Builders throw out welcome mat to real estate agents

With once-massive waiting lists dried up and thousands of homes sitting empty in new subdivisions, Valley builders are trying to jump start sales by offering hefty financial perks to real estate agents.

When the market took off two years ago, builders’ mind sets were “We don’t need you,” said Christa Burlakoff, owner of Principal Residential Group in Phoenix. “They started ignoring Realtors.”

Agents went from receiving 3 percent commissions and higher from builders to $250 referral fees, Burlakoff said.

“That killed our pocketbooks,” she said.

Then the market turned, inventories shot up dramatically and homes began sitting on the market longer.

It’s a cyclical process, said John Fioramonti, managing director of real estate research firm Hanley Wood’s Valley office. When the market is hot, builders don’t offer commissions or incentives, he said.

But when the market turned sour in 2006, they began giving 6 percent to 10 percent commissions, Fioramonti said.

“That’s outrageously high to try to mend some fences,” he said.

Valley builders need to rid themselves of an estimated 12,000 to 14,000 homes.

From a marketing standpoint, reaching out to real estate agents is more cost effective because they have instant pools of buyers to tap, Fioramonti said.

For Scottsdale-based Hacienda Builders, roughly 60 percent of its business comes from agents.

The company recently launched a new incentive program for agents that offers greater rewards, including Westcor gift cards and up to a 7 percent commission, for each additional sale.

“We know Realtors are a vital partner,” said Susan Paul, vice president of sales and marketing.

Paul, who joined Hacienda about a year ago, said she’s used similar approaches in her work for other builders.

She plans to keep Hacienda’s program going in sluggish and robust markets.

“It’s going to be there for them in the long term,” Paul said. “It’s not going to be taken back.”

A lot of times, builders have tunnel vision and create gimmicks that don’t last, but when someone brings in repeat business, “you should reward them,” she said.

It’s not just the builders who are offering incentives.

Homeowners trying to sell existing properties are too, said Frank Dickens, president of the Arizona Association of Realtors.

Dickens isn’t convinced, though, that offering incentives to agents is a major advantage for sellers.

“A good broker will do what’s best for a certain consumer,” he said. “The last thing they look at is what the compensation package is.”

Cave Creek agent Paul Montoya said he believes incentives probably generate more showings for builders.

Ultimately, though, “it’s not about me. It’s the client,” he said. “I wouldn’t steer them toward one house or another.”

Montoya was one of 60 or 70 agents who attended a brunch hosted by Hacienda last week to introduce its new incentive program.

Principal Residential’s Burlakoff, who also attended the event, has been in the business 16 years and seen the cycles of builders offering bonuses in slow markets. This time around seems different, Burlakoff said. Builders are educating and partnering with agents, instead of ignoring them when they bring in clients, she said. “It’s no longer, ‘Sit down. Shut up. Don’t move,’” she said. “It’s about come and see our design center. Come meet our people.”