Working with Builders

Sep 18, 2014 5:57:19 PM

"Keller Williams Mega Camp 2014"Gary Keller and Noah Ostroff of Noah Ostroff & Associates in Philadelphia, discussed the unique opportunities and challenges of working with builders.

Gary kicked off the panel by announcing that Noah was doing something fundamentally different than anyone else that has spoken on the Mega Camp 2014 stage. Noah explained that he had discovered this subset of the real estate market back in 2010 when he listed the shell of a building. He was flooded with calls from builders interested in this property and instantly saw the opportunity to build a mutually beneficial partnership.

Following this breakthrough moment, Noah began scouring the area for other shells and vacant lots. He gathered information on the properties and in the end, he pulled together a list of 200 he thought met the requirements of builders. Noah then proceeded to cold call the owners of these properties and simply asked if they were interested in selling. Within the year, Noah had closed 50 deals from this list, despite none of these properties being “for sale” prior to his inquiry.

Noah explained that he credits his success to his ability to create a business out of thin air. He saw that there was a need, and his team worked to match it. To which Gary exclaimed, “The Internet can’t do this! It can’t put it together, only facilitate it. You help builders find property!”

The story doesn’t end there. The following year, the builders built houses on these properties. Noah saw this as an opportunity to potentially gain 50 listings on the back end of the deal as well.

Today, Noah’s business has evolved. He works hand in hand with builders not only to find building sites, but from start to finish on the creation and sale of new buildings. Together, Noah’s team and his builder partners develop a plan for the property and complete construction drawings, technical specifications and consumer-facing space renderings.

Noah’s end goal is to create “marketing materials so vivid and clear that they (consumers) never have to step foot in the house!” The need to create a vision strong enough to sell pre-construction is vital and doing the minimum will not allow a real estate agent to achieve this. Noah has certainly taken this to heart. He estimates that more than 90 percent of his sales are pre-construction.

Before leaving the stage, Gary asked if there were any downsides to this niche builder’s market. Noah identified four:

  1. Momentum must get going before any commission is earned.
  2. The potential for commission negotiation. Builders are professional sellers and have different leverage than a reseller.
  3. The real estate agent may receive the same commission for 2-3 times the work
  4. A longer buy cycle. It could be 6 months to 1 year until a built property closes.

Noah’s approach can be broken down into phases:

Phase 1: Get the property.

Use market expertise to find properties that will meet the builder’s needs.

Never be afraid of cold calling property owners in order to get the listing.

 

Phase 2: Become the builder’s trusted adviser.

Work with the builder following the initial property purchase to help determine the best use of the lot.

 

Phase 3: Embrace your inner developer.

Initiate a conversation with the builder regarding their strategy and their profit expectations.

Put together a financial model for the builder including their cost to buy, closing costs, area comps, selling price, transfer costs, and, of course, their expected profit.

Work with the builder to create building specs. Technical building plans and consumer-facing floor plans, elevations, and allowances for categories such as interior finishes and appliances.

 

Phase 4: See this vision through and go the extra step by marketing the project to consumers.

Work a marketing plan and brand the community complete with name and logo.

 

Phase 5: Sell! Sell! Sell!

 

Learn more about Noah Ostroff’s New Construction Success Package at: http://www.phillyliving.com/megacamp.php

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