Author: Special Contributor

The who, what, when, where, why and how of new construction

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by Tim and Julie Harris

What is it?

  1. Traditional new-construction, single-family home neighborhoods
  2. New town homes, doubles, zero-lot-line homes, patio homes, garden homes
  3. Condos; low-, medium- and high-rises
  4. Urban and suburban infill/teardowns/rehab
  5. Land acquisition, lot sales, development

Why do you care?

  1. This is a great source to find inventory for your buyers that are not in the MLS! Note: Many resale buyers get frustrated thinking about the cost of repairs on an older home. This is a solution that overcomes that objection.
  2. New construction is a major part of most markets. Not knowing new construction is a handicap to your career. Don’t claim it’s not there if you haven’t actually researched this.
  3. One relationship (with the builder, developer or sales manager) can lead to many multiple transactions. We’ll explain how in a moment.
  4. End the frustration of being in competitive-offer situations with your buyers trying to buy resale. New construction offers them freedom of choice, time to move and no rehab costs.
  5. Buyers can often get more home for the same payment if you find them a builder with in-house financing, rate buy-down options or other assistance.
  6. This is actually EASIER prospecting than many other spokes, because builders usually have commissions built into their pricing!

What opportunities are available?:

  1. Sit in the new-construction model home during the hours the builder doesn’t have coverage. Sell their product when you can, and keep the leads who don’t build with that builder or don’t build at all. Think listing leads, new-construction buyer leads, etc.
  2. Create a relationship with new-build reps and/or the sales managers at different projects where they refer the resale listings to you. If they’re licensed, you may pay them a referral fee. If not, show your gratitude with gift cards.
  3. List the spec homes the builder has under construction or homes where contracts recently fell apart. There are always opportunities that arise, especially in the larger subdivisions.
  4. List every listing the builder has, representing them on the whole project. This may include both lots to sell to other builders and/or the actual homes being built.
  5. Sell as much as you can yourself, to your own buyers, controlling more of the project and keeping the builder as happy as possible for future developments.
  6. Bring the builder/developer land, sell them the land, list the new homes, sell those homes … lather, rinse, repeat!
  7. Develop land yourself or with investors. This may include house-by-house teardowns, rehabs or larger projects.

How do I get started on this?

     1. Find new construction in your area. Create a file, a spreadsheet, a PDF — some way to have your own ‘New Construction MLS’ — for quick reference. The local builder associations can help you know who’s building what, where and for what price. Example: http://www.texasbuilders.org/membership/member-directory.html. NewHomeSource.com is also a great resource.

     2. Determine which builders have new-construction representatives “on-site,” in either model homes or trailers.

     3. Prioritize the builders who have reps on-site for the sake of building your resale referral network.

     4. Visit each development. Get to know the product FIRST, before you go asking for anything in return. Ask the following questions:

  • Do they have spec homes?
  • How do they handle home sale contingencies?
  • Do they have in-house or special financing arrangements?
  • Where else are they building?
  • Do they ever list with agents on a house-by-house basis or entire projects?
  • Who is their typical buyer?

Asking these questions shows your interest and enthusiasm and getting the answers helps you to know how to monetize the relationship.

     5. Create a “pop-by” plan to build relationships and get the inside scoop on available homes. (Be the one they call when someone backs out of a new home that’s just been completed!) 

     6. Take appropriate buyers from your pipeline to the right projects, and sell what you can! Remember: Builders offering financing equals higher price point and same payment for your buyers.

     7. Take appropriate new-build reps to coffee to discuss referral arrangements for resale properties or other opportunities you’ve discovered so far. Make sure you know their product first!

     8. Set appointments with sales managers, the actual builder or the developer to discuss listing spec homes or projects. Use your Pre Listing Package, with a modified Listing Plan of Action for their project.

     9. Lather, rinse, repeat! There are new projects getting started all around you. Make sure you are educated, communicating and participating.

     10. Consider joining your area’s Architectural Review Committee, Urban Planning Committee or other organizations to be on the inside track!

