Investment propertyA Marriage With A Future, Pre-Nup and All
It doesn"t have to be a shotgun wedding. Builders can admit at one point
that they actually salivate when seeing REALTORS® sashay into their model home
sales offices with clients in tow. After all, these professionals, in all
likelihood, wouldn"t be spending time chauffeuring these prospects around if
they weren"t already qualified and ready to buy. The union of builders and
Realtors could, instead, become more of an "arranged marriage", complete with
pre-nuptial agreements drawn up.
Because I frequently write about builder-Realtor relations, I was contacted
by the former president of a builder association organization on how they
could go about forming a formal council with Realtors to network and assist
one another in selling homes. Unfortunately, I could not find any national
organizations in existence that could oversee such an effort. In many parts
of the country, especially in a boom building market such as this, builders
will not admit that they need Realtors, and Realtors feel unappreciated by
builders until the market experiences a downturn. Several years ago, there
existed a now-defunct Builder-Realty Council International. Since then, some
local market areas persisted in keeping BRCs of their own, perpetuating the
cooperation between builders and Realtors.
One such area is in North Texas, where the local BRC meets several times a
year, according to Blanche Evans, editor of Agent News and Associate Editor
of Realty Times. She reports that included in the networking opportunity are
builders, Realtors, lenders, and title industry representatives, who come
together to discuss how these factions can make home selling smoother for
everyone. And, because there are factors unique to new home sales, these
meetings can turn into valuable educational and fact-finding missions.
Builders, for instance, may not realize that the competition is keener than
ever in a great market, where Realtors courting clients through new homes can
explain new home expectations in broader terms. In these days where seller
incentives have all but disappeared except when linked to using the builder"s
in-house lender, and when buyers can cover five or six new home communities a
day with their Realtors, builders can oftentimes be well served by an outside
real estate professional.
Builders spend millions of dollars each year to splash fancy display ads in
their local newspapers" real estate sections, erect billboards to direct
clientele to their model home parks, and arrange elaborate signage, like
bread crumbs in Hansel and Gretel fashion, to steer buyers their way. They
realize, however, that there is no way buyers can read all of the ads, visit
all of the communities or see all of the signs. And, although the Internet
now provides an awe-inspiring new medium for reaching these folk, builders
simply cannot strut their stuff to every one of those relocating families and
individuals who arrive at airports all over the country looking for homes in
faraway places with strange sounding names. Enter the Realtor, who
oftentimes picks up these buyers at the airport, arranges full-day tours of
both re-sale and new homes, can entertain the kids while Mom and Dad inspect
the homes, and even find them a good restaurant at lunch time.
"The Realtor is a gift, " says a Lennar Homes representative in North Texas.
"The customer is one time, but the Realtor is forever. " When asked if
buyers who return to new home communities looking for discounts (because they
now are not accompanied by the Realtor), Lennar"s Steven Brooks responds,
"We let the customers know on that first visit with the Realtor that we don"t
give any discounts regardless of their representation. Our on-site agents
keep careful hard copy and computer records of buyers registered by their
Realtors."
What "pre-nuptial" agreement or guidelines between builders and Realtors are
drawn up for this liaison to work effectively? A specially designed
registration form can be drafted, composed by both builders and Realtors, to
become the standard under which they agree to cooperate. On it, specific
rules are outlined for builder, Realtor and buyer, delineating:
The Realtor must accompany the buyer on the very first visit to the
builder"s community. No pre-registrations or post-registrations are
permitted.
Terms and commission percentages of the base price of the home are
specified on the form.
The time frame for formal buyer representation is also stated on the
registration form, with the possibility of renewal by the agent/client.
A "one price" policy, where the builder agrees that there is one price for
a particular house, whether it becomes an in-house sale or is sold through a
cooperating outside agent.
Both builder and Realtor must disclose all information relevant to a sale.
One dated registration per client will be all that is needed for
representation.
Some agreements may even specify, in the interests of fairness
professionalism, that no gifts, special incentives, trips or bonuses can be
offered to bring customers to particular developments or homes.
Even though nationwide organizations such as the former International BRC are
no longer around, many builders who at one time were members still display
remnants of those times. Signs on sales office doors stating "Prospective
home buyers must be accompanied on the first visit by their Realtor if they
wish to be represented by them" are still commonplace in the industry.
There"s no doubt that the rules and cooperation brought about by BRCs, both
past and present, have left their marks. Local builder associations may now
find it a timely hedge against future market downturns to look into forming
their own councils, helping to create a winning proposition between builders
and Realtors, setting the stage for a "happy marriage" in the new millenium.