RISMEDIA, September 5, 2007–(MCT)–A growing number of home builders are turning to a higher sales power — [local or regional] Multiple Listing Services — to jump-start sales in a sluggish market.[Local or regional] Multiple Listing Service[s], Realtor-owned networks that constitute America’s biggest marketplace of properties for sale, are best known as the forum for resale of houses and vacant lots. Some builders coping with a two-year-old slump see real estate brokers as the best way to unload the unsold.
“Realtors have a bigger clientele list than you get in builder open houses,” said Pewaukee, WI, builder Shelly Basso, “and a lot more market share in terms of transferees.”
Basso has paired up with First Weber Group Realty agents in Delafield for the 20 or so homes her company will build this year. The agents give the properties MLS exposure — [which can then be] circulated to 1.3 million agents and their customers.
A data check at Metro Multiple Listing Service, which serves southeastern Wisconsin, suggests that builder-realty alliances are a sign of the times.
Last year, 959 new construction listings were in the Milwaukee MLS listings for the first half of the year. In the same period this year, new construction accounted for 643 metro Milwaukee listings. It was last year that new-home permits plunged 25% to 1,934 in the Milwaukee-Waukesha-Ozaukee-Washington counties region. In this year’s first half, reports industry tracker MTD Services Inc. of Menasha, the market shrank another 28%.
If more builders outsource marketing duties, realty agents stand to win big. A brokered real estate sale typically nets a 5% to 6% sales commission split among agents arranging the deal. A realty agent supplying a buyer direct to the seller commonly collects a 2% to 2.4% sales commission. Realty industry representatives contend, and some builders agree, that professional marketing assistance makes economic sense.
“Most builders are focused on their product. Their strong suit is not their marketing arm,” said Joseph A. Horning, president of Brookfield-based Shorewest Realtors. “Realtors are good at presenting product, at bringing customers to the table.”
Horning, whose realty company bills itself as Wisconsin’s largest, said realty agents represent “a good chunk” of builder business these days.
Such partnerships are more common but hardly the norm, said Matt Moroney, executive director of Metropolitan Builders Association of Greater Milwaukee.
“The bread and butter of Milwaukee’s market is the small builder who does it all,” Moroney said. “Others have their own salespeople. Some builders may look to realty companies to get more exposure on model homes that they’ve had awhile, but is it a majority? I don’t think so.”
Matt Hall, owner of Matt Hall & Son Home Builders Inc. in Nashotah, can’t imagine anybody selling his product but him.
“I do 10 to 12 homes a year,” he said, “and I don’t sub out my sales. Most Realtors aren’t knowledgeable enough regarding construction techniques and practices.”
Basso, president and owner of Aspen Homes Inc., lauded the First Weber agents that she began working with four years ago when booming demand made it tough to juggle construction and sales duties. Now that conditions have cooled, she said, those agents are even more valuable. Aspen has maintained steady work through the industry slowdown, in part because the agents have maintained a steady stream of shoppers.
Does getting professional help drive up the price of a house? Not in Basso’s opinion. “Every builder pays a sales commission. Some pay their staff — we pay First Weber,” she said. Aspen pays less than a 6% commission; Basso said, but wouldn’t specify the discount.
First Weber works with at least 80 builders statewide, said Roger C. Rushman, the agency’s executive vice president. His company’s Madison office led the trend in the late 1990s, which spread to include metro Milwaukee a couple years ago, he said.
“Eight or nine years ago, some builders were closed to the whole idea. They didn’t want anything to do with you,” Rushman said.
Today, “a lot are struggling,” he said, “and we have seen a steady stream of developing relationships.”
Will these fledgling ties dissolve when conditions improve? Basso and Rushman think theirs won’t, because the agreement works to mutual benefit.
In a world where local competition and global economies squeeze profit margins ever tighter, Rushman said one factor could tip the balance — when the sales bill comes due.
“Realtors absorb the builders’ market costs upfront,” he said, “and get paid based on results.”
Copyright © 2007, Milwaukee Journal Sentinel
Distributed by McClatchy-Tribune Information Services.