Working with Real Estate Agents

Tribbles hate Klingons and Klingons hate Tribbles. This little knows fact from Star Trek might very well been written builders hate real estate agents and real estate agents hate builders.  Ok so it is not that bad but real estate agents and builders have very different perspectives.

For Real Estate agents the product is the customer. For the Builder the product is the house.  This can be a critical difference particularly in overcoming buyer objections. If a buyer object to a window placement the builder will often have a detailed explanation ready why the window was place where it was or ways to relocate the window, a builder will overcome the objection. Too often a real estate agent takes the customer to his or her car and is off to look at anther home built by someone else. Rather than risk the customer they want to meet every need the customer expresses whether valid or not.

 Real estate agents like to get paid quickly and if they have to wait until a home is built than the commission is delayed.  Some agents will steer customers to existing homes just to avoid the delay.

When you work with a real estate agent you are working not only with the agent but with their office and also with all the subscribers to their multiple listing systems. If a customer is interested in seeing a house and they call the listing office they will likely get whoever is on desk duty that day. The desk agents are often the least experienced agents.  Experienced or not the desk agent may know little or nothing about your project.  If the customer is with an agent who found your project in the multiple listing service they may know nothing about the product and have absolutely no loyalty to you.  

We were having difficulty with a spec home that had been on the market longer than the rest of the neighborhood. I was so concerned that I had a friend of mine and his wife shop the real estate agent for me.  The couple called the agent and was referred to the desk agent.  When they told the person answering the phone they would rather talk to the listing agent they were told that the agent would be busy all day but Joey knew the project well and had shown the house several times this week.

When they met the agent at the house he showed them through the house getting in the way rather than adding to the presentation. Near the end of the tour my friend looked out the window at the back yard. He was looking at the yard when the agent said, "and behind that tree line is the highway.  In the winter you can see it and if you think that is bad wait until they widen the road. " Joey was not someone we wanted showing our homes.

Most real estate agents have little or no more expertise regarding home construction than the general public. What they do know often comes from word of mouth from other agents who have the same limited information or even faulty information.  This does not, however, keep many from offering an inexpert opinion on things they do not understand.

So how do you deal with these varied perspectives?  If you can set up a program to pay the real estate agent at contract instead of closing you may gain a few sales.  Even with a real estate agent doing the bulk of the lifting you need you own sales people to do the presentations of the homes and be ready to overcome objections. WE found the process went best when we registered the customer to the agent then got the agent out of the house. Many will object because the customer is the product but try. Paying the agent is painful enough but having to pay an agent who almost screws up a deal is worse.

Do training programs for agents in the area. You will not get everyone but you will get some and you may build some loyalty. It has been my experience that if you have a luncheon you get the agents looking for a free lunch not those interested in selling your homes.  I found you got more return for your effort if you did a training presentation.

The current market has driven out many of the weak agents but it has also driven out many of the good ones. If you are going to turn over such a critical business function as sales remember you still need to control the process. The more you can do in house the better it is likely to work.

Of course, like many things in the housing industry, use of real estate agents vary by region, some areas use agents nearly exclusively and some not at all. If you are in area where it is a necessity it is even more critical you control the process.

Original content copyright 2011 Thomas Robinson

How to Prevent an Ice Dam

An ice dam is a condition which develops along a cold eve where snow on a roof melts over the warmer living area then runs down and refreezes at the gutter or eve. Water then backs up under shingles and leaks into the living area. Most new home warrantees exclude this condition but try explaining to a new home buyer who just spent hundreds of thousands of dollars on a new home that the water leaking into their living room is not covered.

There are a number of steps that can be taken to reduce the number of incidents if not prevent them all together.  Cold well ventilated attics are less prone to ice dams because the roof is not as warm a vaulted ceiling area or an area that is not properly vented. Try to avoid vaulting roofs all the way to the underside of the rafters and provide good ventilations.

We installed a membrane such as Grace's Ice and Water shield above the eves. The membranes prevented backed up water from entering the living space. This simple detail virtually eliminated the problem. It worked so well that we added the membrane to other problem areas such as roof valleys and where dormers me roofs. We also used it on roofs with shallow roof pitches.

If the membrane is not installed during construction there are a couple things you can do. First us a roof rake to remove the snow before it builds up. This can be problematic in heavy snow of overnight snow fall.  The only prevention is installing a heating cable in the gutters, downspouts and in diagonal patterns above the eve. These cables will form paths for water to run off.  This method works reasonably well as long as you remember to turn on the cables.  Your new homeowner will likely not appreciate the cable on the roof.

Original Content copyright 2011 Thomas Robinson

New Home Sales Back to Basics

With new home sales somewhere between mission impossible and nonexistent it is more important than ever to get all the basics right. With every article in the media telling the home buyer that they can buy homes at pennies on the dollar it can be easy to fall into the mindset that sales is all and only about price.  It can be if you let it be. In this article we will discuss selling the area first.

