Breaking into New Construction: An Agent’s Advice
by James McClister
What will work to sell one home won’t sell another. For newly constructed homes, Chicago New Properties co-owner Laura McGreal recently explained to Chicago Agent that an agent will need much more than boilerplate sales speak.
“It’s a completely different animal from selling resale. Real estate agents (who want to break into new construction) need to have a good understanding of the latest trends and know where their target market is,” said McGreal, who broke into the market through first working directly with a developer (which she recommends). “It’s also important agents have a good knowledge of construction.”
In McGreal’s experience, new construction clients come armed with questions unique to the process, many of which, she said, will focus on the budding preferences of energy efficiency and home technology infusion. She added that new homebuyers will be “looking for well-designed, efficient and open layouts with smart home technology.”
Already this year, McGreal said that her business is off to a “strong start,” but that strength is not being felt universally throughout the industry, as builders and buyers alike face considerable challenges in a market still struggling to reclaim its pre-crisis stability. “One of the biggest challenges facing the sector is a lack of inventory on updated or new construction homes, which have put many buyers in multiple offer scenarios,” she explained. “Builders are also starting to face higher land and construction costs, driving up the price of new construction.”
Because of an improved economy and interest rates that are still near record low levels, McGreal believes confidence in the market is growing, which should translate into even more demand. However, while the market is still volatile, McGreal emphasized that if agents want to establish themselves as new construction agents, they’ll need to be able to explain value and learn how to most effectively market a new construction property.
“You have to know why your product is better than the next builder’s,” she said.
It’s not unheard of, McGreal explained, for builders to spend money “behind the walls,” or on things not so obvious at a glance. “If a builder is spending extra money, you better be able to explain the value it adds to the home and why it’s important to the buyer.” A big part of explaining that value will come during the marketing of a property – a process, she admitted, that can vary depending on what stage of construction the property is in when it’s listed.
“If a new home is listed prior to completion, many potential buyers will have trouble visualizing the home and its features,” she said.
To help potential buyers better imagine what their new home will look like, McGreal suggests a number of different techniques, from virtual staging to providing finishing samples and website links to sources explaining the “important features” of the home. In his book “New Home Sales,” the late author and renowned real estate expert Dave Stone touched specifically on the challenge of selling an intangible commodity (i.e. a home yet to be built) to a buyer, but described it more in terms of opportunity than challenge.
“The difference in selling (resale versus new construction) is the difference between selling reality and selling a dream,” he wrote. Stone added that new homes represent “a new way of life in a new environment,” and that’s the way agents breaking into the market should frame their sales approach.
Laura McGreal is the co-owner and managing broker of Chicago New Properties. Her previous experience as a sales associate with Pulte Group and her background in finance give her a unique perspective in her partnerships with developers and agents. Laura has received numerous awards, including the Home Builders Association Gold Award, the Home Builders Association Silver Award, and Pulte’s Outstanding Finance Achievement Award.
Source: Chicago Agent Magazine