New construction: What is it, where is it, why do I care, how can I make money at this? In today’s show, we’re going to be discussing why New Construction is a must-have income spoke for all real estate agents, and how you can effectively grow your real estate business & increase commissions by adding this to your cadre of leads, listings & sales!
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What is it?
- Traditional New Construction, single family home neighborhoods
- New townhomes, doubles, zero lot line homes, ‘patio homes’.
- Condos, low, medium and highrise
- Urban and suburban infill / teardowns / rehab / conversions
- Land acquisition, lot sales, development
Why do you care?
- This is a great source to find inventory for your BUYERS that’s not in the MLS! Note : many resale buyers get frustrated thinking about the cost of repairs on an older home. This is a solution that overcomes that objection.
- New Construction is a major part of most markets. Not knowing new construction is a handicap to your career.
- One relationship (with the builder, developer or sales manager) can lead to many multiple transactions.
- End the frustration of being in competitive offer situations with your buyers trying to buy resale. Newconstruction offers them freedom of choice, time to move and no rehab costs.
- Buyers can often get more home for the same payment if you find them a builder with in-house financing, rate buy-down options or other assistance.
- This is actually EASIER prospecting than many other spokes, because builders usually have commissions built into their pricing!
What are the various opportunities available when I really learn this ‘spoke’?
From easiest to most advanced:
- Sit in the new construction model home during the hours the builder doesn’t have coverage. Sell their product when you can and keep the leads who don’t build with that builder or don’t build at all. Think: Listing leads, new construction buyer leads, etc.
- Create a relationship with new build reps, and / or the sales managers at different projects, where they refer the resale listings to you. If they’re licensed, you may pay them a referral fee. If not, show your gratitude with gift cards.
- List the spec homes the builder has under construction.
- List every listing the builder has, representing them on the whole project.
- Sell as much as you can yourself, to your own buyers, controlling more of the project and keeping the builder as happy as possible for future developments.
- Bring the builder / developer land, sell them the land, list the new homes, sell those homes, lather, rinse, repeat!
- Develop land yourself or with investors. This may include house-by-house teardowns, rehabs, or larger projects.
How do I get started on this?
- FIND the New Construction in your area. Create a file, a spreadsheet, a PDF…some way to have your own ‘New Construction MLS’, for quick reference. The local builder associations can help you know who’s building what, where, and for what price. Example: http://www.texasbuilders.org/membership/member-directory.html#bf_dirFrame_2853
- Determine which builders have new construction representatives ‘on site’, either in model homes or trailers.
- Prioritize the builders who have reps on site for the sake of building your resale referral network.
- Visit each development. Get to know the product FIRST, before you go asking for anything in return. Ask the following questions: -Do they have spec homes? -How do they handle home sale contingencies? –Do they have in-house or special financing arrangements? –Where else are they building? -Do they ever list with agents on a house by house basis or entire projects? -Who is their typical buyer? Asking these questions shows your interest and enthusiasm and getting the answers helps you to know how to monetize the relationship.
- Create a ‘pop-by’ plan to build relationships and get the inside scoop on available homes. (Be the one they call when someone backs out of a new home that’s just been completed!) Use our 12 month Center of Influence plan for ideas on pop-bys, or our private Facebook page to see what other Harris Members are doing with New Construction relationships.
- Take appropriate buyers from your pipeline to the right projects and sell what you can! Remember, builders offering financing = higher price point, same payment for your buyers.
- Take appropriate new build reps to coffee to discuss referral arrangement for resale properties or other opportunities you’ve discovered so far. Make sure you know their product first!
- Set appointments with Sales Managers, the actual builder or developer to discuss listing spec homes or projects. Use your Pre Listing Package, with a modified Listing Plan of Action for their project.
- Lather, Rinse, Repeat! There are new projects getting started all around you. Make sure you are educated, communicating and participating.
- Consider joining your area’s Architectural Review Committee, Urban Planning or other organizations to be on the inside track!