Ask most Realtors about their market and they’ll tell you inventory is extremely limited. Even with a market correction on the horizon, there just aren’t enough homes on the market.
The same is true here in my market in Colorado. But at YourWayHome, we’ve created a successful strategy to help our agents add to inventory, create valuable local relationships, and fill their pipeline with buyers. And it involves selling houses that haven’t even been built yet.
It all starts with a vacant lot
Vacant lot listings are not part of the search criteria for most homebuyers. Aside from high-end custom buyers, the prospect of buying a vacant lot and building a home is a foreign concept. For this reason, vacant lot listings often sit on the market for a long time.
At YourWayHome, our agents partner with a local home builder. Then, we identify suitable lots for sale and approach the listing agent of the lot. We let them know that we represent a small home builder and suggest we co-market the lot. That means that rather than the listing agent having to market just a lot — which is going to have a very small target audience and will often take longer to sell — we will co-market a “to be built” house. It’s a win-win since the agent can still sell the lot a la carte and owe us nothing.
We will then work with our builder partner to identify a suitable house plan that will be marketable to the area. We assemble the plans for the house and include photos of similar houses the builder has completed. We establish what the cost would be to build on that particular lot. And in partnership with the listing agent, we market the house as ‘to be built’ in the MLS and traditional online marketing channels.
Once the listing is out there, it dramatically increases the buyer pool. Buyers that are searching for a home now become aware of this potential new home. The YourWayHome agent is the contact for any inquiries—we represent the home builder, and we’re going to know the product better. Of course, the listing agent gets paid on the land sale and any agent that brings the buyer will receive their commission. We get paid a commission from our builder partner.
It’s a strategy where everyone truly wins.
Find the right partners
The first step is to identify local home builders. I’ve found some home builders are reluctant to work with Realtors, but we explain that we’re not asking them to list their spec homes with us, we simply want to get paid a commission if we bring them a new buyer. That commission is built into their building fee.
The ideal builder you partner with is going to be a bit of a “Goldilocks”—not too small and not too big. They need to be able to price these homes out accurately and be equipped to work with the buyer. So, the builder can’t be too small. But obviously, a large builder is going to be focused on production neighborhoods. The ideal partner probably builds anywhere from five to thirty homes a year.
And what if the buyer loves the location but not the house? No problem. The buyer doesn’t have to build that exact house. You’ve already attracted the buyer and created inventory that didn’t exist in the marketplace.
The YourWayHome team has found great success with this method. One agent can sell about a dozen new homes this way. And since new homes in our area average about $900,000.00, it’s not a bad niche.
But more importantly, we generate about 10 qualified new leads for every co-marketed ‘to-be-built’ home. Because it seems that only about one-third of the new home buyer contacts already have a buyer’s agent we generate a lot of additional business. We often help with the sale of their existing home too.
There are, of course, many more details and potential ‘gotchas’ to be mindful of, but we’ve perfected this over the last five years. Now our team is expanding nationally and we’d love to show you how it works. Contact us to learn more.