Some agents don’t want to sell new construction, while others have established a new construction niche. If you’re among those agents who shy away from new home sales, you might want to rethink your strategy. In many markets, resale inventory is low and new homes represent a real opportunity. If you want to consider selling new construction, here are some things you need to know.
Work to Build Relationships with Builders
One thing that holds some agents back from pursuing new construction sales is that they assume that builders don’t want to work with outside real estate agents. However, experienced new construction agents have been successful at building partnerships with builders.
Once you have a good relationship with a builder, you’ll have the opportunity to list their new homes, and your workload may be lower because the builder’s representatives take on some of the responsibility.
Learn Why Homebuyers Need Their Own Representation
Many homebuyers think that they don’t need their own representation because the builder has a representative to help them. You need to let buyers know that there are very valid reasons for them to work with their own agent.
- The builder’s representative must protect the builder’s interest, not the buyer’s. A homebuyer might not even realize that they’re not getting as good of a deal as they could have with their own representation.
- The builder’s representative can only promote the homes constructed by one builder. If the builder’s homes don’t meet the buyer’s requirements, the representative can’t refer them to other new construction. Only you as their agent can give them an overview of all their choices.
- Some buyers think that they will get a lower price if the builder doesn’t need to pay commission to a buyer’s agent. However, builders expect to pay that type of commission and they’ve already incorporated it into the price of the home.
It’s true that many builders don’t want to negotiate on the price of the home. If they lower the price of a home, it will set a precedent for the rest of the homes in the development. However, there are a number of other ways to negotiate a deal.
Builders will often be willing to pay closing costs and give discounts on upgrades, or include some upgrades at no cost. Every builder is different in terms of the items that are standard and those that carry an upgrade cost. Find out which items are upgrades, you’ll be prepared to negotiate with the builder on those items. It’s also important to make sure that your clients know the options that will cost extra as you tour model homes.
It’s also good to look for a home that’s been built on spec and has been completed for a fairly long time. You might have much more room for negotiation because every day that a completed home is on the market costs the builder money.
Another thing to look for to get a good deal is a new phase of a development that is set to open, which will typically raise the prices in the original phase. In that situation, you may be able to reserve a home in the original phase before the price increase.
Don’t Ignore New Construction Sales Until You Do Some Research
Think about whether your market is heavily skewed toward new construction, or if the resale inventory in your market is low. If you do decide to sell new construction, you’d still use the technology you’ve invested in such as your real estate CRM. And, if you want to list for a builder, you could impress them with the professionalism of your showing solutions that include showing feedback.
You just may find that new construction is a very viable opportunity.