Changing Market Conditions Offer Opportunities for Customer Focus

Some REALTORS® and home buyers may be perplexed about the lack of availability of new homes ready for immediate move-in. Houston area homebuilders are starting fewer homes in response to lower demand; therefore, fewer unsold “spec” homes are being started. Building to market demand is a responsible business practice, which is voluntarily followed by many homebuilders in the industry. For many builders, their construction lenders have required them to conform to a more stringent ratio of fewer spec homes verses sold homes under construction. As a result, many builders have redirected their focus to increasing their Build-to-Order business, and home buyers are responding. 

Fewer home starts during the last three years have created opportunities for builders to refine their skills. Builders are also tapping into their suppliers and sub-contractors to improve their product offering and the level of service offered to their customers. With roughly half of the annual starts compared to 2007, there is an abundance of labor and suppliers ready to build homes. Homebuyers benefit in several ways from this excess capacity:

  • Suppliers of luxury finish items are hungry for business. These suppliers are often willing to give builders preferred pricing on upgraded items. Builders are subsequently passing on their savings to their home buyers through Design Center Allowances, or even offering certain upgrades for free. 
  • With less volume to worry about, many builders have increased their willingness to make modifications to their home designs in order to accommodate their customer’s special requests. 
  • Construction crews have consolidated, creating larger more efficient teams who can complete the stages of construction more quickly. Homes are being built from start to finish much faster thus alleviating the concern about missing out on low interest rates or meeting certain deadlines important to the client. 
  • As a Realtor®, it will take a little more up-front work on your part to make sure you match your client with the right builder.  Done properly, this up-front investment of time should produce long term benefits for you.
  • A home buyer who moves into a home that closer resembles their dream home will be much more satisfied with the advice and counsel they received from their Realtor®, thus compelling your client to refer business your way. 
  • Earning that Customer for Life will be easier than it was with clients who settled for a home that wasn’t really theirs. 
  • With construction schedules shortened as mentioned above, closings and the resulting commissions paid will not be as long awaited as they have been in the past.
  • Should your client need to sell their existing home, most builders are flexible in allowing you time to sell that home by means of a contingent sale. 

Back in the mid 2000s, both builders and REALTORS® were working feverishly to satisfy the insatiable housing demand. The most efficient way to do that was to build and sell as many specs as possible. Today our home buyers typically do not have to move right away. They have thought long and hard about what they really want in a new home. Since we now have the time and should have the inclination to deliver specifically what our customer wants, we should turn our focus to their needs. After all, shouldn’t customer service and satisfaction be our common goal?

Mike Moody is the President and CEO of Newmark Homes Houston. In 2010, Newmark will build approximately 300 homes in Houston’s finest master planned communities. Approximately 80% of these homes will be build-to order.