Houston Agent (HA): How important are relationships with builders when selling new construction?
Ben Caballero (BC): Trust is an important element in any relationship and especially so when an investment is large and involves a family. Builders are not an adversary; to the contrary, they are an asset to the sales. Remember that like you, their livelihood depends on selling homes.
HA: How can agents begin forming relationships with builders and get into new construction, if that isn’t already a part of their business?
BC: Visit builders in your market area. Get to know the sales counselors and their homes. Ask for a copy of their contract so you won’t be surprised by the fine print. Give them your email address and ask them to let you know when they have an event or special offering.
HA: What are some of the key things you’ve learned from working with so many builders?
BC: Selling new homes is much easier than selling preowned homes. Builders are business people, not emotional sellers. The model homes are staged better than any preowned home. It is best for an agent to bring their client to the builder, then step back and let the builder handle everything. They know the product and what they can and can’t do. That is why trust is so important.
HA: Do you see the new construction industry growing or shrinking this year? Why?
BC: We have one of the best economies in the country, so I believe Texas home building will be good this year.
HA: What are some questions agents commonly ask builders?
BC: The most common questions asked by agents are:
Q. Why won’t builders commit to a closing date?
A. Home construction is subject to conditions and events not encountered in a pre-owned home. Weather, material delivery, city inspections, accidents, theft, vandalism and other variables are beyond builders’ control. You can be certain that a builder wants to close home sales as quickly as possible to end their daily cost of interest, utilities, insurance, property taxes, maintenance and risk of damage.
Q. Why do builders insist on using their own contract? What’s wrong with TREC contracts?
A. TREC contracts are not designed for volume builders. Texas law allows sellers to use a real estate sale contract if it is written by an attorney. Builders build homes with their own money or borrowed funds. If the buyer doesn’t complete the purchase, the builder incurs significant costs until the home is sold to someone else. In addition, they build different types of homes in different municipal areas. They have constraints imposed by lenders, insurance companies, city inspectors and others. Because in addition to being the seller, builders create the home, warrant the home, and in some cases, have developed the building site, they have a unique set of responsibilities that must be addressed when they sell homes. It is a good idea to obtain a copy of the builder’s contract in advance so you can familiarize yourself with it and ask any questions you may have. That way, you will not be unprepared if your client asks you a last-minute question about the contract.
Q. Why do builders insist on using a certain title company?
A. If builders closed sales through multiple title companies in different locations, with different personnel and procedures, a certain amount of inefficiency would occur and closings could be delayed. When builders start homes, their title company creates and maintains a file which can help homes close quicker.
Q. Why do builders insist on using a certain lender?
A. Builders use specific lenders because they know they can rely on them to perform. Builders need to know a sale will close when agreed. Not all lenders understand how important that is to a builder. After all, the most important issue is to have a successful closing, not who makes the buyer’s loan.