4 Reasons Builders Butt Heads with Real Estate Agents

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Roughly 10% of real estate licensees sell new construction, so of the 22,000 licensees in the Front Range, only about 2,200 of them have any experience selling builders’ products. That has led to some cultural challenges between builders and real estate professionals that mar what should be a mutually beneficial partnership.

Contract conflicts. Home builders do not use a standardized contract. If there are 100 builders, there are 100 contracts. The real estate community has one contract for any buyer in the State of Colorado.

Regulatory authority. Builders do not fall under the Colorado Division of Real Estate. If real estate agents and builders butt heads, builders’ responses are, ‘We’re not realtors. If you log a complaint against me, it doesn’t really matter because they have no authority over us.’

RELATED: Builders Bring Value to Real Estate Relationships

Employee oversight. Builders want an in-house salesperson to be an employee so they can tell him or her what to do and when to do it. The salesperson can sit on site for a salary or hourly wage, versus a real estate agent who is all over the city every day and doesn’t sit still for five minutes.

Furthermore, builders don’t want to run the risk of a homebuyer saying, ‘Hey, we don’t like this one,’ and a real estate agent telling the buyer, ‘Well, why don’t I show you some resale houses at 2:00 when the sales office closes?’ They essentially could use the sales office as a free lead source.

Licensing regulations. Realtors must have their license at a brokerage, and the brokerage has to fall under the Division of Real Estate. The builder, generally speaking, doesn’t want to abide by those.

Meeting in the middle

In some cases, real estate agents will field sales calls for builders, screen buyers and even schedule a time to meet with the builder. Lately, what small to midsize or custom builders really want from real estate agents is their MLS access.

For example, one builder my firm is working with in Nederland is doing all custom homes. There’s no model and we are just doing MLS limited service for them. We don’t take a phone call or talk to the clients. They’ve got a marketing person and superintendent, and they take over, but they’re not real estate agents.

Real estate agents can bring builders great referrals, but they need to know the inventory and buyers’ needs based on their stage of life.  Of the 3.2 million people who are in the Denver metro area (5.6 million statewide), 1 million of them are millennials. Trying to build a house may not be the right decision for them today.

Builders and real estate agents can work together, but they must truly work together. Develop that great relationship, show the property and be a good steward of the builder.

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