How do Builders Benefit from Partnering with Real Estate Agents?
Original article
Builders and real estate agent partnerships can provide significant benefits for both parties, yet they may also raise concerns among buyers about whether their interests are prioritized.
In today’s competitive landscape, where marketing needs to be targeted and effective, including real estate agents in your strategy can help builders of all sizes expand their audience reach. Embracing this growing trend can enhance your marketing efforts and achieve your business goals.
So the question is, is this partnership beneficial for builders?
In Realtor.com’s 2024 New Construction Consumer Research Report, we found that “while builders are providing the desired product (i.e. the newly built home), in the minds of most New Construction buyers, for better or worse, the builder is still branded as the “seller” as opposed to their teammate. This may be one explanation for the fact that when navigating the purchase process, 94% of P12M New Construction buyers contacted a real estate agent.”
Initially, buyers might be led to believe that they require an agent to represent them regardless of the type of home they are looking to buy. If they perceive the builder as the seller, they might assume that an agent is necessary to look out for their interests.?
Also, while a significant number of participants in the report survey who purchased a New Construction home in the last year entered the market with the intention of choosing New Construction, 39% of buyers of New Construction considered both new builds and existing properties. Therefore, if you’re contemplating both newly constructed homes and resales, having an agent to assist you in exploring both options would likely be more effective.
There are several other benefits for builders in collaborating with agents:
Market knowledge
Agents possess deep market knowledge and insights into the local market that builders may not have. It is common for a builder’s marketing team to be disconnected from what buyers are actually seeking. Engaging directly with potential customers can provide valuable perspectives and knowledge that simply reading articles cannot offer.
Faster sales process
Involving an agent in a transaction helps builders close deals more efficiently through promotions and open houses. Experienced agents are well-trained in the nuances of the construction process, ensuring they can provide in-depth information rather than just the basics available in listings or brochures.
Access to agent networks?
Real estate agents have cultivated networks of potential homebuyers throughout their careers. They also have access to valuable brokerage databases, allowing them to connect builders with new buyers for construction homes quickly.
Common concerns builders have when partnering with real estate agents
Commission costs
Builders may hesitate to partner with agents due to the added expense of paying real estate agent commissions on the buyer’s side. In addition, in many cases, they also cover the traditional 3% commission for their own listing agent.
Many small—to medium-sized builders have different arrangements when a single broker lists all of their properties, which can eliminate the necessity of the 3% commission for the listing agent. However, paying the 3% buyer’s agent commission remains standard practice.
Losing control of sales
Builders might fear that agents will prioritize other homes over their developments. However, it’s essential to understand that, as a buyer’s agent, they have a fiduciary duty to their client. This means that even if a tiered commission structure exists for the builder’s development, the agent will prioritize the needs of their client, resulting in them choosing another home where they will have the standard commission agreed with the seller.
Perceived redundancy
Some builders may believe that their own builder’s agent can effectively handle the entire sales process without the involvement of a buyer’s agent. This misconception comes from the idea that buying a new construction home does not require as much assistance as purchasing a resale property. However, it’s essential to understand that homebuyers still benefit from having their own agent. The buyer’s agent has a fiduciary duty to the buyer, while the builder’s agent represents the builder’s interests.
How Builders and Agents Can Complement Each Other
Specialization in New Construction?
Many real estate agents focus on new construction homes, which gives them a deep understanding of the builder’s process, timelines, and offerings. They can help buyers navigate options such as floor plans, customizations, and features that align with their lifestyles, offering tailored advice that boosts the appeal of newly built homes. Their knowledge as new home realtors can also help set buyer expectations, minimize misunderstandings, and allow smoother transactions.
Builders also benefit from having a trusted intermediary who can present their homes in the best way possible.
Co-Marketing Opportunities
Marketing is all about reach and audiences, and combining builders’ and agents’ initiatives is an effective strategy to amplify both. Joint efforts on digital marketing campaigns, social media, open houses, agent exclusive events, or even traditional advertising can generate higher visibility, but they can also share costs on paid media campaigns or virtual tours. Additionally, co-branded content, such as blog posts or “vlogs,” helps highlight both parties’ expertise, creating a stronger impression on buyers.
Incentives and Flexible Commissions?
Builders can offer real estate agents customized incentives or flexible commission structures to make partnerships more attractive. These include bonuses for closing multiple deals within a certain timeframe or higher commissions for selling homes that have been on the market for longer.
Tailored incentives can also target specific buyer demographics, encouraging agents to promote a builder’s homes actively. This flexibility strengthens relationships between builders and agents while motivating agents to prioritize new construction properties.
When Builders Might Not Need Agent Partnerships
Direct-to-Buyer Channels
Builders with strong digital platforms can bypass traditional agents by reaching buyers directly. With the rise of online home-buying tools, interactive virtual tours, and direct messaging with builder sales teams, many buyers are now comfortable exploring and purchasing new homes without the assistance of a real estate agent.
This approach can significantly reduce costs while streamlining the sales process for builders who have invested in user-friendly, feature-rich websites or apps. These platforms also allow builders to have greater control over the buyer experience, ensuring consistent messaging about their products.
Other direct-to-buyer channels include builder solutions offered Realtor.com New Construction, which can enhance lead generation and expand a builder’s reach through various solutions:
Sales Builder Listing Platform: Builder direct leads from your branded listings are routed directly to you, with a performance-based pay structure—so there’s no risk. You only pay for the leads you receive. Get access to high-intent home shoppers on Realtor.com and capitalize on a proven lead-generation system that works for you.
Ad Media Network: Promote your communities with native ads and billboard placements on Realtor.com, and extend your impact with targeted Facebook ads. Leverage expert-driven strategies to connect with high-intent home shoppers where they’re most engaged.
In-house Sales Teams
Large builders often have dedicated in-house sales teams that manage the entire sales process, from lead generation to closing. These teams are well-trained in the builder’s products and can offer personalized service similar to that of external agents.
However, since they are closely aligned with the builder’s goals, it can be inefficient to partner with outside agents if the in-house team has established a good rapport with consumers. By building trust and making buyers feel comfortable, the in-house teams can effectively execute targeted sales strategies while keeping commissions within the organization.
Three Key Takeaways on How Builders Could Partner with Real Estate Agents: