8. Baby Boomers
Realtors have noticed that many builders across the country are failing to connect with one of the largest group of buyers: baby boomers looking to downsize. They say there is a shortage of appropriate housing for this demographic, made up of older adults who prefer new, one-level construction to existing dwellings, says Baltimore-area Realtor Janice Kirkner. “Eighty-five percent of my 55-plus buyers prefer new construction because there is no maintenance and all common areas are maintained for them,” she says.
Hailey finds older buyers in Texas desire smaller new-construction one-story houses of 2,500 square feet or less that have the features and amenities they want. “They are looking for smaller single-story homes but they want the upgraded amenities that they feel they deserve. They also want that energy efficiency.”
9. Cultural Considerations
Builders often overlook the needs of foreign buyers, says Miami agent Andre Brown, who works for an Asian-owned company. Marketing materials should be available in a variety of languages depending on the area and bilingual staff or interpreters should be on hand to assist potential buyers.
“As the U.S. population becomes more culturally diverse I think it would be good for builders to research cultural preference, architecture and design to implement different aspects into their development,” says Brown. For instance, Richard says sales in his Asian-dominated market often hinge on a home’s favorable feng shui.
10. Closing the Deal
When it comes time to finalize a deal, there is one thing that Realtors agree on: Home buyers are turned off by overly forceful marketing tactics. They see deals falling through because of salespeople’s relentless calling and inflexible rules. For instance, it’s common practice for builders to tell buyers they must use a specific lender or title agency in order to get the pricing they want.
“The hard-sell on the builders preferred lender and title company is not appreciated by most agents,” says Hailey. “Many times before we assist a buyer in looking for homes, we have already had them get pre-approved with a lender outside of the builder’s preferred lender. Giving the consumer the ability to shop the loan is the right thing to do.”
Instead of “used car salesman tactics,” sales professionals should focus on a specific buyer’s preferences and motivators, adds Rice.
“They should break past old‐school sales tactics and dive into the psychology of what their buyer is looking for in their next home,” he says. “Their interests, wants, needs, and priorities are what a sales agent can search for when developing a relationship with a customer. Closing the sale will come as a result of a sensible process that adds value.”
Realtors can be indispensable in knowing what motivates a buyer. “Ask us what is the best approach to dealing with our buyer, we have a relationship with them and can recommend the best way to enter into negotiations, says Kirkner.
Home buyers are sometimes shocked by builder’s contracts, Realtors say. They are put off by no option periods, non-refundable earnest money, and no hard close date. They are nervous when they see that builders giving themselves one to two years to complete the home and that they’re locked in to the contract no matter what the inspection shows.
Houston Realtor Kindi Scartaccini has had clients walk away from listings when they realize the deal would involve a builder’s contract. She recommends builder use a standard state form with just a few addendums. “Most realtors and their buyers love that because the contract is not so slighted toward the builder,” she says.
12. Working Together
Although Realtors help facilitate sales, they often feel as if they not a valued by builders. One of their biggest pet peeves is when a builder reaches out directly to their client. “If a buyer has an agent, call the agent not the buyer,” says Scartaccini.
In addition, they say, Realtors should be treated with the same respect as any other industry professional and have their calls returned promptly. Not answering a Realtor’s questions fast enough slows their own customer service. “In the age of the Amazon World, people are used to answers fast and we like to work that way as well,” says Fields.
On the flip side, builders should consider using a selling agent to market and sell their homes, says Benson. Think of Realtors as another subcontractor. “Builders won’t hire a tradesman with no experience but sometimes they think that their homes should sell themselves,” he says. “New homes don’t build themselves and they don’t sell themselves. Hire a professional to do the job.”
13. Realtors Fees
Many builders do not work hard enough to partner with local real estate agents, and few include a fee for a Realtor in their sales process. Some even try to cut them out of the deal or don’t return their calls.
“It’s frustrating to the Realtors, because they may spend many hours in educating the buyers through showing existing homes and general questions about the process of buying,” says DelVecchio, who is the exclusive marketing agent for a local builder Carina Homes, one of the only builders in her area that reaches out to Realtors with a “Realtor Referral Program” that provides a marketing fee of 3% of the build price.
“Our relationship is built on the premise that the builder’s best skills are with construction, but not marketing/sales. Our arrangement is that I get a marketing fee on every home Carina builds, which is about 10-12 per year,” says DelVecchio. “When there’s another Realtor involved in bringing a buyer to Carina, they also get paid a fee for the referral/assistance with the buyer from financing to closing.”
Realtors often see builders do everything right in their sales process but then drop the ball at the eleventh hour by not having the home completed at closing. Benson urges them to have everything ready at least a week before closing so that the builder and buyer can do a walkthrough and create a punchlist, which should be completed prior to closing. “It far more difficult to do repair or finish work in the home when the owner is living in the home, both for the builder and the homeowner,” says Benson.
“Builders need to learn to finish a house,” echoes Baldwin. “93, 97, 98 percent is not finished! A buyer is always going to focus on things not done,” he says. “In football, you can go 99 yards, but you don’t get any points unless you cross the goal line. There’s no A for effort.”
15. Follow Up
Repeat business and referrals are the lifeblood of any home building business. The best way to achieve them is through excellent service before, during, and after the sale, say Realtors.
Fields says many of her clients have heard warranty nightmares about lingering issues in new homes. “Not having a strong system in place will lead to lost referrals and angry customers,” she warns. “If there is a problem, builders need to take ownership of issues and repair them immediately.”
Manage buyers’ expectations with a follow-up service schedule for the first year. Benson recommends that builders check in with homeowners 90 days and 330 days after closing. “The first visit is to check in and make sure that all of the expectation of the homeowner have been met. The second visit is just prior to the end of the typical one-year warranty and goes a long way toward referrals and ensuring the builder can use his past homeowners as references,” he says.
These visits can be helpful for builders, too, as they are a chance to receive feedback on the design and livability of the home to alert them to the need for any changes in future homes, he adds.
Most experienced real estate agents feel a kinship with their builder peers, especially after having weathered the down years of the Great Recession together. They understand the stress and challenges of making a living in the volatile U.S. housing industry.
“The shortage of labor and capital, increased land cost, excessive government regulation, elevated taxes and impact fees all make the job of being a builder and developer very difficult,” says Brown.
In spite of the challenges, Realtors say they are impressed with builders’ devotion to their craft. As Parker says, “Truly, they are doing a great job!”
Terrific article via Builder: Jennifer Goodman