The Benefits of Collaboration Between Builders and Real Estate Agents
Builders and real estate agents working together can bring advantages to both sides; however, it may make potential buyers wonder if their needs are being put first.
In today’s market, where marketing must be precise and impactful, involving real estate agents in your plan can help builders of any scale broaden their audience base effectively. Incorporating this rising trend can boost your marketing efforts and help you reach your business objectives successfully.
Is This Collaboration Beneficial for Builders?
According to the 2024 New Construction Consumer Research Report by Realtor.com, even though builders offer homes that buyers desire, they are often perceived more as sellers than partners by new construction buyers. This perception may explain why 94% of construction buyers, within the last 12 months, reached out to a real estate agent during the buying process.
At first glance, buyers may feel that having a real estate agent is necessary when purchasing any type of home. They may view the builder as the seller and assume an agent is needed to protect their interests.
Furthermore, in the survey mentioned in the report, a considerable number of respondents who bought a newly built house in the past year began their search with the aim of selecting a new construction property. However, it’s worth noting that 39% of construction buyers also considered both newly built homes and existing properties. So, if you’re weighing your options between brand-new homes and resale properties, having a real estate agent to help you navigate both choices is likely to be beneficial.
Builders Can Also Benefit from Working with Real Estate Agents
Market Insights
Real estate agents have a wealth of knowledge about the market and understand dynamics that builders might overlook. Marketing teams within construction companies are often out of touch with the desires of buyers. Interacting directly with customers can offer insights that go beyond what can be learned from articles.
Achieving Sales Turnaround
Engaging a real estate agent helps developers finalize transactions by organizing promotions and effectively hosting open houses. Experienced agents possess knowledge about the intricacies of the building process, which enables them to offer insights beyond what is typically found in property listings or brochures.
Access to Agent Networks
Real estate agents have built relationships with homebuyers over the years and have access to important brokerage databases. They can efficiently introduce builders to new buyers interested in purchasing newly constructed homes.
Builders’ Concerns When Collaborating with Real Estate Agents
Commission Costs
Builders might be reluctant to collaborate with agents because of the cost involved in covering real estate agent fees for the buyer’s side, and sometimes even footing the bill for the listing agent’s standard 3% commission. Medium-sized builders often have setups where one broker handles all their properties to avoid the need for a 3% commission for the listing agent. Nevertheless, paying the standard 3% commission to the buyer’s agent is still a common practice.
Decline in Sales
Builders may worry that agents could favor other properties over their developments. However, it’s crucial to recognize that agents, as buyers’ representatives, are bound by a responsibility to act in the best interests of their clients. This means that even if there is a commission structure for the builder’s project, the agent will prioritize the needs of their client, leading them to select a property that meets their needs, even if the commission is lower.
Perceived Repetition
Some construction professionals might mistakenly believe that relying solely on their internal agent is enough to manage the sales process, without needing a buyer’s agent. This misunderstanding stems from the belief that purchasing a newly built home doesn’t require as much support compared to buying a pre-owned property. However, homebuyers still gain advantages from having their own agent represent their interests in the deal, rather than relying on the builder’s representative, whose focus is on the builder’s concerns.
How Builders and Agents Can Work Together Effectively
Expertise in New Building Projects
Real estate agents often specialize in newly built homes and have a thorough understanding of the builder’s processes and product offerings. This expertise allows them to guide potential buyers in selecting floor plans and features that suit their lifestyles. Agents offer personalized advice that enhances the attractiveness of newly constructed homes and help manage buyer expectations, reducing miscommunications and facilitating seamless transactions.
Builders also find it helpful to have a middleman who can showcase their homes in the most appealing light possible.
Collaborative Marketing Opportunities
Marketing revolves around expanding reach and engaging with target audiences. A successful approach involves merging the efforts of builders and agents to enhance their impact collectively. By collaborating on marketing initiatives, such as social media engagement, hosting open houses, organizing exclusive events for agents, and utilizing traditional advertising channels, both parties can boost visibility significantly. Additionally, shared investments in paid media campaigns and virtual tours can lead to cost efficiencies. Producing branded content like blog posts and video blogs (“vlogs”) showcases the expertise of both parties and creates a compelling impression on potential buyers.
Motivating and Adjustable Commissions
Builders may provide real estate agents with tailored incentives or adaptable commission arrangements to enhance the appeal of their partnerships. For example, builders might offer bonuses for closing deals within a certain timeframe or increased commissions for selling properties that have been listed for a longer duration. Tailored rewards may also focus on specific buyer groups to encourage agents to actively market the builder’s properties. This flexibility strengthens the partnership and encourages agents to prioritize construction listings.
Reasons Why Builders Might Not Need to Partner with Agents
Direct Channels to Customers
Builders with platforms that allow direct connections with buyers may not rely on traditional agents for sales assistance. Advances in online home-buying options, such as interactive tours and direct communication with builder sales teams, make it easier for builders to cut down on expenses and streamline the sales process. Builders with well-developed websites or applications have more control over the buyer’s journey by maintaining the message about their offerings.
The Sales Builder Listing Platform allows builders to receive leads from customized listings without incurring upfront costs. Builders only pay for the leads they actually receive, gaining exposure to homebuyers browsing Realtor.com. They can also advertise on the Ad Media Network to showcase neighborhoods through advertisements and billboards, expanding their reach with tailored Facebook ads that target audiences effectively.
Internal Sales Teams
Many large construction companies employ specialized internal sales teams to oversee the entire sales cycle, from attracting customers to finalizing deals. These teams receive training on the company’s offerings and provide customized assistance similar to what external agents offer. In such cases, collaboration with external agents may not be necessary, as the internal team has a strong connection with customers and shares the same objectives as the builder. By building trust and creating a favorable environment for buyers, internal teams can successfully implement sales strategies without outsourcing commissions to external agents.
Key Takeaways for Builders Considering Collaboration with Real Estate Agents
- Advantages of Partnering with Agents: Real estate agents provide valuable insights into market trends and offer access to a wide network of resources that can make the buying process more efficient and seamless.
- Evaluate Your Needs and Market Conditions: Consider evaluating your company’s needs and the current market conditions before deciding on the best approach that fits your resources.
- Explore Collaboration Opportunities: If you haven’t already, think about exploring collaborations with real estate agents and brokers to enhance your home-buying journey and reach more potential buyers.
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