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Whether you’re looking for a fixer-upper, a no-demo reno, or a million-dollar listing, home design and build shows are still going strong (thanks, HGTV and Discovery+). It’s not a bad thing. It helps consumers visualize what they want and take ownership over their home, whether they are buying, building or remodeling.
But, when it comes to the new construction process, TV magic can be deceiving. And that’s an understatement! It takes a lot longer than 60 minutes to build a house. Depending on what type of home one’s building, it can take anywhere from six weeks to six months to a year.
I have the unique opportunity to see the new construction process from multiple angles: as a Realtor and owner of a national real estate team, as the owner of a construction and development firm, and as a homebuilder myself. (I’ve built about 10 homes in the past 10 years and have learned a lot!)
As a real estate professional, helping buyers navigate the homebuilding process can be challenging. There is a whole new process and language to learn. But the upside is so worth it. Here are my top five tips for working with new construction buyers.
1. Understand the building process, and learn the language of new construction
One of the best ways to help your clients is by understanding the process — start to finish. Do your homework. Although the construction process is pretty systematic, each builder tends to be slightly different, depending on the size of their business and their overall experience.
If you haven’t already, schedule meetings with your local builders, and learn how they prefer to work with clients and real estate agents.
Take notes, and learn everything you can. Attend new construction seminars and trade shows, and tour model homes.
New construction is a fantastic niche to build your real estate career around. The more you know, the more you can position yourself as the go-to professional for both clients and builders.
2. Know the difference between production homes vs. custom homes
This lesson is a big one. Your clients might not understand the difference, which means they could be operating under the impression that they get to pick every last light fixture, the color of the outlet covers, the type of toilet in the master bath and the type of material used in the pantry.
That is not probable if they are building a production home. Custom? Sure, they can pick whatever they want.
Here are the primary differences:
- Production homes are built on land owned by the builder using stock plans and a limited number of choices on particular aspects of the home.
- Custom homes are just like they sound — completely customizable — and can either be built on land owned by the builder or land purchased by the homeowner. It usually involves an architect in the process.
- Production homes have a shorter timeline, usually four to six months.
- Custom homes can range anywhere from six months to 16 months, depending on the square footage and design of the home. And, of course, the cost difference can vary significantly from production homes to custom homes; but with a production home in general, the cost is negotiated and finalized when the contract is signed, so there is less variability as the build progresses.
As you can see, making sure you and your client understand the difference between production and custom homes will help manage expectations.
3. Set clear expectations with your clients
Speaking of expectations, building a home is much different than buying an existing home, which is why it is so crucial that you are well versed in the new construction process.
The timeline for new construction is generally longer than an existing home, and depending on your clients’ needs, they might not be able to wait. You and your client also need to consider whether they need to sell their home to purchase their new construction. And if so, where will they move in the meantime?
In an ideal world, the closing on both properties would line up perfectly, but we know that perfect doesn’t always happen. Make sure your clients have alternative living arrangements. New construction brings scheduling issues, weather and material delays, design changes, and sometimes unexpected costs.
Something will most likely be delayed or go wrong during the build process, particularly right now with low listing inventory, high cost of materials and shipping delays. All of this should be outlined ahead of time with clients so they are clear on what to expect. When they have that clarity, then everyone will have a lot more fun throughout the process.
4. Get reputable recommendations and referrals for builders
Not all builders are equal. Do your due diligence, and make sure any builder recommendation you make to your clients comes with a backup.
Talk to several of their previous clients. Tour a few homes. Speak with a few subcontractors, vendors and suppliers. You and your clients are getting into a high-cost, long-term relationship with these builders. Make sure it is a partnership in which you feel confident.
5. Know when to let go and let the builder take over and when to step back in
Yes, they were probably your clients first, but there comes a time in all builder-client-agent relationships when it’s time to let the builder take over and manage the client.
Depending on the builder and whether it’s a production or custom home, the timing might look different. That’s why it is critical to understand the builder’s process and when and where it makes sense for you to be involved.
Your clients and their comfort level in navigating the process might also dictate some of this.
However, if you have had these conversations with the builder before introducing your clients, the whole process can go much smoother.
The key here is communication. Ensure everyone is on the same page, each party is clear on their lane of responsibility and holding themselves accountable to deliver on their part of the agreement.
However, knowing when to step back in to serve your client’s best interests is also vital. Regular check-ins on the progress and process are essential too. It’s a fine line to walk, but an important one so that the builder and agent are not stepping on each other’s toes and that the client has the best experience possible.
Building a home is an incredible experience (for me, it’s art). As a real estate professional, it’s your responsibility to ensure that your client is well-represented by having excellent knowledge of the process, great relationships with builders, creating clear communication channels, and providing the best experience possible for your clients. Happy building!
Adam Hergenrother is the founder and CEO of Adam Hergenrother Companies