Real estate agents are stalled on the railroad tracks, and a high-speed train is headed in their direction. Home builders may be the only ones who can stop the train quickly, with fixed commissions and rate buy-downs.
Yesterday, there was a shortage of sell-able inventory and resale shoppers. Today, there are signs that there may be serious adjustments in how resale commissions are paid by whom.
Realtors are trained to negotiate resale home prices. Realtors may need to learn how to negotiate listing commissions with sellers and buyer commissions with home shoppers. It could get complicated.
In the meantime, national home builders who want to build productive co-broker networks will be moving at full-throttle speed to become who they are already – the agent’s primary source of sell-able inventory.
Resale owners can decide not to sell and live happily ever after. Home builders don’t have a choice; they must keep selling.
Builders understand that Realtors control the much-needed qualified and motivated home shopper. The last thing production builders need is for absorption rates to slow to the point that their production schedules are turned upside down. They start laying off, delaying, revising, and the next thing you know, they don’t have the skilled labor to continue building.
In 1980, when interest rates rose to twenty percent, builders brought the rate down to 12 percent, and the market turned around. Speculators and investors buying pre-sale condominiums are the first to cancel and forfeit their down payments if they cannot cover their mortgage payments with expected rents. However, that is a unique risk in a uniquely risky business.
For the homebuilder, the mission is momentum. Homebuilders who understand this will not lower commissions. They can’t risk the instant sales momentum loss thanks to the internet of the entire Realtor community knowing within minutes that they have reduced commissions.
In a slow market, builders will pay above-market commissions and even bonuses. There will be attempts by some builders to lower commissions. But the most productive builders will be those who understand the times and see the opportunity to build long-term relationships with Realtors who need them as much as the builders need Realtors.
If the resale real estate market does not change, real estate agents will find themselves changing. They will have no choice but to adapt and evolve their skills to meet the scarcity of supply with the affordability and selling ability of new homes.
Resale shoppers are turning to new home construction because home builders buy down mortgage rates and deliver sell-able inventory.
This means Realtors must learn how to sell new homes, work with new home shoppers, and collaborate with onsite sales consultants.
Embracing New Home Sales
Selling new homes is a lot less complicated than selling existing homes.
Relationships are more than sales skills. Realtors must focus on what matters and know how to work with onsite sales consultants who can answer every question the home shoppers may have and are trained to do.
There is no need to learn construction. Licensed home inspectors and the builder or the builder’s superintendent can and should answer construction questions.
Learning to work with new home onsite teams has paid off for Realtor Mary Carpousis, who never sold a new home for eight years. She decided to take a new home course, and within about 15 months, she sold seven new homes and picked up two listings. In 2023, Mary was named one of the top ten Realtors in Orlando.
“I never thought I would like to sell prebuilds,” Mary said, “but once the sales started closing, I got used to the fact that booked closings are a real blessing, and let’s face it, booked sales are better than no sales.”
Realtors don’t have to be the best. They have to do their best. Sometimes change is not a choice. It is a success imperative.
For Realtors, the mission is commission. For their broker, the intention is retention.
