The busy spring selling season is right around the corner. It’s a time when business picks up for residential real estate, including new-home builders. New-home sales hit their fastest pace in 25 years late in 2017, and builder sentiment reached an 18-year high. This year, new-home sales are expected to increase by 7 percent, while existing-home sales are projected to grow 2.5 percent.
Residential agents, largely preoccupied with helping buyers and sellers of existing homes, often overlook new construction. But it doesn’t have to be that way. In fact, as a broker interested in helping your agents find every potential angle for gaining more business, new homes belong on your radar.
Before encouraging your agents to get involved, it’s helpful to acknowledge what might be holding them back. New homes are avoided for a variety of reasons, one being lack of information. Often, these properties don’t appear in the MLS, so finding them requires additional research such as driving around, monitoring local ads, and searching builders’ websites or property portals.
Your agents may also feel like they don’t know enough about new-home transactions, and that getting involved requires a steep learning curve. On top of that, it’s difficult to feel confident and persuasive in telling buyers they will add value to a new-home purchase if this is an area where agents are lacking knowledge or experience.
Maybe your agents’ biggest concern is that they will be cut out of the transaction. As a rule, reputable builders don’t try to trick agents out of earned commissions; however, your agents should always take steps to prevent such disagreements. This includes learning how to effectively use a buyer representation agreement (a core topic that’s central to the ABR® designation coursework) and officially registering buyers with the builder’s representative.
On the Flip Side
New homes also offer several advantages. Since builders typically provide warranties on the structure and appliances, agents are less exposed to liabilities from undisclosed conditions. Additionally, a builder’s errors and omissions insurance will cover major structural and site defects, further minimizing an agent’s liability exposure.
It’s also fun. After all, it’s probably safe to assume that most agents would rather help buyers make smart decisions on appliance upgrades and new flooring finishes than to negotiate over roof repairs or septic system upgrades.
Steps to Take
When consulting with buyers, encourage your agents to be proactive and ask about new homes. By initiating the discussion, they will accomplish two important goals: 1) demonstrate their interest in considering all options that might satisfy their clients’ needs; and 2) introduce their role in a new-home purchase (and help ensure they remain included in any transaction).
Regularly checking out new-home construction in your market, meeting with sales representatives and understanding builders’ preferences in working with real estate agents are additional helpful steps.
If your agents want to expand their skillset—and their income potential—to include new-home sales, the easiest way to gain this knowledge is via REBAC’s New-Home Construction and Buyer Representation course. This recently updated one-day course counts toward earning the ABR® designation and is an excellent complement to the ABR® designation coursework. Visit REBAC.net for additional details.
Marc D. Gould is senior vice president, Member Development, for NAR and executive director of the Real Estate Buyer’s Agent Council (REBAC). A wholly-owned subsidiary of NAR, REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. With more than 30,000 active members, REBAC awards the Accredited Buyer’s Representative (ABR®) designation to REALTORS® who have completed the designation requirements. To learn more, visit REBAC.net.
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