Making a Splash in New Construction Sales
Any experienced realtor will tell you that getting a client into a new build is a whole different experience from closing on an existing home sale. If you’ve never swum these waters before, it can easily seem as though you are suddenly in over your head.
If you are looking to make a splash in new construction sales, there are some critical differences you will need to master in order to ensure the best experience for your clients. Here are the top tips you will need to master this field.
1. Be Willing to Learn
Just like any other field, education is key to staying on top of this field. There are different needs, a different set of “typical” clients, and different rules. Many features of this type of sale are unique to the process and you will also be expected to provide education to your clients, as well.
While a client can negotiate an existing home sale without a realtor, that is a dicey act for a new build. Learn all you can, wherever you can about the process. Think of this as a way to build your own knowledge database of builders, floorplans, incentives, and more!
2. Know the Financing
In a world where over 8% of homeowners are actually underwater in their mortgages, it is always important that a potential homeowner understand the nuances of their financing.
Remember, an unfinished home can take as much as 18 months to finish from the time the builder breaks dirt to the time it’s ready to move in. So a buyer who is right on the bubble of affording the home may find themselves priced out of that exact home when the interest rates rise just a few months later.
Hot tip: Help your client understand what a 1% rate hike might look like for their financing. Avoid surprise.
3. Understand the Builder Contract
This document outlines very important pieces of information and deadlines. Here a buyer will be able to see what rights they have throughout the process, when they can no longer get money back, what upgrades they have contracted for, etc.
A home buyer can be overwhelmed with this contract, because compared to the resale contract an experienced home buyer is used to seeing, a builder’s contract is an average of 60–80 pages long!
Additionally, keep in mind that builder’s contracts are written by the builder, of course. So, the language may not be designed to go in the home buyer’s favor. A new house is the investment of a lifetime, and a poorly designed contract opens up the buyer to a multitude of risks.
Hot tip: Get the contract several days in advance of meeting the client, pour over its contents and ask the builder as many questions as you need. Keep this on file so you can refresh your memory as to the typical processes this builder has.
4. Know That all the Little "Extras" Being to Add Up
With a new build, there are lots of incentives that can make a transaction challenging when you are just getting started.
For example, builders often have relationships of their own with lenders or title companies. They may have arrangements with these companies that tie discounts or other incentives to the home buyer using these companies, too.
If a home buyer is particularly loyal to their home bank, for example, they may lose out on these incentives. Your own compensation may be handled differently from a resale commission.
For example, sometimes upgrades are not part of the figure your commission is based on but can represent a substantial increase in the final price of the home. Know how you are being paid!
5. Work to Establish Relationships with the Builders
Every good realtor knows that the best recommendation is a personal recommendation and establishing a relationship with the builders in your region is important to your growing success. Just like you work to establish a client base, you will need to consider networking with local developers as well.
Just like your clients are looking for the perfect home, developers are also thinking about the market and how to maximize their own imprint. Think of how you can create a personal touch and stand out from the crowd when you make your introductions.
A small gift with your business card will do more to differentiate you than sending a mass of emails that are likely to go straight into the trash folder. Remember that old saying: You never get a second chance to make a first impression!
With proper preparation, there is no need to feel overwhelmed at entering the new construction real estate market. Remember, builders know other builders, and once you have your foot in the door and have established yourself as a reliable source of information, you can expect your new construction real estate business market to take off!