While real estate’s recovery is good news in and of itself, the revival of the market is yielding many key opportunities, such as new-home sales. With inventory lagging and buyer demand increasing, builders are back in business. However, the new-home market of today is not the new-home market of yesterday. According to HomeServices of America Chairman & CEO, Ron Peltier, “After six years of very little activity, there has to be a retraining effort to get agents back up to speed.” Here, Peltier shares what it will take to succeed in new-home sales.
Teresa Walsh: How are new-construction home sales being impacted by the real estate recovery?
Ron Peltier: The new homes sector is re-emerging. Over the last six years, new-home sales barely had a pulse due to the terrible economy, surplus inventory and falling home values. New construction wasn’t on anyone’s radar—no one was even thinking about it. But now, in many markets, there has been a dramatic shift in activity. Many of the big builders are aggressively getting back in the game. But we need to remember that the small- and medium-size builders have traditionally built the majority of homes in this country, and we need to help them get back in the game to start meeting the growing demands of buyers.
TW: What are some of the key dynamics in today’s marketplace that are ultimately driving this growth in new-home sales?
RP: Things have shifted from a buyer’s market to a seller’s market and this leaves today’s buyers with a different set of questions, concerns and anxieties. The great thing is, buying a new home enables clients to overcome some of the challenges found in a seller’s market, such as low inventory and the pressure of multiple offers. At the same time, many builders today are not building spec homes, which means we need to be prepared to sell from blueprints. It takes different strategies and skills to help buyers through this process and visualize the finished product.
TW: What should brokers and their agents focus on as they gear up for this growth in new-homes business?
RP: Getting the right training is the most important thing they can do. After six years of very little activity, there has to be a retraining effort to get agents back up to speed. New-home sales are very different from resales—you can’t sell a new home like an existing home. It’s a completely different process and this requires agents to have a specialized skill set. You know this because your Certified New Home Specialist training gives agents exactly what they need to make the most of builder representation and buyer representation business. Successful agents need this specialized knowledge to counsel their buyers through the step-by-step, new-home process. The only way to be effective is to have the proper training.
TW: Would you compare the growth in new-home sales to what we saw in the REO business during the recession?
RP: If a sales associate is not knowledgeable in the new-homes arena, they are going to miss out on an even greater opportunity. We all saw how REOs became a dominant part of the business for several years. What’s important to recognize is that new homes are a much bigger opportunity than this—even bigger than it was 10 years ago. There is tremendous pent-up demand, growing household formation and interest rates that still remain historically low. These factors should continue to play out for many years. Together, this adds up to a massive, long-term opportunity.