By Cynthia Gregory
In partnerships between homebuilders and agents, trust is essential. This may be why a growing number of Chicago-area builders and developers offer unique Realtor programs that encourage agent participation as well as offer incentives for their clients.
The goal of Realtor programs isn’t just sales, according to Maria Wilhelm, vice president of sales at Pulte Home Corporation. “We are as concerned with building ongoing relationships with agents as we are with getting buyers in the door,” she says.
Realtor programs typically offer agents a solid co-op fee, which is either linked to the sales price of the property or is a flat fee regardless of sales price.
“Many of us are Realtors, too,” Eric Workman, vice president of Mack Companies, says. “We know that agents work very hard, sometimes too hard, and they deserve to be compensated.”
Workman believes that’s why Mack Companies’ unique offerings are so successful. As a redevelopment company, they provide the agent’s investment buyers with formerly distressed properties that have already been returned to health and guarantee immediate cash flow. “Rather than showing dozens of properties in a flooded market to overwhelmed buyers, an agent can bring us an investor who quickly sees the advantages,” he says. “We pay the agent $2,500 on every sale that buyer makes for two years.”
In addition to a respectable co-op fee, many Realtor programs offer a variety of incentives and bonuses to agents who bring return business. William Ryan Homes celebrates the holidays with a year-end raffle, and agents receive one entry for every sale made within the year. Pulte’s Premier Partners Realtor program offers bonuses with incremental increases based upon the number of agent sales. M/I Homes gives new community bonuses as well as seasonal promotions.
Many of these Realtor programs are less than a year old, so careful attention is paid to agent response. Suggestions made by agents are taken seriously, so if future tweaks are needed, they’ll know exactly what’s called for. So far, the responses have been encouraging. The 25 percent broker participation with which M/I Homes entered the market has quickly jumped to 35 percent. Before their agent program, Mack Companies had no broker participation; now, agents account for 30 percent of sales, and Pulte reports a whopping 53 percent of Illinois sales involved an agent. “Agent participation is essential to us,” Wilhelm says.
The success of these programs may begin with positive builder-agent relationships, but the buyer’s happiness is at the core of their success; a satisfied buyer is more likely to send future business to the agent. In addition, when builders offer buyers incentives that they often can’t get from purchasing a resale, this can require much less time from the agent, too.
M/I Homes, for example, offers a 30-year structural warranty, all of its homes are energy-plus buildings with Energy Star certification, and they also keep plenty of inventory so agents don’t have to wait months to get paid. William Ryan Homes’ Realtor Rewards Program offers Fast Cash, and pays the commission prior to closing.
Pulte’s buyers’ incentives are tied to one of three brands. For example, Centex Homes, which caters to first-time homebuyers, pays most closing costs so buyers can use their cash for the down payment, and their one-, two-, five- or 10-year warranty offers buyers peace of mind.
Mack Companies knows that investors who purchase a distressed property need considerable up-front cash and will have to settle for a higher loan. They must put money into rehabbing and then find a renter, who may or may not pay the rent on time. But Mack Companies eliminates all those advantages with one of its programs.
“With us, investors need much less cash up-front, can get a favorable loan, and already have a guaranteed tenant in place,” Workman says. “This leverages their cash for further investments, and the agent gets paid every time.”
The only drawback to Realtor programs is the cost to the builder, but everyone interviewed agrees that it’s worth it. It’s difficult to track the success of marketing dollars spent on billboards, websites and media ads, but according to Wilhelm, “The Pulte Group is happy to use marketing dollars on Realtor programs because we know we are going to see tangible results.”
Agents, too, feel the love. Angus Woodbury, a Realtor with RE/MAX of Naperville, has worked with Pulte in the best and worst of real estate markets. “It starts at the top and it’s a culture that filters down through all of the people that work there,” he states with satisfaction.