I Bet You’re Kicking Yourself

As the market cools for some builders across the country, some builders are kicking themselves and upping realtor compensation. I feel like I’m having Deja Vu.

I came into the new home sales industry in 2006, just as the last hot market in the early aughts began to cool. When I started to work in a builder’s office, I came to understand that the real estate agent community was very distrustful of builders, or outright didn’t like them and didn’t want to do business with them. There were all kinds of theories that floated around from, “they didn’t understand the building process,” all the way to the fact that they would have to wait until a house was built and closed before they got their compensation. While some of this was true, I soon learned there was a lot more to the story.

In the last hot market, a handful of builders here and there set the tone for ALL builders…guilt by association. Some builders cut agent compensation. They limited amounts that could be made on the sale of a new home, or outright did what they could to cut agents out of the deal. (Whether true or not these were the agents perceptions.) Every time an OSC or New Home Sales professional doesn’t ask if someone is working with an agent, doesn’t note agent information in online software, or doesn’t register a buyer with their agent – we run the risk of being accused of trying to cut out an agent.

This time period in the mid 2000’s bred much friction between outside agents and builders. And it took a decade or more to win back the trust of agents. We incentivized the heck out of agents with agent rewards programs, agent appreciation dinners, agent-centric marketing, and more. We created real estate agent programs that helped educate their buyers, we as OSCs offered to register their buyers with them in our database so they would not be separated. OSCs worth their salt would ask the question, “are you working with an agent?” And try their darnedest to get the right answer. When asked whether a buyer needs an agent we wouldn’t holler, “Hell no!”  We’d explain the process and let the prospect know that if they are working with the agent there is no benefit to ditching them.

In the early part of the pandemic when agents started bringing their clients to builders because there was no resale inventory, we were ecstatic! But then we realized the sheer volume was crushing us! And we also saw how many leads we were getting, how desperate people were for houses, and with rising prices, builders sought to find areas where they could make cuts… there were some missteps. Any builder who thought it was a good idea to cut outside agent compensation was taking a very short sighted approach. We were repeating the mistakes of the mid 2000’s and it would eventually come back to bite us in the butt.

And here we are. As the market cools. Traffic is slowing down. How is that agent outreach going?

I’ve seen several disgruntled agents say they will never bring their clients back to certain builders, and some lump them all into the same category. Realtor relationships are important. If you have 5 top performing outside agents bringing you 5 sales a year that’s 25 more sales for the company. If you have 10 high performing agents that bring you 2 sales a year that’s 20 more sales. If you nurture 50 agents across the area and create a bond and trust and they bring one client your way a year to close that’s 50 more sales… all be told cultivating those relationships brought you nearly 100 sales! How do you NOT want to tap into that potential? And why would you piss them off?

Kudos to the builders who didn’t cut realtor commissions during the height of sales. Now make sure you capitalize on that and keep those relationships strong. Those of you who did… you may be kicking yourself.