Through September of this year, 1,241,000 building permits had been approved in the United States.
There’s a misconception among home buyers that if they want to buy land for new construction, they need only go through the builder’s rep. In the long run, this couldn't be further from the truth.
If you can find and show these leads the benefits of working with an agent, you can win their listings.
This niche is huge and will continue to grow. An increase in new home construction is predicted to happen in 2019. This is partly because there aren’t enough homes for everyone who wants to buy them.
The National Association of Home Builders® stated, “Over the first four months of 2018, the total number of single-family permits issued nationwide reached 279,302. On a year-over-year basis, this is an 8.4% increase over the April 2017 level.”
Since buyers are looking for a property and a construction company, they don’t think a Realtor is a necessary part of the equation. They think the deal on the land is manageable without a “home expert," and the construction rep has their best interests at heart while negotiating the deal.
This rise in construction is a trend predicted to continue, and it’s one that you can capitalize on. These leads are uninformed when it comes to using an agent, and many just blindly trust their builders.
How to Track Down These Leads
Find prospects online.
The majority of new construction leads are on their second or third house. They’ve lived in a smaller home for a while and are ready for an upgrade. Target people ages 25 to 44. 35 to 44-year-olds traded up to a property that was $90,000 more expensive than the home they sold, according to the National Association of Realtors®.
You can use a data collection site called Melissa Data to collect leads. Create a free account, then sign in and create your list.
Go to “Products,” then “Sales Leads & Mailing Lists.” On the next page, choose “Property Owners,” then click, “Build List Now.” Next, click the blue button that says “Create a New Property Owner List.”
Enter your zip code, then choose the property types you want to target. For these leads choose: single-family residence; condominium; apartment; duplex/triplex/quadplex. Choose 3+ beds, 2+ baths and set square footage based on other new builds in your area.
You want the sale date to line up with seven to ten years ago, so 2009 to 2012. Most families ready for this type of upgrade would have bought their current houses in that time frame.
Select owner-occupied and 25 to 44 years for the age demographic. You can search for a larger area or even a full county. Once you’ve made all of your specifications, name your list and click the yellow box that says “Purchase” under the green section to the right that says “Job Summary.”
This will take you to the final confirmation and payment page. You can choose to download your list in a number of formats.
Work with building companies for referrals.
This is the most direct way to get and win these leads. Approach construction companies and offer an exchange of services for referrals.
Members can offer ad space in their books, and anyone can offer ad space on their websites or on a billboard. These companies are often approached by curious buyers who want to know details about pricing, open lots, and other homes the company has built.
You can even send them referrals when buyers approach you looking for new construction. There are many ways to work out agreements with building companies that are lucrative for both parties.
These companies will, without a doubt, have a stream of new construction leads come into their offices.
Why These Buyers Need an Agent and How to Convince Them
These leads think they don’t need you for a number of reasons:
- They think the property purchase is simple. Show them buying a new construction property still requires detailed paperwork and time. You can also help them negotiate the price, even though builders don’t like to reduce their prices. If they do, it sets a precedence for future home sales. Builders are more likely to pay for closing costs or offer design incentives than lower their prices — all things you can help buyers negotiate.
- They think the home building and sale is all done through the construction rep.
- They don’t realize the commission for buyer representation is legally part of the purchase price. The company is saving 3% if they don’t have to include an agent. It’s that simple. The buyer doesn’t pay your commission.
It's up to you to show them why they absolutely should have a Realtor on their side.
Realtors have negotiating experience and know the market/area.
The buyer needs someone that knows the ins and outs of home buying. They need someone to make sure the price is fair, and even potentially negotiate upgrades. Show them common upgrades Realtors can negotiate, like cabinets, countertops and flooring.
You also know the area and market. No matter how much research buyers claim to have done, you have experience that trumps that. They need an agent to recognize and let them know what type of deal it is.
Realtors know the builders and their reputations.
It’s not uncommon to hear about buyers getting burned by builders. Agents know the warning signs of potentially bad builders.
Your buyers don’t want to buy from companies that are selling too many properties to investors. Otherwise, they may end up living in a rental neighborhood, which can decrease property values. The builder also needs to have a history of building homes in their desired price range.
They may not know the city plans.
Imagine if buyers were locked in but didn’t know a massive parking garage was about to be built across the street. They need to know the future of the area around them.
A family building a home needs to know the short and long-term future of their desired neighborhood. That’s something buyers often overlook.
Buyers make the wrong financing choices.
Most builders will try to steer buyers to a preferred lender. Realtor make sure they’re getting the best deal possible.
Builders aren't likely to pressure a buyer who has an agent to work with their designated lending partners.
Realtors should oversee home inspections.
This is another important facet to the purchasing process that many buyers don’t recognize. This is also one of the more common problems these buyers face.
They don’t get an independent professional to conduct an inspection, and some poorly built parts of the home end up affecting its long-term value. Many states require home inspections, but if you don't have an agent, building companies can
The builder’s agent probably won’t push for an inspection. This is a huge selling point to why they need an agent.
New Construction Leads Need an Expert to Guide Them
If you really want new construction buyers to consider hiring you, you have to convince them you're an expert at what you do. What better way to do that than by showing them you're a published author?
Books hold an inherent value. They aren’t likely to be thrown away. When you give someone a book, you’re providing them something helpful they can use in the home-buying process.
As a MyBooks member, you have access to two different buyer books to give to your leads: One is a general guide for the home-buying process; the other specifically targets first-time buyers.
The Home Buyer’s Guide shows buyers:
- The best ways to search for homes
- How to compare their needs versus wants
- Negotiation tips
- What to look for in a home loan
- Steps to take during a home inspection
- A rundown of the closing process
The First-Time Buyer’s Book shows buyers:
- Programs offered for first-time buyers
- Common mistakes to avoid
- 12 steps to buying a home
- Information on the closing process
- Moving tips
- Much more!
Get a free sample of our most popular book below!
Joe Nickelson is a real estate professional dedicated to helping home buyers and sellers achieve their real estate dreams, and helping real estate agents stop using the sometimes-vicious tactics that weigh on their consciences. He believes that the Smart Agents books will, quite literally, change people’s lives for the better. Check out his full bio here!