The housing recovery has picked up steam and new-home sales are returning to historical levels!
Sales of new single-family homes are up 28.9 percent from January 2012, to a seasonally adjusted annual rate of 437,000, according to a recent U.S. Census Bureau report. That’s the best January since 2008, and there’s plenty more room to run — new-home sales exceeded 1 million a year during the last boom. "It is safe to assume that new homes construction will continue to move forward, if not surge," said David Crowe, chief economist for the National Association of Home Builders.
It is also safe to assume that a growing number of homebuilders — but not most — will forget the Realtors who brought them to the dance. Studies by the National Association of Realtors say that 63 percent of all new homes sold to prospects were introduced to the homebuilders by Realtors.
According to Builder Homesite Inc., a consortium of 32 of the largest production homebuilder in the United States, 84 percent of all home shoppers contact a Realtor. Thus, many production homebuilders face an important business decision that affects their sales and relationships with the very Realtors they have worked so hard to nurture.
It appears that 2013 is the year that new homes have become a high-demand inventory choice, especially as resale inventory remains tight. So homebuilders, who have been profit-starved for years, must either accept the fact that it’s worth offering a consistent commission and co-broker policy to Realtors who introduce ready, willing and able prospects to new homes, or not.
If they are going to cut out real estate brokers, "a builder must assume that his product is so magnificent they no longer need access to the 90 percent of all buyers that typically engage Realtors during their search process," said Tim Wilcox, president of Irvine, Calif.-based Home Builder Media Group.
While history may repeat itself, this time there is no history to repeat. This is the first housing recovery in the history of the world that comes with a marketing booster rocket: the Internet.
The counterargument is that the builder can now attract more walk-ins and thus "save" on commissions paid to brokers. But a large proportion of "walk-in" buyers also have homes to sell and are already working with a Realtor — an issue homebuilders have no solution for. Homebuilders will also be the first to tell you that a large percentage of their walk-in traffic is not financially qualified, or is not actually in the market. In the old days, street signs drove a large portion of the traffic. Today, there is much less impulse traffic.
Homebuyers have seen the home, the floor plan, prices, features, an aerial of the location, on the Internet, long before they visit the community. "Tire kickers" tend not to want to get involved with a Realtor, and that’s a good thing. Realtors deal with this market every day. Homebuilders have had a long time to get to know Realtors and evaluate the impact they have on sales. Marketing commitments to the Realtor community are much deeper than any time in history. It is not a simple thing to dismantle Realtor marketing machines that are generating "first responder" prospects that are converting to buyers. Production builders are now using their "Internet advisers" to set appointments for Realtor prospects — an unheard-of concept before the Internet. They focus on the prospect, not the Realtor.
Homebuilders are accepting the fact that Realtors control the homebuyers, and are making it easier and faster for Realtors to get their ever-improving on-site teams in front of the Realtor’s prospect. The fact is Realtors need the inventory. Homebuilders need qualified prospects to assure continued momentum.
Realtors, sharpen your new homes showing skills.
Homebuilders, don’t leave your Realtor networks at the dance.
After all, they stood by you in the recent past when you couldn’t get a date!
