by Dennis Walsh
Special to Realty/Builder Connection
Another social event.
Amid the handshakes and the laughter, the conversation turns to sales, and then, real estate agents selling for builders.
“I’d like to see it work, but I just don’t understand how they think.” says one.
“The problem is that we don’t talk the same language,” says another.
And a third adds, “I’ve always been concerned about getting the service and follow-through our customers need.”
As a new home sales trainer and consultant, I’ve heard these conversations many times. But who’s talking here? Are these builders, or could they be real estate agents? The answer is both. And surprisingly, as far apart as these two groups often seem, their concerns are very similar. With further examination, we find their goals are also much the same. Shared concerns and mutual goals - sounds like a great foundation for a successful relationship - and it is!
Unfortunately, due to a lack of understanding, many don’t even get started. The good news, however, is that builder-broker cooperation has turned into great success stories all across the country. The key is to establish a true teamwork relationship — based on realistic expectations, clearly defined responsibilities, open communications, and mutual goals.
Do you think this might work for you? “Are you kidding? I’d rather shoot myself in the foot!” you’re thinking.
Relax. Before you take aim, let’s examine some of the benefits of broker representation for builders.
Best source of buyers
National surveys have repeatedly substantiated real estate brokers as the leading source of new home buyers. And it’s no wonder. Brokers spend massive sums of money in their ongoing marketing efforts. These efforts run the full gamut of advertising media, promotional activities and public relations.
As a result, consumer surveys indicate a full 8O percent of prospective home buyers today will turn to a real estate broker in their search for another home. Many buyers are looking to compare both new homes and resales in the process. Others begin to look at new homes after finding existing properties do not fill their needs. And with move-up buyers dominating today’s marketplace, many first contact a real estate agent to handle the sale of their existing home.
The cooperative broker network is also a powerful factor in attracting buyers. Transferees, an extremely important market segment in many areas, are almost entirely controlled through the extensive relocation networks; and relocation specialists find that almost 100 percent of their clients prefer a new home.
Finally, as the concept of buyer agency continues to take hold, more of our customers will seek a real estate agent to guide them through the planning and purchase process.
Can you afford to ignore such a large portion of your market? That’s what I would call shooting yourself in the foot!
Marketing expertise
To many builders, deciding where to spend their marketing dollars feels uncomfortably like betting a horse race - and understandably so. As market segments change and become more diverse, reaching them with the right message becomes more of a challenge.
Top real estate firms, however, have a great deal of expertise in this area. And due to their greater volume of marketing expenditures, are usually able to reach prospective buyers on a more cost effective basis.
P.T. Barnum once said, “Advertising is like learning ... a little is a dangerous thing.” This is the reality faced by the vast majority of builders. In contrast, a successful brokerage firm utilizes a cross-media approach, building on the synergistic nature of advertising and promotion. These efforts build name recognition and market share over time. Through association with a broker, then, a builder shares these benefits and marketing dollars simply go much further.
While this is a great advantage, you can better your odds at the races even more with this next benefit.
Market research and planning
Thou shalt...
Know your buyers.
Know your competition.
Know your marketplace.
These are some of the commandments that should be etched in stone for all of us today. And while few builders would argue the significance of these mandates, most don’t dedicate the time or resources necessary.
In the area of market research, however, real estate brokers can provide loads of valuable information. And those experienced in new home sales can offer considerable input in developing product design and pricing strategies, absorption rates and sales projections, and advertising and promotional programs. Assistance in market research and the development of successful marketing plans is considered by many builders to be the most important benefit of their broker relationship.
Sales expertise
Let’s face it: today’s new home buyers are a tough bunch. As consumer studies show, they’re not only more experienced and sophisticated, but also a lot more demanding. If we’re going to win the sales and service game, our people can no longer be adequate, they’ve got to be great!
The real estate industry clearly recognizes this. Their commitment to training and professional development has never been greater. Essential training today includes all aspects of marketing, sales, finance, agency, real estate law, and customer service.
These educational opportunities, as well as day-to-day experience in real estate sales, produces many highly skilled salespeople. In addition, top brokers will provide the ongoing motivation and management support to assure the continued personal growth and sales success of their associates.
It’s important to recognize the value of this training and motivation. This is the stuff that sales are made of! Yet very few builders provide this level of development and support. Foremost, the resources simply don’t exist.
An association with a qualified broker can be an effective solution to this problem. Through their efforts, your company can enjoy a level of sales expertise and professionalism to keep you ahead of the crowd.
Controlled costs of sales and marketing
“It’s simple ... if we don’t sell homes, the builder doesn’t pay,” explains Bob Unruh, Director of Builder Marketing Services for Realty One, Inc.
One of the top brokerage firms in the nation, Realty One currently represents more than 90 builders in over 110 communities throughout Northeast Ohio.
“We offer marketing and sales support customized to the needs of our builders,” Unruh continues, “Our fees are then paid as a percentage of sales. This allows the builder to budget these expenses up front.”
And while a multitude of arrangements can be structured to allocate costs and responsibilities in builder-broker relationships, the major portions of expense are incurred only when a sale occurs. And the reality for the builder is that most of these sales simply wouldn’t happen otherwise.
It may surprise you, but in some areas of the country, builders and brokers occasionally don’t get along very well. I’ve even met builders who actually say they don’t like real estate agents —- shocking, isn’t it? While there are many cases of builders who have had bad experiences with real estate agents unskilled in new home sales, many others just don’t understand the benefits of working cooperatively with a broker. The article that follows addresses this problem and was featured in several publications directed to builders.... almost every night! And while many of us enjoy working with our customers, do we really have the time to give them the attention they deserve? In most cases, l don’t think we do.
Sales and marketing subcontractors
I think a great way to look at a builder-broker relationship is similar to that with your subs. Why do the great majority of builders rely on subcontractors?
Because good subcontractors are specialists. They are knowledgeable, experienced, and highly skilled in their fields. They generally possess the best tools and use the best sources and contacts. And they typically stay on top of trends and changing regulations in their area of expertise. As a result, they are able to provide the best overall performance on the most cost effective basis.
Could this make sense for the specialized knowledge and service you need in sales and marketing? More and more builders today will tell you that it does.
A teamwork approach
Am I suggesting that all builders are best establishing a full sales representation relationship with a real estate broker?
Absolutely not!
In my travels, I do find those who have cultivated the in-house talent to do an excellent job in their sales and marketing. Most often, these are larger volume building companies who can more easily amortize these costs. But, even then, few of these can afford to ignore the importance of the real estate community.
The strengths of the major builders, however, lie in other areas of the building game. The key in every case is to put together the best combination of players to reach your goals; good old-fashioned teamwork.
A teamwork approach, with the right players, will have a significant impact on the success of your planning, marketing, and sales effort. After the sale, this same team effort can assure a high level of performance and customer satisfaction. But remember, effective teamwork must be based on realistic expectations, clearly defined responsibilities, open communications, and mutual goals.