By Christian J. Barron
Selling new construction takes additional skills than selling an existing home. Agents need to be educated about what goes on in the building process and how this relates to buyers’ needs. Here are four tips to help you better prepare your listing, and yourself, to close a sale and move buyers into their new home.
1. Know the language. Be able to speak and understand the jargon of builders. “A working knowledge of general construction terminology is key,” says Melissa Govedarica of Sergio and Banks Real Estate, who also represents many listings by Noah Properties. Having a construction-savvy tongue “conveys your knowledge and passion of new construction to buyers, and raises your overall credibility to potential buyers – many of whom have already done their own research online and have a familiarity with construction concepts,” she says.
You should, however, know more than just a couple of terms and phrases of a builder’s vocabulary – you should understand the building process itself, from the initial foundation stages all the way to completion, and be able to reiterate this to your clients. Govedarica says that she learned the language of new construction from working with various builders in her 25 years of experience. “Walk through the construction with the builders and have them point out every small detail. This should be done so you can tell buyers that the foundation is clay, or that it’s insulated with a water sealant, and what the differences between the two mean.”
Colin Hebson, residential consultant at Dream Town Realty who also represents many new construction listings from CA Development, adds, “when you know the same language as the builders and can explain what goes on in the walls, electric and plumbing systems of the property, you are more able to put your clients at ease and sell the property.”
2. Identify Your Buyers. Understand the buyers you are selling to, and cater towards them. “A homebuilder’s knowledge of the target demographic has always been key to providing homes that best fit the needs of the buyer,” says Cheryl Bonk, vice president of sales and marketing for the Chicago division of M/I Homes, who adds that in the townhome market, she has seen an extraordinary rise in the number of situational buyers – individuals moving due to job relocation, being newly single or empty-nesters. In addition, she’s noticed a higher percentage of first-time buyers who are single rather than married.
To close a sale, “we find it’s truly important to understand each individual circumstance a bit more intimately,” Bonk says. “Buying a new home can literally be the best part of what is otherwise a bit daunting to people in these life-changing times. We thoughtfully plan our homes with features that our buyers tell us are important. The ability to choose a new home for a quick closing that is appointed with today’s design trends makes any of life’s transitions all that much easier.”
3. Ask About Financing. You’re going to want to make sure that your potential buyer has been pre-approved by a reputable lender. “If they’re not, I ask them to get pre-approved, or get them in touch with a private mortgage banker,” says Govedarica, “Otherwise, it’s a waste of time for everyone involved.”
Obtaining a new construction loan is a different process than its resale counterpart. Resale loans are normally available for 90 days while new construction loans may not be ready for a year or more. “Most lenders don’t allow lock-in rates past 90 days,” says Govedarica. “What typically happens is the lender gets the loan prepared and ready to go into the pipeline, then will do the necessary updating due diligence once the loan is locked, and the buyer simply has to wait to lock in a rate.”
When it comes to representing a listing, Govedarica says that she works closely with the buyer’s agent and lender to gauge progress as construction moves along and a realistic closing date approaches. “This allows the buyer to posture themselves for their lock-in rate; it’s a balancing act that usually works out.” By asking the buyer and agent about financing, Govedarica is not only able to gauge the seriousness and credibility of potential buyers, but also their willingness and ability to actually make a purchase.
4. Stage to Perfection.“Back in the day, you could put a sign in the ground that read ‘new construction condos’ and people would buy them,” says Hebson. “Now, we make sure that they are staged to perfection and look as good as they can. We are very cognitive when we finish the house that it has the right kind of granite or stain colors on the floors to match current trends. We wouldn’t have a house with contemporary finishes decorated with some shay carpet and couch from the ‘70s. The furnishings have to match the house.”
A benefit of new construction is that many of these homes and properties are very energy-efficient. “You are selling properties equipped with some of the latest energy-efficient technologies,” Bonk says. “When presenting the home to potential buyers, you want to make sure that they understand and appreciate the benefit of buying that type of home.”