By LEW SICHELMAN
Builders are going after real estate agents’ bread and butter, and they’ll be asking for agents’ help to do it.
Starting in March, builders will finally launch a long-awaited multimillion-dollar ad campaign aimed at persuading would-be buyers that brand-new homes are a better choice than the scratch-and-dent houses they’ll find in the resale sector. But the largely digital campaign is primed to win over the hearts of real estate professionals, too.
Why? Because agents and brokers absolutely control the housing market. According to a study by Chadwick Martin Bailey, the Boston-based consumer research company, 84 percent of 1,000 people identified as likely buyers in the next year are either already locked up with an agent or expect to connect with one when they actively begin their search.
"That’s a statistic (builders) can’t ignore," said Jonathan Smoke, chief economist at Hanley Wood, a building-centric publishing company based in Washington, D.C. Builders "need them to sell their value."
Unfortunately, builders and agents have always had a love-hate relationship. For one reason or another, agents tend to be a thorn in builders’ sides. Some builders still are loathe to pay a full commission, because they think all an agent does is bring a buyer to the model home showroom. After that, the builder’s sales force often takes over.
But many agents aren’t particularly fond of builders, either. Over and above the commission issue, agents by and large feel like they lose control of the sales process when working with builders. Builders are less willing to negotiate and have hidden upcharges, agents say, and don’t make it easy to learn about properties and inventories. Builders typcially don’t offer much in the way of training about how to sell new houses.
Although only 16 percent of the 3,000 agents polled in December by the Chadwick firm said they sold a new home in the previous year, half said they’d like to sell new houses and well as resales.
So as part of the builder blitz, the promotion plans to "engage agents and brokers more deeply," by welcoming agents into the fold, emphasizing why new is better and perhaps getting their new communities onto the multiple listing service, where they now are often blocked until a house is completed.
"Realtors want to sell new homes; Realtors want to have a better relationship with builders," said Smoke, the economist. "The relationship doesn’t have to be adversarial."
The company behind the "Start Fresh, Buy New" ad campaign is Builders Homesite Inc., an Austin, Texas-based, high-tech marketing company owned by a consortium of 32 of the nation’s largest builders. But 1,000 builders in all parts of the country are BHI clients, the company’s chief executive, Tim Costello, said at the International Builders Show last week in Las Vegas, where the multiyear campaign was previewed.
Buyers are the primary target of the ad campaign — but not all buyers. Forget the 46 percent who prefer existing houses. Builders are going after the 35 percent who are indifferent, who don’t have a predilection one way or another for new or resale. Nail their fair share of that group, BHI Marketing Vice President Keith Guyett said, and builders will notch close to 1 million sales a year.
"We’re not trying to convince people to buy," said Guyett. "We just want our fair share."
Right now, builders account for roughly 7 percent of all sales, or just under 400,000 deals a year. But historically, they’ve owned a 15 percent to 20 percent share, which at today’s sales pace would be around 900,000 closed contracts.
"It’s not that people aren’t buying, it’s that they’re buying existing homes," Costello said. "It’s not a demand problem, it’s a marketing and messaging problem. Other builders aren’t the competition, it’s existing houses."
In a sense, then, the ad campaign is an effort to win back what builders have lost. And to do that, builders plan to emphasize the characteristics they offer that buyers say they favor — the quality of construction, safer neighborhoods, better floor plans and lower maintenance costs.
The "Start Fresh, Buy New" campaign is the "Got Milk" campaign for new construction. It will emphasize that "Everything is New and Perfect," that buyers of sparkling new construction will enjoy the freedom to "Do the Things You Want to Do, Not Have to Do."
With a new home, Guyett said, "you can be the first and only one to soak in your whirlpool tub or lie on your carpet."
His boss is a tad more graphic. "People don’t want to sit on someone else’s toilet seat," Costello said. "Or pick someone else’s toenails out of the carpet."
Lew Sichelman writes a syndicated column on housing issues. He can be reached by email at Lsichelman@aol.com.
