Builders can find themselves in a tug of war between deciding whether to bring their sales in-house or outsource to Realtors. Matt Ivey, co-founder of Ivey Homes, which builds in Augusta, Ga., adopted a hybrid solution. In 2010, sales for the company’s Canterbury Farms community was handed to a local brokerage, which provides a Realtor and an assistant who sell only Ivey properties. For Crawford Creek, a multibuilder neighborhood, another brokerage assigned a three-agent team to sell exclusively for the builder. Ivey shares how this arrangement is working.
Q: Describe how your company handles the sales and marketing of Ivey Homes?
A: We handle sales and marketing in a variety of ways. Where possible, we are moving to a hybrid scenario. This is where we maintain a relationship with a broker, but the agents work exclusively for us in the new-home arena. This structure by nature is adaptable to the situation at hand. We also still have neighborhoods where the broker is the developer or the developer has chosen the broker, and the broker has full control of sales and marketing.
Q: Why did you choose to outsource sales in this fashion rather than bring that function completely in-house?
A: When you start looking at in-house, there are a lot of different factors that you’ve got to weigh. What are the sales volume and velocity for that community? Do I want to carry the overhead? Do I have enough supply in front of these folks to bring them in-house, and what kind of relationship are you trying to establish with the local brokerage community? At that time, we only had one community that had sales volume and velocity. We were the developer in Canterbury Farms so we had lot supply, but that was all we had to create this program. It was a trial. Either it was going to work for us or it wasn’t. In that community, the agent and assistant are direct employees of ours. Later, we were able to take that same hybrid concept to Crawford Creek where we weren’t sure what our lot supply would be. Those agents are third-party agents, but they are exclusive to us. So we are able to train them.
Q: In what ways are the dedicated salespeople in your arrangement approaching or treating a new construction product compared with how a real estate agent working for a broker might do so?
A: When you have agents who represent multiple builders in a community, it’s very difficult for them to tell multiple stories to the prospect. That’s confusing for the prospect and the agent. The builders end up being lumped together in that situation. What happens is if you’re a builder who does anything different, it’s hard for the agent to explain what the differences are. So the product becomes a commodity, and in the buyer’s mind every builder is the same. Their judgment of value is based solely on what they see. Very little value is placed on differences in materials, customer service, and energy efficiency. Then there are operational challenges. Each builder might have a slightly different sales process, so the Realtor ends up handing the prospect off to the builder. Then the builder has to take the sales process to contract and beyond. In-house agents, however, can take your plans, options, and processes and help the prospect develop the home of their desires. This exclusivity gives the agents who are there a lot more tools to work with.
Q: How is the arrangement your company utilizes working out?
A: We have much better control of the process from how they greet the prospect, to telling our story, to the follow-up process after they leave. We’re more consistent with adhering to our internal procedures and systems. The sales teams can handle the presales directly. Sometimes in a multi-builder community, you can overspec because your house is a commodity, and you’re trying to get your home sold first to minimize interest carry. We have a lot less overspeccing of homes. From what we’ve been told, we feel we have better peer-to-peer margins for that market segment. PB