Over the past year, the housing industry has seen historically low inventory levels in the resale residential area, leaving buyers in competitive bidding wars and many agents working around the clock to expand their inventory opportunities.
“The markets are definitely evolving quickly, especially when considering city and state migrations of corporations and people, politics, weather impacts, the ingress and egress of populated city centers, huge pricing fluctuations in a variety of large and impactful generational groups,” says David Camp, SVP of innovation at Legacy International. “This has all made the art of market prediction very difficult these days.” Legacy International is a Keller Williams-certified new home training and education provider, working with KW to expand resourcing, training, and support for agents within the new home industry sector.
Camp and Legacy International founder and CEO Philip Jalufka believe that an often-overlooked branch of real estate – the new homes industry – can provide agents with an abundance of opportunities as resale home shortages continue to be a staple of the current market. “It’s the easiest access to more inventory in your local markets, and it doesn’t look like that trend is going to stop anytime soon,” Jalufka says.
Here, Jalufka and Camp share five actionable steps you can take in order to gain your footing in the new home industry and amp up listings in your portfolio.
1. Clearly be able to differentiate the value between a new home and a resale.
New homes and resales are two very distinct areas of the real estate industry, and being a trusted adviser to your clients entails identifying those differences and properly creating and communicating their individual value points to your buyers. Before working with your buyers to determine whether a new home or resale is the right fit, spend time to make sure you can identify the differences in your own mind. Differences customers may find to be of interest include:
- New homes: Newer, more energy-efficient appliances, roofing, and HVAC system; builder and appliance warranties; no renovation, less maintenance and repair; less negotiating stress. New homes offer the latest and greatest in technology and safety features, and buyers have the ability to ‘make it their own’ with upgrade options.
- Resales: Move-in ready; landscaping is mature; neighborhoods are built and may have more charm with no construction traffic; price points may be less (potentially, more homes and/or larger homesite for your money); homes may come with appliances, window treatments, and some furnishings.
“In addition, new homes can normally capture the majority of the home buyers’ desires with very little concessions – meaning they can get exactly what they want,” Camp says.
2. Articulate the difference in buying new versus resale.
This step is all a matter of process: What can the buyer expect differently when buying a new home? Make sure you can speak to the different payment methods clients will encounter by going with each option, such as earnest money structures for a new home versus a small escrow and 30-day closing on a resale home. Historically, builders have preferred lenders and title companies. This ensures your customer will be well cared for and, quite possibly, they will enjoy compelling incentives simply by using these service partners. Another aspect of new home purchasing clients should be aware of is pricing and incentives – being aware of the fact that builders may not negotiate on price, but you might see some adjustments on incentives. Timelines and ongoing builder communications should also be discussed in order to properly set and manage expectations.
3. Ensure you don’t get cut out of the deal with builders.
As you begin carving out your space in the new homes industry, it is vital that you visit your local new homes communities and discover each one’s unique selling points. This is the most important action step you can take to help you greatly increase your inventory base, and opportunities to sell more homes each year. Foster a relationship with the builder team, so they do not want to cut you out of any deals you bring their way.
This action step comes with six distinct tasks:
- Visually stake out your market area. In most cases, seven to 10 new home communities is enough to offer your customers thoughtful options. More than this may be overwhelming … less might reflect bias.
- Complete one of our comprehensive community evaluations for each neighborhood. The more work you put into the preparation, the easier and more effective your showings. Allow your market activity to dictate how often you update these forms.
- Next, identify the key traits of each community and outline the differences among them. Focus on aspects such as amenities, lot sizes, home styles, timeframes for competition, HOA fees, and quality of construction.
- Establish a primary point of contact within each community and create a symbiotic relationship with them.
- Learn each community’s unique identity and story and be able to convey its message to your buyer.
- Collect collateral materials for your arena and have them ready for any opportunity to sell.
4. Truly understand the difference between value and price.
According to Camp, “Value is perception often used to justify price.” So, the duo advises anyone who is entering the industry to learn to create value that replaces price. “We like to build value around three true fundamental contributors to value: location, concept, and timing,” he says. Because price negotiations are typically not part of the conversation in the new home industry, it is important to establish value in a way that makes the price seem inconsequential to the buyer. Focus on specific site selection opportunities, the home’s amenities, and any emotional aspects that resolve your customer’s need.
5. Demonstrate your product’s value effectively.
For Camp and Jalufka, this starts with an impactful map presentation – an orientation tool that uses a hard copy of the community site plan and a Sharpie marker, allowing the agent to get many questions out of the way before getting the home buyer on-site. This ensures that once you’re out on-site, the focus can be pouring into the customer’s feelings.
Hone this skill in a way that focuses on identifying what’s most important for the buyer. “Let the buyer test-drive amenities. Get a good feel for proximity,” Camp says. Make the site experience immersive for your home buyer. Help them get a feel for what life may be like for them as owners.
Ultimately, there are two sides of the coin as it relates to the new home industry and how Realtors can get involved. “One side encourages Realtors to engage more with new home communities, driving more new home buyers to new home options. The other side encourages Realtors to expand their listings potential by representing more new home listings,” Camp says.
Get more content.
For four more action items and best practices on how to be a specialist for new homes within your local market, as well as learning how to foster productive relationships with builders and developers, Legacy KW offers the Builder Developer Realtor Education course, available in the KW MarketPlace.
This two-part, live virtual-training program takes place during two 3-hour sessions, on December 14th and 15th, and is ideal for Keller Williams agents looking to expand their new home sales participation and achieve a greater understanding of the new home industry as a whole. Your purchase includes access to a Course Library including course review materials, agent assets and downloads, practical application, and more.
The Builder Developer Realtor Education program has a clear mission – to put more qualified Keller Williams new home sales professionals into local marketplaces all over the world. Whether an agent is well seasoned or just beginning their real estate career, the value of this training and education is unprecedented, positioning the agent for unparalleled success immediately following the course.