     11. Join Premier Coaching so our expert, Harris Certified Coaches can help you develop this source of business to the highest level. They can shorten your learning curve, hold you accountable and move you forward faster than trying to figure all of this out on your own!

Tim and Julie Harris host the internationally syndicated, No. 1 daily podcast for REALTORS, “Real Estate Coaching Radio.” Their podcast has had over 20 million downloads from 61 countries and continues to grow every episode.

In their first year selling real estate, Tim and Julie broke all records, selling more than 100 homes, and continued to do so for nearly 10 years. They’ve been professional real estate coaches for more than two decades in all types of market conditions and have a team of Harris Certified Coaches.

The simplest path to a 6-figure year

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By Jake Dixon

Odds are you got into real estate for freedom, flexibility and financial gain. And yet, if you are like most new agents, you have quickly realized this is a challenging business.

Roughly 87% of new licensees end up not renewing their license within the first two years. Combine that with the fact that more than 90% of agents sell 24 or fewer homes per year. Yet when asked, the majority claim they want to earn six figures per year.

So, what gives? Why is it so out of balance? What do the “successful” agents do to create a sustainable business compared to those who become a negative statistic?

Rookie agents often make things more complicated than they need to — then hide behind that manufactured complexity to justify failure. Agents end up finding evidence to support their beliefs, saying things like, “See, I told you so: This is hard.”

Other agents end up living in scarcity, thinking there is not enough opportunity available to achieve their own goals. They play the blame game, pointing the finger everywhere but themselves, eventually saying, “I’m going to go get a real job.” But they’re turning their back on an amazing opportunity.

Success is not easy, but it’s also not complicated. To build a sustainable, profitable, consistent business, you must get granular: Chunk things down into manageable pieces. It takes 90 days to create or lose momentum in business, so what we do today may show up three months later. A farmer doesn’t plant his crops and expect to see the fruits of his efforts tomorrow. It takes time. Cultivate the ground, plant the seeds, water them and then allow time to produce the fruits.

Similarly, for most agents, the question is not, “What are the 101 things I need to do?” Rather, the question becomes, “What are the simple things I need to do repeatedly to produce the fruits I am seeking?”

Success always happens by the slight edge. Errors in judgement, repeated over time, compound into failure and disappointment. But disciplines, repeated over time, can compound into massive results. Success can be boring, tedious and even mundane. Sometimes, though, we must accept that boredom is associated with success.

Consider this: Would you rather have $1 million cash upfront or a penny that doubles every day for a month? We know the temptation is to take the $1 million cash, but with time, patience and consistency, the penny will yield $5.3 million.

So, where am I going with all of this? Let’s do some math together.

After working with thousands of new agents over the years, I see a consistent conversion rate of 2% from contacts made to business opportunities. In other words, every 50 real estate conversations ultimately yield one new piece of business. Knowing this to be consistently true over time, there is a formula to building a sustainable, predictable real estate business that earns six figures per year.

What if you simply spoke to five people per day about real estate and you worked five days per week for 50 weeks out of the year? Five contacts x five days per week = 25 contacts per week. The compound effect totals 1,250 real estate conversations over the course of the year. If we take those 1,250 real estate conversations apply the 50:1 ratio, that gives you 25 sales. Simply put, five conversations per day for five days a week over 50 weeks of the year can yield you 25 sales: a six-figure income in real estate.

This is the true meaning of consistency. It’s having faith over fear, trusting that you are showing up every day doing the work. Although these results are not guaranteed for everyone, how many agents are really repeating this activity over time? As the statistics prove, not many.

In closing, what is easy to do is also easy not to do. This is deceptively simple. Many agents overcomplicate things because they are convinced it could not be this simple.

So, get out there! Have five conversations per day, five days a week, for a year — and report back to me in 12 months. Your future self is thanking you.

Jake Dixon is founder and CEO of The Locker Room Real Estate Coaching and Training.