Market Research and Marketing
If you do any type of market research in this industry, you’re going to be ahead of the competition. The bulk of the builders I know just manage day by day and never really do any kind of market research. The thing I don’t want you to do is go overboard in market research so that you never build a home. You need to develop an accurate and concise research plan so that you can reach a clear-cut decision.
One key to good market research is a good real estate agent [Success Team Member]. A good real estate agent is always on the front lines. He or she knows what the customers want and considers what they value. A good agent is one with whom you want to list and sell your property. Even if you’re a licensed agent or broker, let a professional handle this for you. They’re working for you on those nights and weekends when you want to rest. They’re your go-between with the customer. I don’t want to deal with the customer. I want the agent to handle those negotiations.
Getting a signed contract is when your work begins. I don’t get excited over signed contracts. I get excited over closings and when I pick up my check. A good agent will work with the buyers, help them with financing and many other related items that I don’t want to be bothered with. If you ever become one of those builders who assumes the agents don’t know anything, then you’re on the road to failure because the agents know everything. The beauty of it all is, the agent only gets paid when the home is sold. Always use an agent and never, never, never build what you want to build. Build what the agents tell you to build. When you start in this industry you can’t afford to be a pioneer, because pioneers get arrows in the wrong places.
Now, you don’t have to spend lots of time and money doing this. Here’s all I want you to do. Go into a given area where you plan to build a home and jot down three real estate broker signs that you see in that area – three separate real estate brokers. Go home and call all three brokers. When you call a broker, you’re going to get the agent on duty to answer the phone. Don’t get locked into the agent on duty because the agent on duty may have little or no experience. Tell the agent on duty that you’d like to speak to the broker. When you speak to the broker, tell the broker that you’re looking for an agent who is familiar with the area where you want to build and is a member of the Million Dollar Club.
Now, listen. I don’t want to take anything away from those hard working agents out there that are not in the Million Dollar Club, but when you start out you’ve got to go for the gusto. I’ve found those agents that are in the Million Dollar Club have sacrificed friends, relatives and social life to sell real estate. They’re committed professionals. That is the kind of person you want to deal with. Tell the broker that you’d like an agent that earned most of his or her commissions selling homes, not listing homes. There is a big correlation between selling and listing. The successful listing agent is one that cultivates a large network of people. They’re members of tennis clubs and golf clubs, and they know a lot of people. You want an agent that got most of their money selling homes.
The broker will know what you mean. The broker may give you the name and number of one or two agents they can recommend. Don’t deal with two agents within the same company. Just deal with one agent. Contact the agent with a list of pre-printed questions that you’re going to ask the agent. Don’t tell them your grandiose plans. Don’t show them any of your plans. What you want to do is tell the agent you’re considering building in a given area or subdivision and you’d like to ask them a few questions. If things work out, tell them you’d consider them when listing your home. If deep in your heart you know you can’t let them list the home because you’re locked in with another agent in the subdivision, or some other business reason, then be honest with the agent. Tell the agents you’d like to ask them some questions and you’d be glad to pay them for their time. If they answer your questions without wanting payment, send them some flowers or a small gift as a token of appreciation. Remember, you’re going to receive only what you give.
Ask them questions like:
· If you were going to build in this area what size home would you build?
· How many bedrooms would you have?
· How many bathrooms?
· Would the master bedroom be on the first floor or the second floor?
· Would you’ve a two-car garage or would you’ve a three-car garage?
· Would you have a basement?
· What do you think of the schools?
· What do you think of the area?
· What would you do that other builders aren’t doing?
Write all of these answers down. After you complete the call, thank the agent for his or her time, hang up and call the other two agents. When you’ve completed these three phone calls, combine your lists, evaluate them and determine a common thread where all three agents said about the same thing. I want you to incorporate all those things into designing your next home. Add to it all those little goodies that you think are great and wonderful, and that you think will make your home unique. Then develop a set of drawings.
After you get a set of architectural drawings that incorporate all these features call these three agents back and set up lunch or breakfast appointments. Go to a nice restaurant. What an inexpensive investment to obtain this information. After the meetings, show them your drawings. This will accomplish two things. (1) You’ll have a professional critiquing your drawings. They may see little things that you’ve omitted or little things that need to be changed. (2) It gives you an opportunity to meet the agent and see if your personalities mesh and in that way you may indeed hire him to list your home. I can’t stress how important this is.
I had a builder student who heard this same message. He went out and built a beautiful home in a beautiful subdivision and didn’t sell it. He had to give it away and lost his shirt. Why? Because, in this case, the house had only three bedrooms instead of four. Any agent in that area could have told him, “You have to have four bedrooms in this subdivision.”
I know of a builder who built a beautiful home in a subdivision and had to sell it at a loss because his master bedroom was on the second floor not the first floor. Most of the people in this subdivision were retirees and they didn’t want to have a master bedroom on the second floor. Any agent in that area could have provided this information.
I remember a builder who built a beautiful home in an area called The Atlanta Country Club at the same time I was building there. He sold it at a loss because his dining room was too small. Any agent in that subdivision could have told him, “Your dining room is too small.”
I built an $800,000 home when the interest rates were 18%. I showed an agent the drawings. In a large home like this, the owners liked to entertain. Consequently the flow of traffic through the home was important. I had what is called a dead-end living room, that is a living room with no access out. The agent quickly pointed that out. I changed this before we began construction. I’d have been sitting on an $800,000 home paying almost $300 a day in interest because I didn’t have another door in the living room! The agent is very, very important in understanding what the buyer wants.