High-End Custom Home Builders and Real Estate Professionals Unite: Ignoring the Myths and Building Great Relationships
Consider this fact: Real estate professionals are a valuable resource for finding and guiding interested buyers to their dream homes.
Now, consider this one: High-end custom home builders produce exceptional, high-value homes with modern amenities, often in desirable areas.
These two groups – both Realtors and home builders – obviously have something to offer each other. Realtors want to get buyers into good homes, which helps them earn a good commission while building the kinds of relationships that will generate future business. Home builders have good homes to sell and need to attract interested buyers in order to move inventory. So it seems natural that these two groups would form a strong relationship, right?
Unfortunately, that’s not always the case. Just as one example in the U.S., the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) have a long history of butting heads, which is really to the detriment of both groups. Efforts at repairing those relationships have been slow; in fact, in the past couple of years, the NAHB rejected the NAR’s offer to have an exchange: placing a Realtor on the national board of the NAHB in exchange for placing a home builder on the NAR’s board.
The proposal was met with resistance, once again solidifying the general mistrust between Realtors and high-end custom home builders. These problems are not limited to the U.S., and the same kinds of issues come up with Canadian real estate professionals and home builders on a regular basis.
While these types of efforts are discouraging, that does not mean local Realtors and home builders can’t make their own efforts to build strong partnerships that can ultimately bring about a great deal of mutual success. Here are a few ways to try to solidify those relationships.
1) Gain some perspective. It is important for Realtors and home builders to understand each other. For example, many Realtors might not be aware that a home builder may only be making between 6 and 10 percent gross on a particular project, making the standard 3% commission a significant cut into their profits. On the other hand, builders should keep in mind that many hard-working Realtors have weathered a rather significant storm in the recent market, which has predominantly consisted of short sales and foreclosures – which, in general, means more work for less money.
By understanding these perspectives, high-end custom home builders and Realtors are better able to negotiate with each other – ensuring a fair split on earnings and commissions that will ultimately lead to profitability on both sides.
2) Honesty is the best policy. As a home builder, you should train your home sales agents carefully so that you cannot be accused of being dishonest. One of the first questions asked should be whether a buyer is already working with a real estate agent. This practice will alleviate many fears that an agent has in suggesting new construction to a client, as the common perception is that the agent might be cut out of the deal if the buyer starts contacting the builder directly.
3) Consider your reputation. A builder who makes a habit of getting buyers to drop their Realtors to work directly with their own home sales agents is essentially shooting themselves in the foot. Can you really afford to lose that agent traffic? Consider this question carefully before making any suggestions to potential buyers.
If a buyer approaches one of your home sales agents asking if a better deal is available for not working with a Realtor, the answer should be, in a word, “no.”
4) Build relationships. Realtors who attract high-end purchasers are a natural fit for high-end custom home builders. So, how do you get those agents to notice you? Start by looking around. Who has been selling the high-end homes in your area? Once you’ve gathered a few names, it’s time to start pounding the pavement. Contact those individuals and invite them to your open houses, and go to their offices to meet with them. In the process, you can start training these Realtors on how to sell your product. Speaking of which:
5) Educate each other. There are a lot of benefits to a Realtor in working with a custom home builder, including saving time. Often, the builder’s sales agent can conduct most of the transaction, letting the Realtor focus on other clients. Newer Realtors may not be aware of this benefit, along with many others. Doing presentations and meeting these teams of Realtors are a great way to provide this kind of education and highlight the benefits of working with you.
6) Offer additional incentives. Many purchasers come in looking to buy a home but needing to list their existing home in order to facilitate the new purchase. When high-end custom home builders provide that listing to a Realtor, it is an excellent gesture that costs the builder nothing. What else do you think would be a good way to provide incentives to Realtors to work with your company?
By solidifying these principles, home builders and Realtors can work together to help more buyers find what they are looking for. Realtors can also start becoming more familiar with all of the services and amenities that home builders can offer, including things like offering more energy efficient homes in Toronto, including homes that can benefit from the saveONenergy Home Assistance Program. Many buyers are looking for benefits like green energy and other environmentally-friendly features, and being able to work alongside a custom home builder lets Realtors offer these amenities to their clients without being limited to just those homes currently on the market.
Trust is a big component in why high-end custom home builders and Realtors have a hard time getting along. By overcoming these trust issues, both groups of real estate professionals can work together to increase profitability and serve purchasers more effectively. Are you a Realtor? What are some of your biggest concerns in working with a home builder? Have any home builders in your area taken steps to alleviate those problems? What would be effective from your perspective?