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What developers want agents to know about new construction

by Scott Klocksin

We asked some of the smart people we know in the development and new construction industries what they thought about the state of the industry, the influence of amenities and technology and what agents can do to make new-construction deals flow more smoothly. Here’s what they had to say.

Would you say there’s a healthy number of new housing units coming to market in the next year to meet demand?

“It depends on the housing type and area. Part of the problem developers are facing now is that pricing and values for existing homes have stayed pretty flat the last couple of years, while costs for all types of new construction have continued to rise. Between that factor and the lower levels of traffic most sales offices are seeing these days, I don’t anticipate there being any real shortages in new-construction offerings to meet buyer demand in any given submarket.” — Jeff Benach, principal of Lexington Homes

“New construction condominium supply in the downtown market is incredibly low right now, especially if you’re only looking at units that will deliver over the next year. This is why we moved up the construction schedule for Fifteen Fifty on the Park in the Gold Coast, where demand for luxury homes is strong, and there just isn’t a lot of new product available.” — Paula Harris, senior vice president at Golub & Company

“There is a significant amount of multifamily rental coming online over the next 24 months and the number of for-sale new-construction projects is starting to increase. But we won’t have enough product delivering next year to meet demand. Most of the current projects and those coming soon will deliver in 2021 and 2022.” — David Wolf, president of ON Collaborative

“At our company, we focus on the infill market on the North Shore, which is inherently supply-constrained. There just aren’t a lot of opportunities to build, especially in prime locations. So there’s strong demand for maintenance-free new construction, and if you can build a luxury product at an attractive price in a close-to-town location, you’re going to attract buyers.” — Keith Jacobs, president and CEO of The Jacobs Companies

Often one of the main differentiating features between new and existing homes is the number of technological bells and whistles. Do you think smart-home technology and more energy-efficient design have the potential to shift the new vs. resale proposition for consumers?

“Maybe to a degree. There are always new things coming out that distinguish new construction from resale, and they often do shift some new folks that way, but usually nothing significant. Twenty years ago, it was better insulation and energy-efficient HVAC systems. Also, most smart-home technology is easily retrofitted into an existing home.” — Jeff Benach, principal of Lexington Homes

“In general, buyers choose new construction because they want a housing product that is on the leading edge of design and construction, without having to deal with the hassles and expense burden of renovating used product. That’s why the latest and greatest version of everything, including smart-home tech, is so important to them.” — David Wolf, president of ON Collaborative

What other factors do you see leading to buyers choosing newly-built homes over existing ones?

“New construction provides opportunities for technology and energy efficiency, which have a certain appeal. But factors like well-designed floor plans and interiors have a more significant impact on the new vs. resale decision. Technology is evolving very quickly, and thanks to Bluetooth and smart appliances, it’s getting easier and less expensive to retrofit existing homes. It is much more difficult to reconfigure a floor plan, add a designer kitchen and dd or update amenities. That is where luxury buyers find real value in new construction.” — Paula Harris, senior vice president at Golub & Company

“Technology will continue to have an effect, both in terms of smart-home design as well as construction techniques and materials. Another factor is newer floor plan designs, as more and more folks only want open floor plans. Homes are also being designed more efficiently today, eliminating hallways in order to put all the square footage into significant places, like rooms.” — Jeff Benach, principal of Lexington Homes

“New construction competes with resale now more than ever. It’s up to us and our agent-partners to educate buyers on the benefits. Technology is important too, and it’s not just about the ‘wired home.’ Building systems and materials have undergone a lot of innovations that make for a more efficient, comfortable and ultimately more affordable home in the long run.” — Keith Jacobs, president and CEO of The Jacobs Companies

New construction can be difficult for agents to break into. What can real estate professionals do to make sales of residential new-construction units smoother and more efficient?

“Frankly, I think collaboration between agents and developers has never been better than it is today, and in the end we all want the same thing, which is to delight the homebuyer. To that end, what we hope and expect is that brokers make a real effort to understand our story and our product, because it really helps buyers recognize the value in our homes. Think about buying artwork. When you go to a gallery and you learn about the artist and the context in which the piece was created, you gain a much deeper appreciation for that work.” — Paula Harris,
senior vice president, Golub & Company

“Real estate professionals have become an integral part of our operation, and we’re set up internally to make their jobs easy. For some people, buying a new home off a plan is a leap of faith and the more comfortable the buyer is with the process and the builder, the better.” — Keith Jacobs, president & CEO, The Jacobs Companies

What kinds of problems do you run into most often when working with outside real estate professionals?

“The pre-construction sales phase has been the most challenging for many projects in this cycle. Buyers are often not comfortable buying before ground-breaking, so projects that are able to break ground without a significant presale requirement have faired better. Having a professionally designed sales center or an onsite model unit is a key component to the success of a project. Combining these tools with an experienced sales team will greatly increase the likelihood of success.” — David Wolf, president, ON Collaborative

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