The Power Broker Roundtable is brought to you by the National Association of REALTORS®. Look for this column each month, where we address broker concerns, issues, and milestones.
This edition of the Power Broker Roundtable was moderated by Steve A. Brown, Special Liaison for Large Firm Relations, NAR. The panelists include:
Dennis Walsh, CEO, ReBuildUSA.com/SellNewHomes.com, Newport Beach, Calif.
Helen Hanna Casey, Pres., Howard Hanna R.E. Services, Pittsburgh, Pa.
Scott MacDonald, Broker/owner, RE/MAX Gateway, Chantilly, Va.
Steve A. Brown: When it comes to new construction, there’s good news and…there’s good news. The National Association of Home Builders (NAHB) predicts a 25 percent increase in new home construction this year. That’s in part because lenders recovering from the effects of the downturn are once again funding developers—and, in part, because low inventory and pent-up demand have boosted the need for housing. The result is a resurgence in building nationwide and a renewed interest in new construction by consumers. But what does this resurgence mean to brokers and agents? How do we capture and maximize what can be a great opportunity? Dennis, what do you see happening in new construction at the moment, and how can we best prepare for a changing market?
Dennis Walsh: As you indicated, Steve, we are already seeing huge growth in the new homes sector and, for a variety of reasons, it’s going to continue long-term. Reports from the Harvard Joint Center for Housing Studies indicate that by 2020, we will need 1.8 million homes each year just to meet consumer demand. The resale market alone can’t meet that growing need. Savvy sales professionals know this is the time to jump in…to position themselves as both a vital partner to new home developers and a knowledgeable resource for buyers. I recommend some specialized training too.
Helen Hanna Casey: I agree—we’re going to need to focus on new homes to satisfy market needs. First of all, let’s face it, new construction excites people. It also revitalizes communities and helps buyers feel more secure about selling their existing home. But there’s no question agents are going to need to apply new skills and strategies in the changing market. They’ll have to be well-versed in the details of new construction and how to work professionally with builders and buyers.
Scott MacDonald: I can testify there is almost unlimited opportunity in this area. In our company, we’ve developed a referral agreement relationship with a huge new-home sales center in our region—essentially for buyers and sellers who come in unrepresented. We host meetings for them, and act as a general resource. We’ve also hired a team that focuses on infill lots, tear downs and assemblages for smaller builders that used to be affiliated with larger builders and are now out there on their own.
Dennis Walsh: Many larger builders hire their own sales reps. But there’s plenty of room to develop relationships with smaller, regional builders—positioning yourself as a sort of sub-contractor. Remember that a large percentage of homebuyers are more than willing to consider a new home. As Helen says, it’s exciting. When you know the local market, and are acting as the buyer’s rep, you have a far better shot at helping customers make the best decision from among new and resale homes.
Helen Hanna Casey: A developer has always been a part of our business, whether it’s large, custom teardowns and rebuilds or tied to new zoning opportunities—and I can tell you that the key to success in this sector is in working closely together as a team with the builder.
Steve A. Brown: What I’m seeing here in Tennessee, too, is that marketing new homes inevitably drives resale business. That’s a bonus. And I also see the opening, once you establish yourself as a new home expert, to promote yourself as more of a full-service resource. So how do your market yourself as the expert, both to builders and potential homebuyers?
Scott MacDonald: For us, it’s through the normal market channels, of course – website, social media, whatever works best for you. But we also visit new home sites regularly and drop off brochures. We meet with builders at their sales meetings to discuss our program – and we invite them to ours, and reverse market them by finding out where they’re looking for land. When we come across lots worthy of subdivision, we can take the properties to them.
Dennis Walsh: The key for brokerages is in making the new home culture a part of your everyday business.
Steve A. Brown: No question, the need and the growth factor are there. It’s just a matter of getting in the game. NAR has some great resources for members wishing to learn more about specializing in new home sales, including a New-Home Construction and Buyer Representation classroom course. More information can be found at www.training4re.com/. Additionally, realtor.com® has expanded new-home listings from builders to the site. This expansion of the new-homes inventory creates additional co-op commission opportunities in the sale of new home listings, and increases the relevance and exposure of all REALTOR®’s listed new home inventory on the site. Ultimately this provides a more comprehensive search experience for buyers. For more information, visit www.realtor.com.