Marketing teamwork conundrum


It seemed like a simple thing; a no-brainer, really. The National Association of Realtors, in an effort to improve Realtor and builder relations, offered to add a builder member to its national board of directors if the National Association of Home Builders would reciprocate by adding one Realtor to its national board. When brought forth on the NAHB Board floor, the motion went down in flames. After 12 years serving as a national director on the NAHB board and being a real estate agent for 32 years, this did not surprise me.


The NAHB board consists of thousands of directors, so the NAR offer was not voted down for fear of adding a swing vote, or that the Realtor vote might make a huge difference in difficult decisions. Rather, it goes much deeper than this. The proposal’s failure rose from the gorge of dislike and distrust that exists between builders and Realtors; a gorge that prevents, in many cases, powerful partnerships from working together to increase mutual success.


As president of a regional home building firm, we sought out Realtors, marketed to them, offered them incentives and budgeted for commissions on 50 percent of our sales. Next to model homes it was our largest marketing investment. Some Realtors were actively involved in the transactions, while others where helicopter agents, dropping in, not knowing what was going on and making things worse than they had to be. When 150 sales a year come from real estate agents you learn to cope. Although many times painful, for a production builder, real estate agents can be the lifeblood of referrals and sales.


Bridging the gorge

How can high-end custom and estate homebuilders find a way to tap the resource of the real estate community, bridging the gorge of mistrust to increase their market share? For most custom builders, one additional sale per year can mean a dramatic increase in annual revenue. Regardless of the potential, how can a custom or estate homebuilder pay an agent a 3 percent commission on a $2 million home when the builder might be making 6 to 10 percent gross on the project?


In a recent study of Utah real estate agents conducted as part of an MBA program at Westminster College, 88 percent of respondents indicated they are willing to work on high-priced new homes for 1.5 percent or less. Forty percent indicated they would provide a referral to a custom or estate homebuilder on a $2 million home for ½ percent. This is only $10,000! Can builders afford $10,000? You bet they can. This does not overcome all the challenges of the builder-Realtor relationship, but it does open the door for a bridging of the gorge.


As builders, we first must understand the business of today’s real estate agent. During the past few years, many good, hard-working agents have worked on short sales and foreclosed properties on which they are paid less than in the past and work ten times as hard. Many agents are receiving only 1 percent net commissions after bank reductions and paying short-sale negotiators. In the same survey, 96.8 percent of responding agents indicated they are working much harder on a given sale than in the past.


Now is our chance to develop relationships and educate real estate agents to the opportunities in the custom and estate homes market. Let’s face it, we don’t have the time or the money to hire an in-house sales team, but there is one just outside the door looking for opportunities to increase his or her income. For the most part, these agents are highly professional real estate experts that can become an independent third-party recommendation for your company. During the past ten years, the NAR increased its educational emphasis. Custom and estate home builders can take advantage of this professionalism, increase their sales and even survive the experience.


Following are my thoughts, based on the results of the Westminster survey, on how to take advantage of this rare opportunity. For custom and estate homebuilders the biggest challenge will be sifting through the hundreds of agents to find those that really have connections in the high-end market. With limited time and resources builders don’t need a complicated, costly marketing plan to attract real estate agents, but rather a simple plan that, perhaps, utilizes existing programs to engage local real estate agents. In the survey, 90 percent of the respondents indicated they will refer a builder because of the builder’s reputation, past projects or a personal relationship with the real estate agent. Almost 47 percent indicate a personal relationship as a key requirement for referrals. Focusing on developing relationships and exposing agents to your projects is not as difficult as we think. To get you going in the right direction, I’ve shared some simple ideas below:


Relationship builders

1. Hold open houses at your finished products. You may be doing this already for your trade contractors, architects and designers, so adding real estate agents is easy. I’ve never met an agent that didn’t enjoy some free food and drinks. You still have a sifting problem, however; you don’t want to invite everyone. Ask around, find out who is selling high-end homes, who are the biggest producers in your marketplace? Invite these agents. Find a very productive agency and invite the entire team. Be there, welcome them and get to know them.


2. Make arrangements to attend a sales meeting at a local real estate office. Train agents how to work with high-end builders. This takes a little time but can yield huge results.


3. Invite a real estate office to tour your office or homes under construction.


4. Have a plan, based on your market, about how you compensate agents for referrals. Be specific in terms of:

a. What level of involvement you expect from them.

b. How you keep them in the loop. Remember, even if just a referral, the agent’s reputation is hinging on a successful customer-builder relationship.

c. When they get paid.

d. Whether they get paid on the final price or the original estimated price.


5. Educate real estate agents about your product and your processes. You will have a much better experience if you make them part of your team rather than begrudgingly welcoming the additional sale. An agent that understands the process in detail is much less likely to do something you don’t like.


6. Get testimonials from agents you’ve worked with in the past. Use these in simple agent promotional materials. Be a name dropper when talking with agents, let them know those agents that work with you and refer customers to you.


7. Don’t forget about the new hotshot. Many times new agents may not have the experience, but they compensate with powerful energy and a new set of connections with the younger crowd. Finding a few of these energetic agents as part of your agent marketing can open doors to new opportunities.


8. Be grateful for their referral. Send them a thank-you in addition to the commission. They don’t have to split a dinner at a nice restaurant with their Broker. It does not have to be much, just a kind gesture.


Bridging the gorge between builders and real estate agents doesn’t have to be difficult. Sift through the masses to find the best, treat them well, help them see that this is better money for their time than working short sales and foreclosures, and show appreciation. For the builders that can accomplish this goal, the results for their limited efforts will grow their business. Beyond additional referrals sales, I am convinced that a group of real estate agents in your community saying good things about you will result in non-commissioned sales, too.

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