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When Realtors Manage Home Builder Sales

New-Home Sales

When Realtors Manage Home Builder Sales

A hybrid approach to managing sales with real estate agents can bring home builders more focus and closings

By Bob Schultz, Contributing Editor May 9, 2014
Homes sales hand-off as sales agent drops keys into homeowner's hand
This article first appeared in the PB May 2014 issue of Pro Builder.

Real estate agents and brokers can play a significant role in the sale of a builder’s homes. Most builders with an internal sales organization promote outreach to the entire Realtor community for co-op sales. Other builders use real estate agents and brokers to manage their whole sales operation.

This is the first in a series of articles about the choices available and how to evaluate effectiveness when brokers and real estate agents manage your sales. There are many important considerations that will help you determine what’s best for you. Among those issues are the following:
Your position in the marketplace as to potential sales volume
The locations of homes for sale
The scope of the involvement of all parties
Marketing and advertising  possibilities and responsibilities
Sales performance objectives and benchmarks
Training and evaluation of sales and customer satisfaction skills
On-site staffing for appropriate representation
Responsibility for expenses and compensation

Builders Staying Active in a Hybrid Relationship

One method proven beneficial for some builders is establishing a relationship with a Realtor or brokerage company for representation in which the builder maintains active involvement and levels of control. We call this a hybrid relationship. This approach creates the possibility for all parties involved to develop a culture that allows for more specific focus and concentration on the builder’s objectives, activities, best practices, and accountability measures that ultimately produce sales results.
Essentially, a real estate agent has the listing and markets the builder’s homes through multiple listing services (MLS), advertising, and throughout the Realtor community. The salesperson or team is focused solely on the sale of that particular builder’s homes and reports to the builder, as well as to the Realtor, under a predetermined set of specifications. Some of those specifications can include, but are not limited to, these points:
Interviewing and approving sales team members
Setting the days and hours for staffing model homes or open houses
Establishing compensation 
Limiting or excluding involvement in outside real estate activities
Elements of the hybrid relationship that produce exceptional sales readiness for the Realtor or sales team include comprehensive knowledge of the builder’s construction processes, customer service provisions, design, and included features. Sales skill development through sales meetings and training with role-playing and mystery video shopping evaluations also is essential. 
From the administrative perspective, complete and accurate reports need to be compiled and provided on a timely basis to assess the effectiveness of marketing and advertising efforts, traffic, sales, conversion ratios, and more. The terms of “who provides what” under this arrangement should be diligently considered and carefully negotiated so that all parties are fully aware of their responsibilities and how they will be measured and evaluated. When properly implemented, this method creates an environment for a win-win-win relationship to be enjoyed by the builder, the Realtor, and the sales team. It has been said when it’s everybody’s business, it’s nobody’s business; and when something become personal, it becomes important. 

Case Study of a Hybrid Sales Relationship

Here is a firsthand assessment of how this hybrid type of relationship is working for Scott Brantley, sales manager for Ivey Homes, Augusta, Ga. Scott says:
“Before entering into a hybrid situation with Ivey Residential, I was involved in several different aspects of the real estate business including new-home sales representing multiple builders, as well as listing and selling resale homes.
After beginning my career with Ivey Residential, I was solely committed to implementing all of my skills and time to increase the success of only that company. I no longer was involved in outside sales nor any real estate transaction that did not include them. The goals of Ivey Residential then became my goals, and my success helped them to succeed. Instead of worrying about multiple resale listings and multiple builders, I was able to concentrate only on listing and selling Ivey’s product.
In order to represent them in the best way possible, I had to learn all of their systems and their entire construction process. Having a bachelor’s degree in construction management and science was extremely helpful in allowing me to relate to their process. Through an ongoing program that included systematic sales and management training and coaching that involved extensive role-playing and periodic mystery video shop evaluations, I was empowered to learn and master the sales process at a higher level. I have made it a point to learn as much as possible about every aspect of the process from the real estate side, the construction side, and most importantly, the sales and management side. In doing so, I am able to explain to the customer every facet of the real estate process and how things will work as well as explain how the home was constructed. I am also well versed in how our homes differ from other builders.
Since beginning my exclusive relationship with Ivey three-and-a-half years ago, I have sold just shy of $30 million of their product, have been recognized in the most elite and highest category for new-home sales in our market, and have been part of the No. 1 selling new-home community (for most homes closed) in our market three years in a row.
To be in a hybrid situation with Ivey Residential has been a great experience. Being able to concentrate all of my efforts on one thing has allowed me to set aside outside distractions and focus on that one thing. In doing so I have found that I am able to work on perfecting one sales model, thus making my sales process far greater than it would be if I were worried about trying to sell a wide variety of homes and service multiple builders.
Overall it has been a win-win-win for me, the builder, and the broker. When each member’s success stems from the others, it helps to provide trust and interdependence for the others involved. Doing so allows you to take comfort in the fact that everyone is working toward the same goal.
I would highly recommend this type of relationship to any Realtor, salesperson, or builder who is considering it. The most important thing to remember is that when building this type of relationship, everyone should understand that this cannot be accomplished by people with individual goals. It works with people who are willing to accept the others’ processes and work toward a common goal.” 
C. Scott Brantley can be contacted at scott.brantley@iveygroup.com.
Written By
President and CEO

Bob Schultz is president and CEO of Bob Schultz & The International New Home Sales Specialists. Write him at bob@i-nhss.com.

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