Builder/Realtor Relationships - A Love/Hate Relationship - Bridging the Gap, Part II

I like the motivational and life changing speaker Stephen Covey.  One of the things Stephen Covey says is that highly effective people seek first to understand then be understood.  In my previous post Builder / Realtor Relationships - A Love/Hate Relationship Part I  I began trying to create an awareness for Realtors and Builders of how each other thinks.  Realtors think apples and builders think oranges.  It doesn't mean that either of them is thinking wrong.  It's just two different perspectives on the residential real estate industry.  I'm hoping that a better understanding between the two will lead to more successful business relationships in the future.  

Working on-site and in upper management with builders for over twenty years has given me a wealth of opportunities to work with Realtors to resolve both their issues and those of their client customers. Before I'm blasted by any Realtors or agents, please note that this post is based on my extensive experience resolving issues in the field. There are always those Realtors who do things in a different, better and more professional way, and since you are reading and blogging all things real estate you are likely in the better and more professional category. 

For Builders: The Realtor's Perspective (The Builder's Perspective for Realtors was in the first post. Jump there from here to view.)

The homebuilder's goal is to drive quality traffic, not quantity. Realtors are taught early on that success in real estate is quantity, a numbers game, so they try to list and show as many homes as possible.  This is why they keep asking for your listings. They need to keep building listings, which are their inventory, since listings sustain their efforts.  They have all those other agents out there working with buyers and hope that one of them will sell their listing even if they themselves can't.  While agents will try to sell their own listing what they want most is to pick up other business from that listing in the form of new leads for other listings and buyers for other properties.  Think of it as multi-level marketing and the pyramid.  Their goal is to build up a database of suspects who will either buy or sell or lead them to someone who will.  A successful Realtor adopts the attitude of hanging in there until they either buy or die.  This is why so many of them invest heavily in points of contact such as newsletter, cards, developing farm areas, client events, emarketing, etc.  

In home building, we track and measure everything.  We count traffic and study lead sources.  We grade every prospect and turn those grades in with our traffic reports. We look at cost per lead and cost per sale.  The general real estate agent doesn't, especially if they work for someone else.  To them, a buyer is a buyer and a seller is a seller.  They are trained to work with their hottest prospect first, and often do not ask the same qualifying questions that site agents are trained to ask. 

Unlike a site-agent, or new home consultant, most Realtors are not willing to hang out in your inventory home holding an open house during the week. They are working on multiple things and don't have the support staff that builders typically have to handle closings, homeowner orientations, etc.  Realtors must chase down the mortgage approval and any supporting documents, meet and juggle roofing inspectors, plumbers, home inspectors, termite men, repair men, and more.  They work hard for their money and earn it by handling all of the details that you have a full support staff for.  If they are sometimes a little harried or ditzy, it's probably because you have caught them at a time when they have four balls and a couple of flaming batons up in the air. Haven't you ever asked yourself how some of your sales team can safely cross the road? Great sales people are often great not because they are good at details but because they are good at building relationships.  It's the superstars that are good at both.   

Site agents are generally taught the price is the price on the price sheet.  Taking the lot off the market through lot reservations are typically the first steps in the site-agent's path to a purchase and sale agreement.  Realtors are taught to negotiate and ask for an offer as the first step.  

Builder's and site-agents work in the abstract off of blueprints and the promise of tomorrow and what will be.  They learn to speak in generalities when discussing time frames, and are likely to discuss changes and modifications, options and upgrades.  Not having brick and mortar to show doesn't phase them.  They have learned to paint the picture. Realtors work with the here and now.  They are not abstract sellers.  They must deal with the home as it sits and must learn to overcome bad decorating, small yards, poor lighting, lack of closets, and home made, hand lettered DO NOT LET (PET) OUT (IN) signs.  Often, Realtors don't like to show new construction because they themselves can't see it.  

Realtors can expect to be paid in thirty to forty-five days from contract.  Site agents know it could takes ten months to close and be paid.  Realtors want quick gratification so that they can move on to the next "deal".  Site agents must develop patience and learn to accept that gratification comes in time.  

Good builders (or their sales managers/sales directors) will have a clear policy as to which site agent has earned the right to write a contract for a customer, and thus avoid any disputes between agents.  Buyers frequently roam around without their Realtor and will end up buying from another Realtor.  The procuring cause rule. Realtors somewhat skeptical and hesitant to "register" their prospects with the builder, when in fact, this is exactly what they should do to protect themselves as the procuring cause. 

HOW TO SOLVE THE BUILDER - REALTOR LOVE/HATE RELATIONSHIP

I am going to recommend that both Realtors and Builders read each others points below.  If you can each understand what the other is trying to accomplish, and why things are done the way that they are, you will bridge the gap of miscommunication and understand the residential real estate arena from both perspectives.

BUILDERS:

• Put your Realtor Co-Op policy IN WRITING and make it available to Realtors on your web site and in your offices.  
• Clearly state the registration requirements, and whether or not you will accept a phone registration and under what conditions you will take one.  
• If you require that the Realtor accompany the prospect on the first visit, then please say so in writing. 
• Don't send mixed signals.  Establish a policy and then stick to it so that it will be well known and have greater acceptance with the Realtor community. When you make different rules for different occasions or special agents, you risk making your policy unfair and discriminatory, whether or not by intention.  Just like buyers, Realtors talk, and you do not want word getting that you are saying one thing and doing another,
• Provide a Realtor Registration form that is four part - One for you, one for your site agent, one for the Realtor, and one for the customer. Yes, one for the customer.  You want the customer to know that they are registered with XYZ Realty, and that you will be working with Agent 007.5 from XYZ Realty to help them with their new home needs.  What you are trying to achieve is to discourage them from getting another Realtor involved in the sale later on in the process as well as reassure them that their agent is a welcomed business partner. 
• Make certain that the prospect completes the registration form at the END of the presentation, not the Realtor, so that you can collect data critical to your sales and marketing success (for proper pricing, promotion, product, placement, etc.) and have the customer state what their new home criteria is. (Realtors, please read this comment in YOUR section for the logic behind this as it applies to YOU.)
• DO NOT OFFER ONE PRICE WITH A REALTOR AND A LOWER PRICE WITHOUT.  Train your site agents how to properly handle this request.
• Do not treat Realtors differently from one market cycle to another.  Be consistently fair and willing to either co-op with them or not.  
• Do not fall into the trap of begrudgingly paying them their commissions.  If they have followed your registration policy then they have earned it.  Pay them cheerfully and thank them for their business by honoring your Realtor co-op policy.
• Please have your site-agent follow up with the Realtor to both inform the Realtor of any progress being made towards a successful home buying experience and also discover any new information that may help the agent further identify how to help the prospect make a buying decision for one of your homes.
• When a purchase ensues, if the Realtor is not present, as is often the case, please contact the Realtor ASAP and provide them with a copy of the executed agreement ASAP.  
• Keep the Realtor posted of closing dates.  By being proactive, you are building your relationship and earning the trust and confidence of that Realtor and developing future business.