David Fletcher

Founder, CEO New Home Co-Broker Academy LLC

The # 1 Reason You Should Show A New Home First? You Will Sell More Resales If You Do.

If you want to close more resales, show a new home model first. Guaranteed. If you're going to sell more new homes, show a new home first. Guaranteed. Ok, "guaranteed" may be a stretch, but not much. 

“I’ve been showing new homes for 8 weeks and am about to lose them when I remember what you said about showing a new home to help them understand how they can live for the money they want to spend. I showed them a new home, introduced them to the new homes agent, and let her do her job. They bought that very afternoon.” We hear a version of this every now and then.

The issue is the level of trust your home shopper has in you and MLS. 

What you need to understand and care about is your client's confidence in the market regarding the asking price of a resale. Why? Because the seller is expecting to get offers. The buyer is hoping to make an offer, and the agent is expecting to make a sale based on not the listed price but a different price than listed. 

When qualifying your home shopper, be it for new but especially for resale, what is the most important thing you believe your clients must understand? Stop right here. Take a deep breath. What is your answer?
“We just listed the perfect home for you.” is buzzer fodder. 

The correct answer should establish and enhance their trust in you and their comfort level when making an offer on a resale. Here's your script:

 "Mr. and Mrs. Smith, there is nothing more important to me as we begin working together than to make sure you understand the money. There is a lot of crazy pricing going on, and there is only one way I know to make sure you know how you can live for the $500,000 you are qualified for and want to purchase.

"I can show you what has sold at what prices in MLS, but nothing replaces a personal inspection. I highly recommend that you see, touch, and feel how to live in this market for $500,000. 

"When I develop our resale showing schedule, I will stop by a new construction model with a fixed base price of $500,000 so you can see how you can live for $500,000. I understand that you want a resale, and that is precisely the purpose of stopping by the home."

“We call it establishing a price baseline, meaning the base price from which all homes we see will be compared. When you are ready to make an offer on the resale, you will have the confidence of a first-hand inspection of new homes. 

“Make sense?”

Standard Options

What you see is what you get, which could include upgrades. But it may not.

Builders generally try to keep their baseline price low, which translates to a lower price for your buyers, and since lower prices are more enticing, the hope is to have more sales. 

The easiest way to determine the base price is to ask the onsite sales consultant this question: What is the base price for this new home? 

Understand what is standard and what is optional is especially important if they are purchasing a new home, which they might. But for resale offers, having seen what his $500,000 will buy when he is looking at a $425,000 resale for example. At this point, you have given the buyer a ‘which one’ as opposed to a ‘yes’ or ‘no’ option. 

Showing the new home first is an idea we brought to market about five years ago, and we trust it is being taught in resale training because it works. The fallback position, of course, if they don't buy the resale, is a new home purchase. It happens. 

Different Builders, Different Strokes

Every new home builder is going to be different. 

As you might expect, each builder will have different price baselines and options. For example, some builders will include granite countertops as a standard option or even solar panels, all these things change the pricing, and you should be aware of these details if your client has questions.

Lots Matters A Lot

The lot price will also determine the price. 

Not all lots are the same, even if the floorplans are. For example, some communities have premium lots, waterfront, trees, better views, etc. Whatever the case may be, some houses have different prices even if they share the baseline.

Establishing these baselines is vital when looking at different builders as it allows the buyer or the realtor to compare apples to apples and see how the features and price per square foot stack against each other. Otherwise, comparing houses becomes a nightmare. Of course, there are a few other things to consider, but it is nice to have a starting point.

The things you won't see in many cases in the baseline price are the options, the upgrades, or site costs that might come up.

Learn More About Baseline Prices With New Home Co-Broker Academy

Are you a real estate agent or onsite sales consultant ready to learn more about how to work together? If so,  How To Build A New Homes Niche is the course for you.   New Home Co-Broker Academy can teach you everything you need to know about working with each other.

Learn more at the website HERE.

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