New home sales start not with the home but outside the home. The saying goes the three most important ingredients in home value are location, location and location. That has not changed. Find out if the new home buyer is from the area. In our sales office we always had a large scale map that showed the area around our projects. The scale was large enough to include nearby shopping malls and other important facilities.

Next in progression we had a map of the more immediate area including the most important ingredient of location; schools, schools, schools. Make sure you get all the information on the local schools that are served by your location. The school districts will likely be eager to help you with information from test scores to number of National Honor Society members. School districts have to sell the public on their value so they will have the information for you. 

The immediate area map should also include recreation opportunities. We always believed the recreational opportunities for the children were the leading attractions; little league, soccer, dance studios, parks, even movie theaters. Do not forget the adults; golf courses, bowling alleys, etc. We once sold several homes in a subdivision because of a nearby snowmobile trail including to several customer who had never been on a snowmobile but liked the idea.

The municipality, park district (if different) and Chamber of Commerce will also have information that can help you sell the area.  Hospitals and medical facilities are important. Access to assisted living facilities for elderly parents of your customers may be appropriate. Even if you do not display it on your map have it on hand should the topic come up in conversation.

Once you have sold the area move into the benefits of the neighborhood in which the home is built; all cul-de-sacs, near transportation, wide streets, wood lots, etc. Pay particular attention transportations to major employment centers such as train, highways even busses if price range appropriate. Without selling the neighborhood you may find that you go through the entire process to lose the sale to the deal killer that you could have discovered within minutes.

If you do hit a roadblock can you sell a built to order on their lot in a location that may be better for them? Are you set up to build on an individual lot instead of only in one of your projects? If not what does it take to set up to do individual lots.  Building only in locations where there is corporate infrastructure can be more comfortable and even less expensive but in this market you need to be flexible and be ready to take advantage of opportunities as they come. It may take some emotional strength to avoid trying too hard to sell a location that will never work for the customer so you can move another lot but losing the sale does not help your bottom line either.

Once you have sold the area, municipality and neighborhood you are ready to begin selling the home. In future articles we will deal with selling the home.

Original material copyright 2011 Thomas Robinson

Three Types on Two Story Homes

It is an over simplification to say that there are only three types of two story homes but the vast majority of the mid priced homes follow simple logical patterns  that divide homes into three basic types. By asking questions of your customers it is likely that you can guide them to one of these three types making design easier for you and still letting them believe the home has been custom designed just for them.

A typical home has either five or six rooms on the first floor; kitchen, breakfast, family room, living room, dining room and sometimes a den.  The kitchen and breakfast area are next to each other for obvious reasons and in nearly every case adjacent to the family room. Because kitchen is more enclosed due to cabinets and cooking areas the breakfast area is almost always between the kitchen and family room. While I have done the opposite – kitchen separating the family room and breakfast – it has not worked as successfully. Even the home owner for whom I built it regretted the decision after the fact.

The kitchen-breakfast-family room area makes up the primary family living area. The family will spend most of its' waking time in these three rooms and even when entertaining this is the area most often used.  For privacy these three rooms are nearly always at the back of the house away from the street.  

The dining room will logically be next to the kitchen.

The resulting layout has the family room, breakfast and kitchen along the back of the house with the dining room in front of the house next to the kitchen and the living room the other side of the front door in the front of the house. This is a very functional and therefore popular plan. Nearly every builder has a version of this plan in their portfolio and it is usually their most popular five room plan. 

This layout also places the family room adjacent to the living room. If the client likes having additional entertaining area you can open the living room to the dining room. If the family likes separate spaces so one member of the family can escape to read in the living room while the rest of the family watches action movies the family may want to close off the opening and create separate use areas.

If the family wants a "den" you need to determine why they need it. If it is to be an office work area with possible client visits the buyer will likely want the office den at the front of the house. If this is the case you put the family room behind the garage with the breakfast and kitchen along the back.  To create more room at the front of the house the den is placed next to the kitchen but at the back of the house.  The den office and the dining room are then placed either side of the front entry. If the dining room is placed next to the living room so that a single large room the dining room table can be expanded into the living room to accommodate large gatherings.

If the den is really a guest bedroom then the room can be created by sliding the garage forward and placing the family room behind the garage.

There are any numbers of variations most significantly the location of the powder room and first floor laundry, if desired, but  the vast majority of two story homes will fit into one of these three templates.  When we designed a custom or semi-custom home before we started the plans would ask the family a couple of questions:

·         Do you need a den? If no we started with the first plan.

·         If you want a den what is the purpose; extra bedroom or office

o   If bedroom we would start with the plan with the den behind garage

o   If an office we would start with the plan with the den in front.

·         If the family is usually together we would open up the family room to living room. If the family wanted two separate areas we would either close off the family room or put it on the opposite side of the house.

Select the first floor plan that meets their need and you have a semi-custom template from which to work.

Relight the Stove

            Note: the following customers were never a problem before or after the incident described. They were model home buyers. The following story is absolutely true. The story also has very little education value except it is a great story.   

