Real estate agents in inventory-starved markets will soon be able to turn to a database provided by the National Association of Realtors for a source of business: new-construction listings.
NAR subsidiary Realtors Property Resource (RPR) has struck a deal with Builders Update, an Austin, Texas-based firm that launched nationally in 2012 hoping to make its online search engine “a national MLS for new homes.”
Builders Update will be RPR’s exclusive provider of new-home construction data, which includes to-be-built “spec” homes, ready-to-move-in homes, and coming soon communities, Builders Update CEO Bill Gaul told Inman.
“The stage of the home is clearly indicated along with planned completion date for each property,” he said via email.
The agreement will make about 100,000 new-home listings nationwide available to agents through RPR when the integration between the two companies goes live in about 60 days, according to Gaul.
RPR’s property database is available to all 1.2 million Realtors at no additional charge with their NAR membership.
Builders Update receives data from large and small builders across the country and claims to be the no. 1 source of new-home inventory in the U.S.
“Agents want to sell homes, brokers want to make money, and once agents realize how easy it is to use this data provided to RPR in their presentations, they will increase their earnings potential,” said Bob Seeman, Builders Update’s vice president of business development, in a statement.
“Agents will now have 24/7 access to thousands of new-home listings, and builders will be able to make their homes available to hundreds of thousands licensed Realtors working with pre-qualified buyers who would consider a new home.”
Gaul added, “There is a shortage of resale homes across the country currently, and new home construction fills that gap and makes the economy stronger.”
This deal helps both agents and builders, according to Gaul.
“[N]ew-home data availability for agents is often spotty and difficult to acquire,” he said in a statement.
And builders typically spend a great deal of money and time trying to woo consumers directly, although 64 percent of new-home construction is sold with the help of a Realtor, according to NAR data, the company said.
“The reality is that reaching agents using a tool like this is far more cost-effective for a builder because the agents are ready with a pre-qualified client,” Gaul said.
When asked about whether and how much money is changing hands between the two companies, Gaul said, “This is confidential information pertaining to our exclusive multiyear contract.”
“Our goal is to provide Realtors with the latest in high-value property information to assist their clients and customers at all levels of the real estate transaction,” said RPR CEO Dale Ross in a statement.
“By adding new home construction data through Builders Update, agents will have access to an important resource in today’s rapidly changing market, while being protected in the sales process.”
How exactly agents will access the new-construction data through RPR is “being worked out,” according to Gaul.
“Primarily the data is being shared with RPR and they have their own set of tools and functionality to use within their system so that they can manipulate it within RPR,” he said.
Builders Update allows registered homebuyers to search for new homes either on BuildersUpdate.com or through the websites of participating agents. Homebuyers must either be already represented by a licensed real estate agent or have an agent assigned to them in order to get full use of the site, the company has said.
The company’s prospect registration system, launched in January 2013, includes date and time stamps to eliminate commission disputes between builders and agents. Homebuyers cannot see builders’ contact information or property detail sheets without agreeing to be represented by the specific real estate agent offering them that information.
“We have a patented buyer registration process, that ties together a buyer authorization, and the ability for the builder to check their lists to make sure they are not already working with that buyer,” Gaul said.
“[I]f not, they accept the referral electronically, protecting the agent. In case the buyer goes to another community within that same metro for that builder, the agent is protected metro-wide for a stated number of days determined by the builder. Everything is recorded and transparent.”
In addition, the builders featured on Builders Update that use the buyer registration tool must first agree to a code of ethics, Gaul said.
“[W]ithin that code is a requirement to pay a co-op fee if they accept a registration from an agent and that buyer purchases a home, as long as [it’s] within the stated amount of days [and] the agent goes to the builder and fills in the appropriate full forms,” he said.
“The co-op commission rate varies but is usually 3 percent, sometimes more when a builder wants to close out a community and move the last few homes.”
Deal means more builders will pay
With this deal, Builders Update aims to increase the number of agents using its data and also make builders aware of the reach Builders Update will now have through RPR, which has partnered with 671 out of 716 Realtor-affiliated MLSs nationwide.
“[T]he time to join a marching band is when it’s forming, not when it is marching down the street,” Gaul said.
“[I]n other words, the more agents use the system, the more activity we can show builders and the more the builders will want to share their data with us. This system was built by agents, for agents.”
Builders Update charges homebuilders to display their new-construction data, but only in markets where the company has partnered with MLSs. Once the integration with RPR is live, the company will start charging more builders because RPR has partnered with MLSs covering nearly the entire nation.
“[How much builders pay] varies based on how many subdivisions they display with us, the more they have, the lower the cost per subdivision,” Gaul said.
“We only charge builders for those areas that we have significant agent activity, so if they are a national builder and give us their national feed, we are only charging them for the areas we have MLS participation currently. That will soon change with this RPR deal.”
“[T]he more eyeballs we get, the more metros will convert from free to paying,” he added.
Revenue sharing with MLSs
Despite the deal with RPR, Builders Update will continue partnering with MLSs, according to Gaul.
Currently, the company has signed up nine MLSs representing more than 130,000 subscribers, though the company has several contracts out for review and the figure should increase “dramatically” by the end of the summer, he said.
Seven of those MLSs have signed exclusive agreements with the company, meaning they don’t get new-home listings from anywhere else.
MLSs that have exclusive agreements with Builders Update participate in the company’s revenue-share model.
“We have created a pool of funds (revenue before expenses) that is shared amongst the MLS associations that have chosen to use us exclusively based on the percentage of their agent activity,” Gaul said.
“Those MLS associations that educate their agents about the tool will enjoy a bigger slice of the pie.”
The revenue share was only an “early adopter incentive,” however. Though the company will continue to pursue partnerships with MLSs, it will stop adding MLSs to its revenue-share program at the end of the summer, according to Gaul.
“[S]o any MLS association interested in participating should contact us soonest so that we can present to their board,” he said.
Still, MLSs that sign exclusive agreements with Builders Update will be able to use additional tools not offered through the RPR arrangement.
These include additional data fields, the buyer registration tool, the ability to create and store properties in separate buyer files and “the ability for agents to create their own IDX, which we call the ‘Agent Spotlight’ … a free lead generation tool turning their website visitors into prospects that are sent only to that agent. No one else shares them and they are not shared with the builder unless the agent decides to do so by way of the buyer registration, and if accepted they will be protected for their commission,” Gaul said.
Agents that belong to these MLSs also get the ability to create “search agents,” which Gaul said are “like a silent assistant that doesn’t take coffee breaks.
“If an agent doesn’t immediately find a home in our vast database that suits their buyer’s needs, they input a form requesting the particulars that they must have and as soon as a home becomes available, we notify that agent by email at a time they choose (daily in real time, weekly or monthly).”