How do real estate agents work with builders?

by Corben Grant on 04 Jan 2022

Most people think that home builders build homes. And unsurprisingly, they do! But there is much more involved in getting new homes to market with many different areas of expertise required. Building companies employ far more workers than just the people who build the homes. Construction workers may be great at what they do, but you can't expect them to handle real estate transactions or work with home buyers. These roles are handled by a dedicated real estate salesperson hired by the builder, fittingly called the builder's agent or an on-site agent. As a real estate agent, becoming a builder's agent can offer unique work opportunities and good money can be made in this career path.

Even as the buyer's agent, working with builders can be different from a regular sale as well and you should know the differences to make sure your clients are getting the best home they can without any unforeseen issues.

In this article, we will look at who builder's agents are, what they do, and how to become one or work with them.

What do builder's agents do?

A builder's agent is still a real estate agent and will still be responsible for handling real estate sales. However, rather than working with a homeowner as a listing agent, a builder's agent works for the developer to market and sell their homes to buyers. Because of this, builder's agents can have pretty different day-to-day jobs than a standard real estate agent.

For one, builder's agents are required to sell real estate that may not actually exist yet. They need strong sales skills to help their clients envision what is being offered to them and what the different options may mean for their budget and their lifestyle. They need to know what the builder can offer to the client as well as what the client expects and serve as the middle person between the two parties to make sure both can reach a deal.

They also need to be well versed in the world of pre-construction real estate. The construction process can be long and complicated with many bumps along the way. Managing clients' expectations about timelines and the project's budget will be crucial for a builder's agent.

Furthermore, since new construction can take a long time, a builder's agent's relationship with clients may be much longer than a traditional real estate sale. A builder's agent may be required to follow up with their clients for months after closing in order to make sure everything is going as planned.

A builder's agent also works for a specific development company, so as well as being knowledgeable about the homes, they need to be an advocate for the company. They communicate with clients about what the builder does, how they do it, and why clients should choose them over others.

Also, many real estate development projects are built as a complete community. The builder's agent then must sell not only the home but also the community that is being built. Often this will have its own set of marketing and selling points that the buyer will want to know.

Why are they needed?

Firstly, newly built homes need to be sold just like any other. However, sales in new build homes have a lot of unique challenges that need to be addressed and may not be common knowledge to a regular agent.

Homebuilders are often building numerous homes at once, this means they need someone who can not only sell homes but do it efficiently to fill all the homes they are constructing in a timely manner. These agents will need to be highly organized and able to juggle multiple clients at once.

There are also many differences between new build and resale homes. For example, financing is different and while builder's agents aren't expected to act as financial advisors, they may be needed to explain differences to clients and direct them to the proper sources for information. In addition, when it comes to building new homes, there are far more options and costs that homebuyers need to be aware of on top of the usual closing costs that any home is subject to.

Builders need an agent who can be the dedicated point of contact for clients and point them in the right direction for any questions they may have, allowing the builders to focus on building. How are builder's agents paid?

Many builder's agents receive commissions from sales like any other real estate agent, with the commission being paid by the developer. A builder may take a larger cut from your commissions, but you will also be able to make a lot more sales as a builder's agent, so overall, you could make the same or more than a regular real estate agent.

However, there are some cases where the builder's agent is an employee who gets salaried pay. This may also mean that no commission is paid to any buyer's agents so the buyer will need to cover these costs.

How to become a builder's agent.

Being a builders agent can be a rewarding career path for real estate professionals. For one, you will have a very steady business as new homes are being built all the time. For a real estate agent, where your income depends on how often you can make a sale, this can be a huge plus. You will also have the satisfaction of working with clients to customize their dream home and the knowledge that you helped them get exactly what they want.

There are also some downsides to being a builder's agent, a lot of them stemming from the same factors as the benefits. For one, a builder's agent will be much busier and you will often be working with many clients at once; potentially attending many model home showings and client meetings. You may also be selling many similar homes, so if you are someone who likes variety in your job, this can be a downside. Finally, you will be working with only one builder and may even have non-compete or exclusivity contracts. This means you will not be able to take on other clients while working as a builder's agent (if you had the time for it anyway).

Overall, if you are an ambitious, seasoned agent who can handle a lot of work at one time, you will be well suited to the job of a builder's agent and it can be a great career opportunity for you.

If becoming a builder's agent appeals to you, here is what you need to know to get started. First of all, buyers will be looking for experienced real estate agents who are capable of handling a large volume of sales. This means you not only need to have a real estate license like any other agent, but you also need to be relatively experienced. If you are a new real estate agent, you will likely be unable to find a job as a builder's real estate agent until you have established yourself more in the field.

However, if you are starting out and want to become a builder's real estate agent one day, it may be worth working as a buyer's agent for new builds, or otherwise becoming familiar and forming a relationship with builders in your local market. This can help you gain experience before starting out and it will be more likely that builders are familiar with your work when it comes time to look for a job.

As a builder's real estate agent, you will still need to work with a broker if you aren't one yourself, so it may also help to work with a real estate broker who already has experience and connections in the construction industry. This can help you find builders to work with, as well as help you find clients for your sales.

If you are already an experienced agent, your next step would be to find a builder to work with. Since builder's agents often work with one builder exclusively, choosing the right one can be an important consideration. You should learn as much as possible about a builder before you choose to work with them. For example, what is their reputation like? If they are a builder with a proven track record, your job will be made much easier. If they are a builder who often fails to deliver on deadlines or expectations, you will be on the hook for breaking bad news to clients and this can reflect poorly on you.

You should also pay attention to how much work the builder does. If they are regularly building new construction projects, you can count on a steady stream of work. In addition, a builder who has a lot of new developments in the pipeline will also be the most likely to be looking for new agents. A developer with no homes to sell has no need to hire new agents.

It’s also worth looking at what types of homes they are building. This can help you land the job if, for example, you have experience selling to their target audience. It will also determine the types of clients you are working with and their expectations. For example, clients of a luxury home builder may be far more particular and demanding than other clients.

Working with a builder's agent as a buyer's agent

As a real estate agent representing prospective buyers, you may at some point be asked to assist in the sale of a new build property. When working with clients to buy a new build, it’s important to keep some things in mind.

For one, you will be working along with the developer's own agent who represents their company like a seller's agent would represent a homeowner. This means that while they do want you to buy the home, they will be more likely to go for deals that benefit the company. It will be your job to advocate for your clients and make sure they are getting what they want.

Home builds are particularly challenging for buyers as they can take a long time, often longer than first expected, or they can have additional costs that come up along the way. You must make sure your clients are aware of these possibilities, and ensure that all paperwork and contracts are clear about these possibilities and what to do when difficulties arise.

You should also know from the beginning what sort of payment structure the builder intends on using. Some builders do not pay commissions on sales, so your clients need to know that they will be paying for your services. If you do not work this out in advance, you could find yourself making much less than you thought for all the work you put in.

Conclusion

Selling homes in the new-build industry can be a new and unique challenge for a real estate agent. Whether as a builder's on-site agent or as a buyer's agent helping your clients to build their dream home, this field comes with its own challenges and rewards. Hopefully, we have given you a good outline to begin your journey into new-build home sales.

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