Three New Homes Sales Myths Debunked

Two women reviewing a contract.
You might have the wrong idea about selling new homes. Let us help clear up some myths.

Warning: Debunking the three myths listed below may cause some angst for those who are long in the “new homes sales” tooth.

For those of you who don’t show new homes because you believe these myths, you may be losing thousands of dollars in commissions.

Here we go:

Myth #1: If you are serious about selling new homes, you need to know construction.

Myth #2: You need to learn how to “sell” new homes.

Myth #3: You must register your prospect’s first visit to a builder’s sales center if you are to be paid.

The truth is none of these myths hold much water. Let’s address these myths one at a time from a practical standpoint.

Myth #1: Real estate agents need to know construction.

The idea of a general real estate agent needing to learn construction to sell new homes is about as far away from the money as the agent can get. I once asked a national new-home consultant to give me one reason agents need to learn construction to introduce their prospects to an on-site sales consultant. He could not think of one. Can you?

Some will say that the more the agent knows about construction, the more new homes he or she will sell. Where’s the proof of that assumption? What is true is that the more comfortable the agent is with working with new homes and new homes sales consultants, the more new homes he or she will show.

According to the National Association of Realtors, Realtors sell 67 percent (two out of three) of all new homes sold in the United States. Of these Realtors, what percentage do you think know construction? Just a wild guess, but 3 percent might be high.

Granted, the more an agent knows about construction, the more comfortable he may be showing new homes. But do you know who these agents are? They are likely agents who worked for a builder or grew up in a builder’s home. They knew construction before they got into general real estate.

Here’s a thought: Make it your business to do business with homebuilders who welcome home inspectors hired by the buyer.

The last thing you need after a closing is for the buyer to remind you of some statement you made about construction that turned out to be a problem. You don’t get paid to know construction. You get paid to know your buyer’s wants and needs and finding the home that meets those needs, be it a new home or a resale.

Myth #2: General agents need to know how to “sell” new.

You might think so, but you would be wrong. Let’s say you have a prospect who wants to see a specific new home found on the Internet. It’s a $300,000 home in your zip code. You don’t know construction. You have had no sales training.

Which one of these two scenarios should you follow?

Scenario #1: Advise the prospect that this is your first week and that while you do not know how to sell new homes, you will be attending a “How To Sell New Homes” seminar this Friday and have enrolled in a “How To Hang Drywall” class that starts in two weeks. Then say, “If you can wait until I graduate, we can go look at new homes.”

Scenario #2: Put the prospects in your car, turn on your GPS, take them to the sales office and introduce them to the sales consultant. Then let the on-site agent do his or her job.

If you answered the latter, you’d be correct. After the introduction, the on-site agent sells the location, the builder, the homes, the price, the value and explains the incentives to buy now.

If your prospect decides to buy, the on-site agent writes the contract, helps coordinate the mortgage process, the pre-construction process and the closing. He makes sure you get your commission check while helping your homebuyers move into their new home.

Production builders tell real estate agents that selling new homes is the easiest “sell” in real estate and they are absolutely right. In fact, they encourage agents to introduce their prospects and let them do all the work.

Myth #3: Homebuilders will not pay your commission if you don’t register your buyer in person at the sales office.

This may be the most misunderstood anti-broker repellant used to keep real estate agents away from new homes because agents don’t think they will be paid. Requesting first-time accompaniment with your prospect is a standard new homes practice; so is the exception to the policy.

The exception kicks in when you have a prospect who has visited a builder’s new homes, but now they are using a Realtor to help them find a home.

Scenario: Prospect Smith tells you he has seen builder A’s homes, liked them and would like to go back to see them a second time.

Think about what is happening here. Your prospect has seen a new home before meeting you and really likes it. This is a super-hot prospect for the builder’s home and the builder knows it.

The last thing this builder wants is for this prospect to see another builder’s homes. Don’t shy away, be bold instead. Call the builder’s sales office. By calling first, you control the prospect. By walking in cold to the sales office, the builder controls the prospect.

When you call, ask what their commission policy is regarding second visits if you did not register the prospect for the first visit. Chances are extremely high that you will be told your commission will be protected.

And that’s the truth.

About the author 

David Fletcher

Broker and Lifetime Achiever David Fletcher teaches general real estate agents how to become new-home professionals, based on how he listed and sold more than $3 billion in new construction over his 30-year career. Along the way, he has been a featured speaker for the National Association of Realtors and chaired the Sales and Marketing Council for the Florida Home Builders Association. He writes for “agents on the ground” from his experience with working with home builders and new home co-brokers and is considered a thought leader in the industry.

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