Doug Dunlap has done a lot of things over his 30-year real estate career in the Puget Sound area in Washington State.
He’s been a real estate broker and home builder. He’s co-founded and was managing broker of three real estate firms, and he co-founded two successful home building companies. And now he’s an author.
Dunlap’s self-published book, Presale Home Concepts 101, has three sections — one each for homebuyers, builders and real estate pros, the latter aimed toward those who want to expand their sales and listing opportunities.
The book is aimed at real estate agents who normally shun the new-home sector. And it’s particularly timely now when decent existing homes for sale are becoming more scarce every day and builders are boosting production to fill the void.
Unfortunately, as the 79-year-old author sees it, “many agents and builders are working against each other rather than together to provide information, construction details and top-notch customer service, which is what buyer prospects need.”
The focus of the 106-page manual is on houses that are not yet started or are in the early stages of construction, a part of the business Dunlap calls “neglected.” He says “most brokers and builders do not know how to market and sell presales,” a term he uses to describe both unstarted houses and early stage spec houses.
Dunlap, who’s now retired from the real estate business, contends that the builder and broker communities are not on the same page, and won’t be until they start talking to each other.
Generally, when a real estate agent brings a prospect into the sales center, they are asked to sign in. Then the agent is told to leave, that the builder will take it from here and that you’ll get your 3 percent (sometimes less) commission. The underlying message, says Dunlap, is “that we know more than you about our product.”
On the flip side, some realty firms and their broker managers aren’t terribly enthusiastic about this part of the business, believing that such transactions are too costly, too complicated and can result in legal problems, the author contends.
Also, some agents are content to take a full cut while working basically as a lead generator and having to do little or no work. But, Dunlap argues, “a good agent is not afraid of the work part. It makes them more comfortable in earning his or her commission.”
In the middle of all this is the would-be buyer who can benefit by buying an early-stage new home because he or she sometimes gets to pick the lot as well as the exact flooring, countertops and paint colors he desires. Besides these personal choices, the buyer will get to add upgrades and possibly even make modifications to the floor plan itself.
“They get to participate in the process; that’s what consumer’s want,” Dunlap says. Yet none of this is possible, he points out, when the spec house is finished and becomes standing inventory.
The challenge for agents who want to break into the presale part of the market is convincing builders that they must have skills and expertise to do so, Dunlap says. And to do that, you’ll have to show that you know as much or more about his product and building sites as the salesperson sitting in the model home.
The author suggests establishing a “marketing concepts plan” that includes, among other things, a story about the builder, a variety of renderings and plans, a standard features and upgrades list, a current price list, a list of available lots, photos of finished houses and construction details, carpet and tile deckboards and samples of kitchen and bathroom choices.
These are standard sales office tools, but you’ll want to stay away from there at the moment, so you’ll have to carry them in the trunk of your automobile.
Writes Dunlap: “It is extremely important to be well organized with marketing tools so you can present yourself as a true professional” to both would-be buyers and the builders you are representing.
Agents should also show their potential builder-clients how they save construction carrying costs by selling presale houses. “A presale is less risky for the builder and the lender,” Dunlap writes. “Many home builders have gone broke because of high carrying costs, but none that we know of [have failed] because of low carrying costs.”
If you are successful serving one builder, other builders may follow, according to the author, who recalls his first experience selling presales in an old subdivision of 43 one-acre lots. Four houses were already built and occupied, but nothing new was under construction because of the tight lending restrictions that were in effect in 1972.
“I sold five presales homes within four months, which allowed me to acquire six new builder accounts,” he writes. “One of these builders became a good friend who listed most of his spec homes with me for 20 years.”
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.
