Without a doubt, large volume is inherent in selling new construction. Developers build a set number of properties that need to be sold quickly, and real estate professionals step up to the challenge. While similar in many ways to selling existing homes, new construction is still remarkably different.
Real estate professionals from both the developer and buyer’s representation sides of the transaction explain how selling new construction differs from resale properties, what it takes to succeed and how it can lead you on the path to top-producer status.
Whether you’re working for an individual seller or a developer, the expectation is the same: Sell the inventory, according to Erin Ward, real estate consultant with Related Sales. In both scenarios, you have to determine who your target market is, consistently come up with clever ways to reach them, regularly drive traffic to the property and — once potential buyers are there — show them why it’s a worthwhile asset, she said.
Understand the market
While a lot of similarities to selling resale properties exist, new construction is definitely on a more elevated scale, Ward said. “Anything you do for an individual seller, you have to do at a much higher level — more detail, more information — for a developer, because someone who is looking at new construction is shopping all new construction,” she said.
Presently, Ward is selling units at Related Midwest’s One Bennett Park at 451 E. Grand Ave., a luxury high-rise with 5-star amenities. The building has a large volume of homes: 69 condos and 279 apartments.
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While the job requires Ward to know the building backwards and forwards, she also has to fully understand how all of the new developments in the city and metropolitan neighborhoods compare to what she is selling. This is one of the many ways in which her work differs from that of an agent representing an individual seller, who might be totally satisfied with an agent who can deftly compare their one condo to the rest of the competition in the building.
Ward advises those who aspire to sell new construction to know who the competition at all times and be confident in one’s market knowledge. “Always do price valuations,” she said. “Review what is pending, what has sold and what is new online to make sure the property you are selling is priced right.” Moreover, you need the ability to sell from the floor plan by helping buyers envision a sense of space and lifestyle that meshes with the property’s specs.
Follow a regimented schedule
Selling new construction for a developer involves more of a time commitment than working with an individual seller due to the myriad of duties that come with the job. For example, Ward has to be present at all gatherings related to the property — weekly meet-ups with the developer, regular construction meetings and every special event that is held onsite.
Basically, she attends meetings every day. But that’s not all. “I’m not only selling a building but I’m also helping them plan future buildings, based on market knowledge,” she said. “It’s a large scope and a bigger picture than an individual resale transaction.”
Still, Ward has to make time for other business. She also sells existing properties because it helps her maintain her pulse on everything that is happening in the wider Chicagoland market.
Learn the process
As listing agents who serve as a sales, marketing and project management arm for more than 20 individual developers, the team at The Biazar Group of North Clyborn Group represents developers’ brands in the marketplace. Long ago, founding partner and team leader Karen Biazar created processes to streamline the new construction experience, add more transparency to it and make it more pleasurable for everyone involved: developers, purchasers and real estate professionals.
“When you bring a buyer to a project that is not built, there has to be a level of trust,” Biazar said. She builds that feeling by defining what the client is building and who they are — reputation is everything, after all — as well as going over upgrade programs in detail, managing the process and communicating regularly with them.
“It’s a lot of detail work,” said Staci Slattery, Biazar’s business partner and co-team lead, noting the team takes pictures of job sites every couple weeks, monitors how the project is going, and pre-markets and presells properties to take advantage of spikes in the market.
Slattery warned agents thinking about getting into the development side of sales that with the first project, it’s often about just failing forward. She has to manage the experience not only for her client, the developer, but also for the prospective buyer and agents. “You don’t know until you experience it,” she said. “Understand everyone’s role in the process and how to achieve the shared goal of getting things done.”
Slattery said it’s also important to understand what it takes to build a property and how the city works. “Know that sometimes you are at the mercy of inspections and other things outside of your control, such as weather, which can delay a delivery date,” she said. Such hurdles require her to problem-solve and communicate as clearly as possible, and with empathy for all parties involved.
Another piece of the process is knowing the presale requirements that may come up in new construction. “Make sure purchasers are working with the right lender,” Slattery said. “Familiarize yourself with them.”
Since her team works to brand its developers, what happens after closing is important, too, because happy clients result in repeat and referral business. Therefore, they have a policy of always saying yes to clients. And when things get hairy, Slattery recommends doing whatever it takes to anticipate needs, advocate for clients and avoid losing your cool.
Suburbs versus city
Selling new construction in the suburbs differs from the city mainly because suburban homebuyers are often not as used to the product. “In the city, new construction is everywhere,” said Andra O’Neill, a broker with @properties in Lake Forest. “When the market fell apart in 2007, everything stopped. We haven’t seen much development in the suburbs until the last two or three years.”
As a result, the biggest challenge O’Neill faces is educating buyers on new construction in general, carefully explaining how the process works and the factors that are driving cost. The other notable difference is price. New construction in the city costs about double the price per square foot as the suburbs, because land costs more and contractors probably charge a little extra to offset the cost of doing business in Chicago, O’Neill noted.
When her manager asked if she could help sell the luxury condos and single-family homes at The Residences of Kelmscott Park in Lake Forest, she didn’t hesitate to accept the job.
Like Slattery and Ward, O’Neill said it’s important to have a firm grasp of the market. “Clients will ask you how this development compares to the development down the street, built in 2006,” O’Neill said, noting it’s crucial to know all of the details and be quick to share that information with them. Also, be prepared to set expectations with clients and explain the value of new construction versus resale.
Patience pays off
Selling new construction requires real estate professionals to be patient: Sometimes it takes several years to get to closing, O’Neill said.
Ward can attest to that. She and her associate, Gwen Farinella, have been working on selling One Bennet Park for more than four years. While that kind of project can definitely get an agent onto the coveted top producer lists, it’s not always a steady climb. “Yes, it’s a lot of volume we close, but our volume is for one year,” she said.
Their 2019 volume will be pretty significant because they finally started closing units this year. But for the last two to three years, there was no consistency. Thus, they might become top producers the year the building closes, Ward said, but they will have done lower volume, maybe not top-producer worthy, during the years leading up to it.
“Most new construction sales don’t happen quickly,” Ward explained. “They usually require multiple visits and many rounds of correspondence before a buyer commits to a purchase.” During that time, she said it’s necessary to keep the purchaser excited and engaged, in order for the transaction to move forward.
Set your fears aside
Regarding fears buyer’s reps might have about selling new construction, trust issues with developers or disorientation brought on by new contracts and procedures that don’t follow the pattern for selling existing homes, our sources say there are ways to avoid problems at the outset.
For Ward, the key is knowing she’s working with a reputable brand. “Find a developer with a history of success and consumer confidence,” Ward said. “Research who they are and what they’ve built.”
Slattery suggests finding a mentor who works on a team or calling an industry leader to troubleshoot issues as they arise. “It’s OK to ask questions,” she said. “No one wakes up and just knows how to do this.”
While working with new construction means there is usually larger volume and a set amount of inventory to sell, Ward warned agents against getting into it just because they want to see their name among Chicagoland’s top producers. “You have to have a passion for it and a certain set of skills: confidence, market knowledge, vision and patience,” she said.
And now may be an opportune time to break into the new construction market. According to the U.S. Census Bureau, new-homes sales in June reached 646,000, 7 percent above the revised sales pace for May and 4.5 percent higher than the Bureau’s estimate for June 2018, indicating a solid balance between supply and demand.
So, what are you waiting for? “You miss all the shots you don’t take,” Slattery says. “Push yourself into a situation you haven’t been in before and see what your skill sets are.”