Selling New Construction Homes - Tips for Agents
When you get into real estate, you want to find your niche — the area you specialize in that separates you from the competition. One such niche to consider is new construction. New build transactions present a wealth of opportunities, including impressive earning potential. Not only can selling new builds be lucrative for agents, but they also present buyers with the opportunity to customize their home through upgrades and additions. This guide will give real estate agents negotiating tips on successfully selling new construction properties to homebuyers. For even more powerful tips, check out our Professional Development Kickstarter package for agents who want to supercharge their real estate careers!
Create Relationships With Builders and Developers
The real estate industry revolves around relationships and who you know. If you want to join a field that could pay dividends but is hard to enter, such as selling new construction homes, you need to build relationships with builders and real estate developers. It’s worth noting that joining this niche as a buyer’s agent is the recommended path - it’s easier for agents representing buyers to break into this sub-industry and secure home sales rather than approaching it as a seller.
As a buyer’s agent, having a relationship with a builder can make negotiations easier and you may learn about upcoming available properties before they even hit the market. With that kind of inside scoop, you could give your buyer an opportunity to customize parts of the home before the property is listed. But the key aspect in establishing yourself within this niche is networking. Make yourself known to the people of influence in this part of the industry. Find ways to connect with the builders, construction companies, and developers in your local real estate market. Joining a real estate professionals’ association can really help as well. If you’re an entry-level agent or struggling to burst onto the scene, a real estate mentor can help in these situations, too.
Did You Know?
According to data from the National Association of REALTORS®, 5.64 million existing homes were sold in 2020. According to the U.S. Census Bureau, only 822,000 newly constructed homes were sold in 2020.
Understand Your Buyer’s Needs
To best serve your clients in buying new construction builds, you need to be well-informed about your potential buyer’s needs. From the get-go, ask your future homeowners what they’re looking for in a new build before construction starts if possible. Find out what they’re looking for in this new construction. You can even go over floor plans at this stage. As a real estate professional, it’s your job to help bring your client’s expectations back to Earth if they’re unrealistic, and doing so sets everyone up for success down the line. Ultimately, keeping track of your client’s needs leads to a better homebuying experience, especially since the goal is to have all the agreed-upon customizations or upgrades finished before closing.
While serving your clients is the utmost priority in any aspect of real estate, you also have to consider the builder. Within this niche, you’re playing the part of both the buyer’s agent and the builder’s salesperson. And as a builder’s salesperson, you represent the interest of the home builder while also representing the buyer. It’s a difficult wire to walk, but practicing exemplary communication skills will make this balancing act easier. Set proper expectations early, and keep your buyer’s needs and desires top of mind as you navigate each stage of this sale. Since you know the market and those working on the new build, you’re the expert and should be able to answer any questions they may have for you. All in all, having these discussions early sets everyone, from the buyer to the builder to you, up for success when it comes to new construction sales.
Prepare to Negotiate With the Builders
No matter the practice, you know you have to negotiate in real estate. The purchase price for new construction is no different. Some people think that new construction homes are a fixed cost, but this is not always the case. The new home sales price on a new construction home may be non-negotiable, but other aspects of the deal, such as upgrades and closing costs, could be negotiated. The key to negotiating new developments is all about the timing as it can have an impact on the final price. In most instances, new construction homes have a set price for the lot and the development’s basic level of home. This is where knowing the buyer’s needs is vital to securing the best deal. If you know what they want in terms of upgrades on the new home, that knowledge is power, especially if you know how to negotiate. When your client signs the paperwork to begin construction, that price is listed, so negotiate any additions or upgrades prior to that point. Also keep in mind that your client will have to pick the finishes for their house, and that can impact the final price as well. Don’t double their financial stress by waiting too long to negotiate the building price. Learning how to negotiate is like learning how to dance. When you first start negotiating, it will look a little rough. But if you stick with it and practice, over time you’ll shine no matter the tune.
Account for Additional Costs
The biggest thing to remember about new construction homes is that what you see always has a price. In most situations, model homes are exactly that: a model of what is possible in this particular development. Builders and developers want to catch peoples’ attention with the best possible home. That means the buyer will have to pay more to achieve the best home since those upgrades have a cost attached.
The typical new construction home listing presents the base price of finishes and fixtures. Carpet, carpet padding, cabinet hardware, light fixtures, light switches, and doors are all the most cost-effective. That’s not to say they’re “cheap,” per se, but they’re not high-end either. So if your buyer wants to upgrade the carpet, wood floor, cabinets, countertops, and so on, they’ll have to pay for all of it. Understanding what your buyer wants in their new construction is essential to advising them on potential additional costs. Typically, picking and choosing upgrades rather than going all-in is the smart play to help keep those additional costs lower. But each situation is different, and knowing the buyer, builder, and development will help all involved find a satisfactory conclusion.
Be Informed
At the end of the day, if you want to succeed in new construction, you need to know everything and anything about your market. You also need to know people of influence, both in the new construction niche and in the industry as a whole. That’s how to find new developments and real estate business before they even hit the market. Selling new construction is different from selling regular listings, and becoming the expert about a new development you are selling will pay off for both your buyer and you.
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