Realtors and Home Builders: If You Knew a Sure-Fire Tactic to Generate More Sales- Would You use it?
February 2, 2010 by Coach Rick
Realtors® and Home Builders: If You Knew a Sure-Fire Tactic to Generate More Sales- Would You use it?
I’ve been teaching quite a bit of real estate continuing education of late and have noticed there is still a HUGE chasm between Realtors® and builders.
So here’s the questions…
How can Realtors® leverage builders to increase their business in 2010?
How can builders increase their co-op Realtor® sales?
Building relationships with Realtors® and builders is the fastest, easiest way to build your business. Here’s how to do it.
~Rick
Cracking the Realtor®/Builder Code
education class I always ask this question…
“How many of you derive 5 – 15% of your income from representing buyers in new home sales?”
The statistics are pretty consistent…about 5%!
That means 95% of Realtors® AND builders are leaving money on the table.
Here’s what Realtors® are telling me about WHY they aren’t comfortable with builders…
- They don’t trust builders. Either they’ve been burned by a client going directly to a builder or have heard a story about it in their office.
- They don’t understand the building process. It’s hard to admit but Realtors® don’t feel comfortable working with builders because they don’t understand the process.
- They don’t think of it. Most brokerages don’t have a training program that deals with buyer representation in new construction. Out of sight and out of mind.
- They don’t want to wait to get paid. Would you? Let’s see…you can sell a used home and get paid in 45 days or wait 6 months to get paid for a build. Tough choice, isn’t it!
- They don’t realize new homes are available in the area they’re showing homes. Most Realtors® don’t realize infill possibilities exist. Most aren’t aware of remodeling options and renovation financing either.
Now I’m sure there are more reasons but these are the top 5 I’m hearing on a consistent basis.
Builders Pay Attention
Because 85 – 95% of all transactions in any particular market are used- builders need Realtors® a lot more than Realtors® need builders.
Here’s the top mistakes I see builders making when it comes to working with Realtors®…
- Paying the builders representative a higher commission if no outside Realtor® is involved. And how is this set up supposed to foster better cooperation?
- Making the client registration process difficult. Have registration forms available at your model, office and on your website. Phone calls are just fine for temporary registrations too.
- Relying on the MLS for your Realtor® business. Relationships, not showings will build your Realtor® business. Remember Mr. Builder, you need them more than they need you. You have to put your best foot forward to get these relationships going.
- Treating the co-op fee as a commission. The 2-4% you pay out, Mr. Builder, is not a commission- it’s a marketing fee. The best news is you don’t pay a dime of it unless the sale is made.
- Offering to take 2-4% off the price since the buyer doesn’t have a Realtor®. Look, I work in the trenches with my clients and I know how tight deals are today. But the minute you utter these words to your buyer and they get back to the Realtor® community- it’s the kiss of death. AND think about it- unless 100% of your sales are with cooperating Realtors®, you don’t have a 2-4% co-op fee built in on every sale.
“So herein lies our problem- Realtors® and builders keep traditional mind sets and no new business relationships are fostered. Well, is that good enough for you in 2010?”
Fresh Opportunities for the New Economy
Realtors® and Builders can’t continue the oil and water relationships of the past. Each needs a new avenue for business and both have something the other wants.
I’ve developed a list of “best practices” for Realtors® and builders. It’s called Cracking the Realtor®/Builder Code- 10 Sure-Fire Tactics to Jack up Your Sales.
This list is based on direct feedback from Realtors®, builders and builder sales representatives.
You can download it for absolutely FREE by clicking on this link>>
What about Your Thoughts?
Am I missing anything?
What are some of the successful relationships you have fostered with Realtors or builders?
We all have our horror stories of the past but that won’t help anyone grow their business today. I look forward to hearing what you think! Leave a comment below.
Happy Selling!
P.S. It doesn’t matter if you’re a Realtor and have never sold a new home or are a seasoned builder representative. You need to change the way you approach working with each other.
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Comments
6 Responses to “Realtors and Home Builders: If You Knew a Sure-Fire Tactic to Generate More Sales- Would You use it?”
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Couldn’t agree more with the relationship between builders and realtors. Most builders don’t get it. They see it as some big fee, rather than a marketing expense that brings them solid business. Look at my listing at 10 Island Road in North Oaks as a “to be built”. It took a long time to find the right builder-realtor relationship. Shortly after we partnered on this lot, we picked up a buyer/client for a lot across the street from this lot that was listed for sale with another agent. Definitely good results for both realtor and builder when everyone comes together and sees it as a win-win situation.
Rick – Excellent points, and great suggestions. If a builder were to add up all the marketing and advertising costs associated with in-house sales, working with Realtors becomes very appealing. And those builders that work with Realtors to drive traffic to in-house sales reps have the best of both worlds.
What about remodelers? They can have a relationship with Realtors also. I have offered Realtors “free contractor inspections” to their clients to help them figure out how much repairs or remodels would cost. It seems to work…Let me know what you think.
Holly- Great idea with the inspections! How about working with a select group of Realtors to offer design/build solutions to tough listings and buyers that want/need some updates. You could pair up with a renovation financing specialist and help Realtors sell more listings and buyer sales with your service.
I know of one Realtor who specializes in foreclosures that spent $1,000,000 in 2009 working with remodelers to fix up his listings- and he only did a couple of 203k loans!
You bet- there is a lot of opportunities to partner with Realtors (See #5 in my first list).
Thanks for the comment
Good report Rick, some things never change.We always had good response from Realtors by offering a free lunch for them at a new model. That seemed to work the best for us when starting to get them to work with a builder
Ah yes…some things never change. Feed them and they will come! Great thoughts on promoting a new model.