Builders have joined the ranks of home sellers who now use the Web to advertise homes directly to buyers and eliminate the cost of the real estate salesperson’s commission.
ForSaleByOwner.com, one of the more successful online do-it-yourself home sale companies, last month launched a service that lets builders post their own for-sale properties on the ForSaleByOwner.com Web site and connect directly with prospective buyers.
Builders pay $200 a month to display an unlimited number of homes on the Web site. A $400-per-listing option adds the MLS and Realtor.com to the builder’s online advertising package.
The National Association of Realtors estimates that at least 70 percent of people now start their home search online. New programs like ForSaleByOwner’s give builders a chance to connect directly with those buyers without the assistance of a real estate broker.
Builders have been able to upload inventory to ForSaleByOwner for some time. But the new service makes it even easier for them to interact with the for-sale-by-owner platform and gives buyers more search parameters, according to company COO Colby Sambrotto.
“Now buyers looking for new homes will have access to a larger inventory,” he said.
Only 2-4 percent of the 30,000 for-sale homes on ForSaleByOwner.com are new construction. Yet the new-home market is no small opportunity for Web site operators. Sales of new single-family homes topped 1.09 million last year, an 11.5 percent increase over the previous year, according to the Commerce Department. The median sales price of new homes sold in December 2003 was $197,600.
Builders who use the ForSaleByOwner.com service can include up to six color photos, a virtual tour, a 3,000-character description and a virtual slideshow for each home. The properties also appear on three other Web sites, SaleByOwner.com, ByOwnerSales.com and Fisbo.com, which ForSaleByOwner.com also owns and operates. Builders who sign up for the service also are listed in the company’s online builder directory.
Other new-homes Web sites have taken the opposite approach and deliberately included the real estate salesperson in their calculations and business models.
INest, an online brokerage that specializes in new homes, enables buyers to search an online database of 7,200 new home communities and 500 builders, including Beazer Homes, Centex, Lennar Corp., Pulte Homes, D.R. Horton and Ryland Homes. The Web site attracts buyer prospects through a link on Bank of America’s Web site.
INest doesn’t charge builders an up-front or per-house cost to participate in the service. Instead, the Web site functions as the buyer’s real estate broker and collects a commission from the builder when the home sale closes. INest has sold more than $1 billion in homes since it opened in 1998, according to Jeff Harris, VP of business development for iNest.
Part of that buy-side commission ends up in the buyer’s pocket because iNest offers a 1 percent rebate of the home price to buyers who purchase a home from a builder in its database. INest appears to be the only dot-com that has cash-back offers on new homes, although other online realty brokerages offer commission rebates on resale transactions.
“(Buyers can) visit iNest, search communities, research builders, register online, print the coupon, then take it into the builder’s office,” Harris said.
The Homebuilder.com Web site that Homestore operates for the National Association of Home Builders launched “Realtor reach,” a program that puts builders in touch with realty sales agents who work with home buyers.
Builders can add their for-sale homes to Homebuilder.com’s 130,000-property database. Those properties also appear on two other Homestore-operated Web sites, RentNet and Realtor.com, the latter if the builder is a member of the National Association of Realtors. The cost to advertise a home on Homebuilder.com depends on the market and the subdivision, according to the company.
Home buyers can use Homebuilder.com to search for builders in a preferred market. The Web site lists such large builders such as Toll Bros. and Pulte Homes, and smaller regional builders. The Web site also recently added promotional programs to help builders sell existing inventory built on spec, connect with prospective buyers who have been prequalified for a mortgage and advertise sales events online.
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