How Important are New Homes to Your Real Estate Business? Here’s an interesting question for brokers, managers and sales professionals:
Of all current prospective homebuyers in your market, what percentage would like to at least consider the purchase of a brand new home? Certainly this number will vary from market to market, often depending on what may be realistically available and affordable. But if you had to make an educated guess, would you estimate 50%? … 70% … or even more?
Asking this question in my sessions at a number of national conventions recently substantiated that clearly a majority of buyers fall into this camp. The majority of hands in the room went up in response to an estimate of 70% or more. More than a quarter of the session participants felt that more than 90% of their prospective buyers are including new homes in their search!
In fact, most agree that owning a brand new home is truly one of the most common of “American Dreams.” Almost everyone we know dreams that someday he or she might own a home that has been built specifically for them – brand new from top to bottom, with the colors, finishes and features of their choice.
So what happens when the typical prospective buyer of a new home calls the typical real estate office and gets the typical sales associate on the phone? Do they find someone with the education, systems, resources and market knowledge to help guide them professionally? Do they find someone who knows the ins and outs of helping these buyers explore the options and alternatives of both new and resale homes?
The unfortunate answer, by a long margin, is no. In fact, a survey we conducted using a sample of 200 real estate offices randomly contacted nationwide found that more than 90% not only did not have the new homes expertise to help these prospective customers – they actually tried to convince the caller to buy a resale instead! When asked for help specifically in buying a brand new home, the agents tried to convince these prospects, over the phone nonetheless, to buy something else.
Is this an effective sales strategy? Of course not. Can you imagine a salesperson doing that to you? Not only are these agents missing an opportunity to help these buyers into a new home, they also lose the opportunity to assist in the sale of their existing home. Further, if the prospective buyers shop for a new home and decide instead that a resale is a better choice, these agents have likely lost the opportunity to participate in that transaction as well.
I think it’s important to keep in mind that builders, unlike some of our resale sellers, simply have to keep selling homes. Individual sellers may sit stubbornly on their asking prices, or simply come off the market for a while. Builders have to keep the machine running. As a result, in many markets today, new homes represent some of the very best values – often the greatest inventory of competitively priced homes available. Most of us are aware of the incentives many builders are using, including generous co-broke commissions and bonuses.
Ignoring the new homes segment of the market could be turning our back to tremendous sales potential – as well as the resale business it drives. Keep in mind that buyers will find their way to these new homes without us – if we let that happen.
If you’d like to find a way to capture this business, consider the following:
• It’s important to establish a “new homes culture” in your company. In other words, selling new homes is just as important a part of the real estate business as selling “used” homes.
• Reinforce this message internally to encourage associates to pursue the training and market awareness to successfully support this business. Support those agents who want to make new homes a part of their business mix.
• Promote the message of your expertise in new homes to your customers along with everything else you do. If they are in the market for a new home, a resale home, or considering both in their search, you want them to recognize your company as the one-stop solution.
• Emphasize the importance of new home specific training and organizational tools to your sales associates. New homes business can be built on a foundation of resale skills, but also requires substantial specialized knowledge, strategies and systems.
For many reasons, there has never been a better time for real estate professionals to pursue the tremendous opportunities found in working with builders, developers and new home buyers. Remember, builders will continue to build and sell homes and buyers will find a way to realize their dreams with or without us. Sit on the sidelines and watch, or get in the game – the choice is yours.