Home builders are like a box of chocolates: you never know what you’re going to get. (Thank you, Forrest Gump) I know this because I’ve been helping builders market their homes for the better part of the past 25 years. This is a diverse group of individuals with varied backgrounds. So it should come as no surprise that their policies and attitudes about working with the agent community are just as varied.
Nothing illustrates this point better than my recent trip to Austin, Texas last month. While spending the week with our management team, I also had the opportunity to visit with a handful of builders of different sizes. These were fact-finding meetings where we shared information, and I talked about our plans for Builders Update.
If you haven’t been to Austin recently or haven’t read about it: it’s a red-hot market. Most builders are selling homes as fast as they are building them. It’s always interesting to me to see how builders react to agents in this type of market. Do they pull back on their marketing efforts to agents? Are they marketing to them at all? Do any of them dare to reduce commissions or pull them altogether?
Wisely, all of them said they still work with agents and still pay agent commissions. However, two of the six I met with said they pulled back their agent marketing significantly, and indicated that they don’t want to encourage agent sales in a hot market. On the surface, their argument may seem logical from a business perspective. I mean, if you can make a sale and not pay a 3% commission, why wouldn’t you do it, right?
The reality of this on-again-off-again agent marketing strategy is that builders potentially risk much more in the long run than they stand to gain in the short term…mainly market share. The fact is that most builders lean heavily on agents in down or even average markets. So those who slow or stop marketing to agents stand to lose ground in the market place when sales inevitably slow down (everywhere but in California, but that’s a blog for another day).
A local division of a national builder I met with in Austin even said they are continuing to expand their marketing efforts and incentives to agents. Their reasoning: when the market falters, they want to be one of the builders agents turn to with their customers. It’s a forward-thinking strategy.
The good news in all of this is that builders and agents value each other. And just about all builders are agent friendly in good markets and bad. It will be interesting to see how each marketing strategy plays out in Austin over time when the market eventually cools. Stay tuned.
buildersupdate.wordpress.com 