Build Your New Construction Commissions on Referrals, Not Skills.

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Build Your New Construction Commissions on Referrals, Not Skills.

Written By: David Fletcher, NHCB
Thursday, June 14, 2018

The following is Part 3 of a four-part series.nbsp;
Part 1: Builder/Realtor >Part 2: What Experienced Realtors Like Abut Selling New Homes

Realtor Ed called to tell me he sold a new home, after showing resales for six weeks.

ldquo;Irsquo;ve been doing it wrong for 16 years,rdquo; he said, but I did something I learned recently, and it worked.

ldquo;What did you do?rdquo; came the obvious question.

ldquo;I introduced my prospects to the builderrsquo;s onsite agent and did not say another word.

ldquo;They bought the same day. I am stunned. The onsite consultant was terrificrdquo;


Did Ed lsquo;sellrsquo; this home? No. The onsite sales consultant sold it.

What did Ed do? He referred his prospect in person to the onsite agent. Is that what todayrsquo;s production builders are doing? Yes. Most.

In a real sense, he referred his prospect to the agent, just as he would a resale referral, with one important exception, the prospect will remain his prospect throughout the process.

What nails it as a referral is the fact that the builders write the contracts.

Itrsquo;s time Realtors stopped lsquo;sellingrsquo; new homes and started lsquo;referringrsquo; their prospects to new home consultants. Training new home agents to sell new homes is redundant. To ask them to learn construction is a complete waste of time and distraction.

Realtors introduce qualified home shoppers to onsite agents, and the agents do the rest. That is the way it works with most production builders.

And it works as well as the Realtors allow it to work.

When onsite agents tell Realtors to bring their prospects to the sales office, and they will do all the work, they mean it.

So, if it is a referral fee, why do builders pay commissions that compete with resale fees paid to the local Realtor community, and sometimes more?

It has been customary for years for builders to consider themselves the listing broker and Realtors co-brokers, paid for the sales side of the commission.

Thus, the lsquo;how to sell new homesrsquo; mentality, but it needs to be called what it is- a nbsp;referral. Why? Because more Realtors will start showing more interest in new homes.

Helping qualified, motivated resale home shoppers find a home is what Realtors do. About half of their prospects come from referrals.

If Realtors start to think lsquo;new home referral,rsquo; instead of lsquo;sale,rsquo; they soon understand why they have nothing to prove or impression to make, other than being honest and helpful.

The sooner the Realtor community grasps the lsquo;new home referralrdquo; concept, the sooner it will start suggesting that their agents farm for new home prospects.

There is nothing about construction, incentives, or anything else one needs to learn to refer a new home shopper to a new home builder.

Onsite sales consultants do not need or want your help during the sales process.

Thatrsquo;s the way most production builders think of your service, not because they disrespect you, but because they do not need your services during the sales and construction process. They have professionally trained, highly motivated staffs to provide every task in the process, better than you can.

Except one.

Todayrsquo;s builders are acutely aware that Realtors provide the one thing builders cannot deliver in quantity and cannot do without ndash; ready, willing and able prospects.

According the National Association of Realtors, Realtors sold ninety percent of all homes sold last year.

As Builder Homesite Inc BHI Founder and CEO Tim Costello said five years ago at the 2013 International Builders Show. ldquo;Buildersrsquo; are starting to understand that their competition is not the builder across the street. Their competition is the resale and who controls these potential buyers? Realtors.rdquo;

Here is what homebuilders can do better in most cases than you can:

  • Sell the benefits of the homersquo;s features
  • Sell the value
  • Sell the urgency incentives
  • Sell the location
  • Sell the builderrsquo;s reputation
  • Sell the amenities
  • Sell the construction quality
  • Sell the design features
  • Help them understand the money, starting with a fixed price
  • Explain financing
  • Coordinate mortgage application/approval
  • Provide answers to all construction questions
  • Explain the construction process
  • Write the contract
  • Provide all transaction management
  • Close escrow
  • Provide other services as requested by the buyer.
  • Pay referral fee sales commission/fee
  • Welcomes you as someone who has a strong >

These builder services beg a question. ldquo;What do Realtors do to earn their fee?rdquo;

They get paid if the referred prospect purchases the builderrsquo;s home and the Realtor is the referring agent of record.

Finding qualified resale or new home prospects in new home price ranges is not easy. Every member of the local Realtor association, and it could be thousands, are competing for these buyers.

Homebuilders understand this.

What many builders donrsquo;t understand about Realtors- and itrsquo;s a turn-off, is when they say, lsquo;bring them out, and we will do all the work.rdquo;

Realtors dont like the idea of not working for their commission. They hear a lack of respect for their hard work.

What if homebuilders said:

ldquo;Refer your new home prospect to me. They are always treated with respect and courtesy, as you will be, and yes, you are welcome to participate in any stage of the process.rdquo;

This approach is respectful, honest and implies that the onsite agent is to do all the work.

Herersquo;s the game changer.

Realtors understand referrals. They are encouraged to build their business on referrals. They are not trained to lsquo;referrsquo; prospects to onsite sales consultants. But it is what they are doing when they introduce their prospects to an onsite consultant.

If homebuilders asked for referrals instead of sales, they would be speaking the Realtorsrsquo; language.

If Realtors were taught to refer, instead of lsquo;sellrsquo; new homes, there would be no need for Realtors to fear working with new home shoppers.

Here is what matters: At the closing, your clients should be singing your praises.

You provided the most important service for them.

You not only helped your buyers find the home of their dreams, you introduced them to a builder and a team of professionals that held their hand every step of the way.

You earned a healthy referral fee because you referred the one thing the builder needed most ndash; your prospect.

Next: Part 4 Best Practice Recommendations For NAR and NAHB

Copyright© 2022 Realty Times®. All Rights Reserved

Updated: Sunday, July 3, 2022

Copyright ©2022Realty Times®. All Rights Reserved

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