Editor’s note: This is the third in a series of articles on homebuilders’ willingness to pay commissions to real estate agents who can bring buyers to their properties. Read Part 1, “Builders: Don’t forget Realtors brought you to the dance,” and Part 2, “New homes are one solution to tight inventories.”

History may record that technology laid the foundation that brought homebuilders and Realtors together during what real estate development, marketing and sales consultant S. Robert August has called “the fastest market turnaround in 80 years.”

“It’s a new day for homebuilderRealtor relationships” says Tim Costello, CEO of Builder Homesite Inc (BHI), a consortium of 32 of the nation’s largest homebuilders.

Homebuilders are starting to realize and accept that Realtors control ready, willing and able buyers. BHI’s own market study shows that 84 percent of all homebuyers intend to use a Realtor.

Realtors are selling 63 percent of all new homes sold, according to a recent study by the National Association of Realtors, and Costello believes this number can be significantly increased.

Costello said BHI just completed a national attitude and opinion study among real estate agents “to determine the issues we need to address to make showing and selling new homes easier and more effective for the real estate agent community.”

BHI is working “on a host of tools, services and resources, which will make it significantly easier for real estate agents to sell new homes,” Costello said. “These are being made available to local MLSs, brokers and agents as a service to the industry.”

Keller Williams Realty International co-founder Joe Williams, a homebuilder and developer in his own right, says the Internet and rapidly changing technology provide new and real opportunities for homebuilders to increase their cobroker sales.

But Williams cautions that “We need to remember one thing, human nature.” Technology will continue to change, he says, but human nature does not.

“New homes inventory needs to be easily searched, directions to the sales office need to be clear, and the information needs to be accurate,” Williams said. “This is true today and it will be true years from now.”

The thought of a homebuilder determining cobroker policy based on the agent’s unchanging human nature instead of the home builder’s unchanging human nature is a compelling one.

Based my own experience, surveys, and discussions in LinkedIn groups devoted to real estate and new homes, I submit the following “unchangeable” preferences, no matter what the market is doing or what technology provides.

Five, 10, 50 years from today, homebuilders will prefer to:

  • Sell presales rather than build inventory homes on speculation
  • Sell direct to the prospect without paying a cobroker commission
  • Pay commissions at closing rather than “upfront” for presales

Question for real estate agents: If you were making your living and building your company on the quality of your product and the profit it earned, would you not think the same way?

Five, 10, 50 years from now, Realtors will prefer to:

  • Be paid a market rate commission now rather than later for presales
  • Be treated with respect by onsite sales consultants
  • Use MLS or whatever is easier to find and find out about available inventory
  • Show saleable inventory that can close within the shortest period of time
  • Sell inventory that leaves no doubt about the amount of commission to be paid

Question for homebuilders: If you were making your living based on 100 percent commission, would you not think the same way?

What specifically might be done? Here are a few suggestions:

For Realtors:

1. Put a new home model at the top of your showing schedule. A stop by a new homes model will help set a price benchmark for your resales, and will help your prospects get more comfortable with price faster. You want a sale, be it new or resale. This is a good way to make your showings work for you.

2. If you have a short sale buyer who wants to spend thousands to upgrade, and they cannot make up their mind, show them a new home. The work is already done.

3. Attend builder open houses with a purpose: Asked to be introduced to the builder’s most successful cobroker at the party. Find out why that agent likes selling this builder’s homes and prefers not to show other builder’s homes, if that is the case.

4. Don’t listen to the old timers who “remember when.” Today that is like sitting on an atomic submarine listening to Noah explain how he built his ark. Today’s “when” was yesterday.

5. Thank builders for providing inventory both now and in the future (resales). Be supportive.

For builders:

1. Understand that if the agents don’t “understand the money,” they will not trust you, your registration process or your construction quality. Ever.

2. Whatever you do, make sure your prospect protection policies are clear, consistent and communicated. Revisit the “protection period” and treat your homes like FSBOs, which they are.

3. Make sure your broker policies are as leading edge as your homes. The Internet has changed the rules. Simplify your registration process. Online registration is already here. What is your policy if the agent’s prospect previously registered with you on the Internet?

4. Take a broker-manager to lunch. Ask him to tell you how agents protect their commissions when dealing with FSBOs, then follow suit.

5. Memorize number 1.

Builders want to do more business with Realtors, and Realtors want to sell new homes. And we know that when two people want to work together they find a way.

It’s nice to know that technology will continue to provide creative, cost effective prospecting and home finding tools. It is now up to homebuilders to question and commit to Internet-age cobroker policies and communicate them clearly to those involved.

Like Costello said, “It is a new day.”

David Fletcher, a licensed real estate broker and lifetime achiever, is founder of EMentoru, a company dedicated to helping real estate agents and homebuilders help each other make sales. Contact him by phone or text at 407-234-2349, or by email at davidf@ementoru.com.

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