudent that the buyers understand this in advance, so that it doesn’t cause issues if they are particularly loyal to their current bank or lender.

Make certain you understand exactly how the builder will compensate you for bringing them a qualified buyer.

Builder co-op commissions are often structured differently then re-sale commissions, so you need to be clear on how you’ll be compensated. In most instances, builders only pay a disclosed percentage of the home’s base price, but do not pay any commission on the lot premiums, structural upgrades, landscaping, or design center options. This is important to factor in, because these costs can reach as much as 50 percent of the final price on some homes such as former “model homes.” Make sure you clarify in advance whether a builder pays commission based on the home’s base price, or on the home’s final purchase price. Also clarify the percentage they intend to pay as well. In most cases it’s slightly higher than the percentage paid on a resale to compensate for the fact that we aren’t paid on the home’s entire price. However, in some instances builders do pay on the complete amount, and there are some instances where the percentage paid is slightly higher than the area average for resales. This typically occurs when a development is selling too slowly, the builder has too many completed spec homes in inventory, the market is declining, or the builder is closing out the development. In these instances, selling new-construction can be particularly lucrative!

Make sure your client has never registered in the past while touring model homes without including your name on the registration card.

The builder’s salespeople are tenacious about pressing everyone who enters the model homes to fill out a registration card. Much like an open house on a re-sale, they want to capture the buyer’s information for follow-up purposes. However, those registration cards also serve a more insidious purpose as well. There are questions on the card that ask the buyer how they found out about the development, and whether they are represented by an agent or not. If your buyer previously visited the sales office without you (even if it was before they started working with you) and they didn’t put your name on their care, the builder now has a record of it. If you bring that buyer back later and attempt to register them as your client, the builder may not allow you to. The builders only intend to pay you if they determine that you were truly the procuring cause and initially brought the buyer to them. If they determine that the buyer found them on their own, without your involvement, then the builder will most likely refuse to pay you a commission. So be careful and ask your clients early in the process if they have registered with any builders before hiring you!

As long as you do your homework, the pros outweigh the cons.

Selling new construction can be very rewarding, and it can provide you with precious inventory in a market where re-sale homes are in short supply. If you take the time to tour all the builders’ models in your area, and learn as much as you can about their homes and policies, it will be time well spent. Get to know the sales people and their floorplans, because a solid knowledge of the builders in your area will be a benefit to both you and your clients. Be confident in your abilities and go sell some new homes!

David Hakimi runs the Hakimi Team with Berkshire Hathaway HomeServices Innovative Real Estate in the Denver and Boulder, Colo. market. Connect with David at www.DavidSellsDenver.com or on Facebook, LinkedIn, or Google+.