3D home tours, customization and other keys to reaching today’s new-construction buyers

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One of the biggest hurdles facing residential builders is raising awareness of their projects among prospective buyers, according to Zillow’s recently released new-construction consumer housing trends report.

“Among new-construction buyers who didn’t initially consider newly built homes, 71% cite not being aware of any in their desired location as a reason why,” the report said.

Clearly, marketing and raising project awareness are essential for builders and agents selling new construction. The study also found that virtual home tours and customization are more important than ever. Another key takeaway from the report is that buyers of new-construction value agents who are affiliated with major brokerages more than the typical homebuyer does.

Today’s new-construction buyer

The demographic profile of the new-construction buyer has not changed much in recent years, Zillow reported. That buyer is typically 44 years old and married or partnered, with a median income of $110,000. Beyond that, though, the preferences among new-construction buyers have evolved. It starts with the importance of customization.

“One reason new-construction homes continue to compete well against existing homes is buyers’ desire to customize their home before it’s built,” the report said. “That desire increased in 2022. In fact, 35% of new-construction buyers said they intended from the start of their search to buy a home they could customize during construction, a surge of 10 percentage points from 2021.

“This year, 44% said they planned at the outset to buy a completed home, while 21% sought out a home already under construction they could customize. The rising enthusiasm for customization may be the biggest trend uncovered among new-construction buyers this year.”

Another change is the willingness among new-construction buyers to look for a fresh home within existing communities, rather than solely in newly built neighborhoods.

In 2020, 23% of new-construction buyers purchased within an existing community. That percentage increased to 30% in 2021 and 33% last year.

“For some buyers, new-construction conjures images of dream homes lined up next to each other in a suburban development built from scratch,” the report said. “Over the last few years, the data is trending away from that vision.”

Buyer preferences

The Zillow report found that new-construction buyers gravitated to experienced agents with ties to teams and large brokerages more than the typical homebuyer did.

About 60% of new-construction buyers preferred to work with an agent on a team, and 59% preferred an agent who is part of a “major brokerage.” Among all buyers, those percentages were just 45 and 42, respectively.

“When it comes to new construction, buyers need trust and credibility throughout the process. According to the data, they may even care about it more than other types of homebuyers,” the report said. “Given the complexities of new construction, perhaps some buyers are hesitant to sign on with agents working solo.”

New-construction buyers also were more likely than all buyers to prefer a digital home tour compared to an in-person one. Forty-three percent of homebuyers looking at new construction prefer 3D tours to in-person viewings. Only 20% of people looking at existing homes prefer a 3D tour.

How new-construction buyers purchase their home varies greatly from buyers of existing homes.

“New-construction buyers are 35% more likely than existing homebuyers to be selling a home they already own,” Zillow Senior Economist Jeff Tucker said.

Zillow reported 32% of new-construction buyers saved for their down payment over time; 28% used money from the sale of a previous home; 19% used sale of stock or from a retirement fund; and 14% relied on a loan from friends or family.

New-construction buyers relying on equity from a prior home sale present a double-edged sword for builders, Tucker said.

“Those buyers should have substantial equity from their home value’s recent rise, but they may not be able to sell as quickly or easily as they hoped,” Tucker said. “They’re also likely to get some sticker shock at mortgage rates, which could be twice what they’re currently paying.”

Deliver what buyers seek

To meet the demands of today’s new-construction buyer and maximize sales, builders and agents should focus on three things, the report noted.

First is customization. If buyers are prioritizing custom amenities and layouts, builders and agents should highlight those options. “Communicate those possibilities early and often during the sales process. This will give buyers more say in their purchase, which could lead to more commitments,” the report said.

Second is location. The data shows buyers are more and more comfortable with new construction in older, established neighborhoods. Make sure potential buyers are aware of those options.

Third is to offer contract contingencies.

“The median sales price for newly built homes costs roughly $60,000 more than the median sales price for existing homes,” the report said. “As a result, homeowners may decide to delay buying their next house because they’d lose their comparatively lower mortgage rate if they moved. Builders that provide a rate buy-down combined with flexible financing and sale-of-existing-home contingencies might tempt them off the fence and into a new-construction home.”

The secret to a long, successful real estate career? Ditch the sales pitches and swagger. Just listen.

Special Contributor Leave a comment

By Diane Terry

I am often asked what I feel is the secret to my 30-plus-year successful career. The answer for me is simple. It is understanding the importance of your listening skills. Stephen Covey said it best: No one cares how much you know until they know you care. I have seen fellow agents dish out thousands of dollars to learn “pitches” and, God forbid, “swagger.” I assure you there is not one past client I was honored to work with who cared about my swagger, and they would smell a sales pitch a mile away.

In the many listening workshops I teach and with the private coaching clients I have, we start first by understanding the type of listener you are. There are basically 11 listening modes to which we tend to default. You can find them in an excellent book called “Listen Like You Mean It,” by Ximena Vengoechea. It is very important to understand what your default mode is so you can be aware of your behavior and train yourself out of it.

For example, I am a problem-solver. The minute a client begins to share their problem, I am troubleshooting the issue five different ways in my mind. Before I learned to train myself out of this, I was so busy solving the problem that I was not staying present, remaining quiet and listening for the “real” problem, and probing for more.

All people need a bit of a warmup before they get to the core issue. So, they may give you what is easy to share, but unless you create a safe space and all the time in the world, then they are not going to trust you enough to share the REAL issue. The first problem shared is rarely the real one. If you do not know how to listen, you are going to waste your time showing how you can solve the wrong or incomplete problem.

When I meet sellers in their homes and I notice that I am doing the talking and not them, I silently reprimand myself with W.A.I.T. — “why am I talking”? I am learning nothing if I am doing the talking. Remember, “words conceal, silence reveals.” Get comfortable with silence. Did you know that in the U.S., people jump in after 4.6 seconds of silence due to discomfort? Contrast that to Japan, where it is 8.2 seconds. In the silence is a sea of possibilities.

Learn the type of listening style you default to in a client situation, and create a safe space for them to reveal what is most important to them. Learn how to ask great questions. Know how to probe deeper. Seeing good listening as a cooperative conversation vs. listening to “win” will serve you well, not only in business, but in all the areas of your life.

Who else would like to see a collective discussion of our industry revolve more around integrity, honor, work ethic, privilege, fiscal responsibility, a standard of excellence and the sacredness of our vocation? How about less of things like pitch, swagger, pay per click, buying leads, “use your buyers as bait” and sending unsolicited CMAs?

We are better than this. Let’s all hone our listening skills and become invaluable partners in our clients’ journeys of success.

Diane Terry is a 30-plus-year real estate professional in the Seattle area. She is the chairperson for Windermere Real Estate’s In City Standards of Practices Committee and has been for six years. She has recently parlayed her coaching and teaching skills into dianeterrycoach.com. She offers talks, workshops and one-on-one coaching on listening skills, business planning, boundaries and women in business.