            Over the years, we had done a very good job of training our buyers to submit all service requests in writing. Having requests in writing reduced misunderstandings and we were able to establish a procedure to make sure the request was routed to the correct trade contractor or material supplier for correction.

            When our receptionist told me one of our home buyers, who had been in her home about six months, was on the phone I picked up the call with some concern. Mrs. Buyer said her stove used to work but was not working and could I please tell her how to relight the pilot light. I was almost certain all the stoves we installed were electronic ignitions but I took her number and told I would call her right back.

             I called our purchasing manager, Darlene, who assured me that none of our stoves had pilot lights. I called Mrs. Buyer back and told her there was no pilot light. I then asked her if they had checked the circuit breakers. She immediately assured me that her husband had checked the circuit breakers as they had been instructed during the new home orientation.

            I then asked her if her heat was working. It was near Thanksgiving so if the gas had been shut off for some reason, she would likely have noticed. She again assured me that the heat was working and the gas service was on.

            I called Darlene back on her cell phone. She, by chance, was in Mrs. Buyer’s neighborhood so I asked her to stop in and see if she could see anything obvious before I had Mrs. Buyer call the appliance company for a warranty claim.

            Darlene went to the Buyer's home and knocked on the door. Mr. Buyer answered and took Darlene to the kitchen where there was no stove. There was a burn mark on the wall where the stove had been. It seems they had had a minor stove fire but had needed to call the fire department. The fire department had disconnected the gas and electric from the stove and placed the stove in the garage to get the smoke smell out of the house. Mrs. Buyer was out trying to relight the stove in the garage. 

Original Content copyright 2011 Thomas Robinson

Verbal Agreement

Have you ever heard, "but the sales person told me __________." I have had customers sit in my office and tell me that my salesperson promised things that not only do we not do but that we never did. I also have had customers tell me that I promised them things that I was confident that I never promised.

I believed the customers were sincere as it was unlikely both partners could lie so convincingly. I was also pretty sure I was not yet going senile nor were my salespeople over promising. I began to believe that the customers were shopping a number of builders and they had been promised something someplace else and mis-remembered who told them what. Either that or when discussing their new homes one would say to the other, "what did they say?" They would discuss the issue and become convinced that we said something we did not.

The issue was not common but happened often enough that we felt we wanted to proactively deal with the issue. We discover the following clause which we added to the end of our contract.  We Left about ten lines of space to write in verbal promises. We rarely had a customer add anything and if they did we could deal with it before we started.

Record in the space below any and all verbal commitments that any representative of Robinson Development has made to you.  If no additional commitments were made, please write none.

____________________________________________________________________________________
____________________________________________________________________________________

Original Content copyright 2011 Thomas Robinson

When to Say No to the Customer

One of the most difficult customers to deal with are the Negotiators.  The Negotiators are on a mission. Sometimes to get a specific item they want but just as often to get as much as they can.

There are a number of books on negotiating that all tell the reader how to get whatever they want by negotiating. In reality they are not negotiating as much as trying to manipulate someone to get a desired result.  One example given in one of these books is if you are looking to buy a car always tell the car salesperson that you like the car you are looking at but hate the color, even if the car is your favorite color.  The strategy is to make the salesperson think you do not like the car so he will lower the price to induce you to buy the car you wanted all along. The trouble with this particular tactic is every car salesperson has heard it a hundred times and all the good ones have read the same book.

In our housing business we had customers who had read these books and when they wanted something they were not entitled to by contract would express displeasure over some item then try to turn the expressed displeasure for what they really wanted.  We had a customer call us about a scratched cabinet after they moved into the home. The "scratch" had not shown up on our list of incomplete or damaged items on the walkthrough and upon inspection the "scratch" was on the side of a cabinet and nearly invisible.  We could repair the item with a dab of touch up wax but the customer wanted the entire cabinet replaced which would have been costly and disruptive to the family.

After a few minutes of discussion he said "You know what, we really do not want to put up with the hassle and put you through the expense. How about you give us a wine rack for under our counter as compensation?"  I discussed the issue with my superintendent and discovered there had been a number of similar "trade offs" during the construction and the customer was talking bad about us to other home buyers in the community but was telling all the neighbors how he got us to give him free stuff.

I called the customer and told him that because the item was not on the walkthrough list we would not be doing any work on the cabinet. We told him we would give him the touch up wax if he wanted to make the repair himself.

He asked me if I was sure that I did not to make him a happy customer by giving him the wine rack. I told him that it was unlikely we would ever make him happy. I told him I knew what he had been say about us to his neighbors. I also told him that giving in to a made up warranty claim was unlikely to make him happy.

If your customer has a legitimate complaint deal with the complaint even if it is more expensive and time consuming than the proposed alternative. Giving in will only open you up to future similar claims. If your customer does not have a legitimate complaint tell them so politely but firmly. If the customer threatens to withhold their satisfaction or happiness it is more often time to call their bluff.

Original Content copyright 2011 Thomas Robinson