As the housing market sits on shaky ground, more home builders are creating a “one-stop shop” to guide home buyers through the process from beginning to end by establishing their own real estate and mortgage companies.
While the practice is more common for larger national builders, a handful of local contractors have jumped on board. The most recent is Vancouver-based New Tradition Homes, which established New Tradition Realty March 1.
Agents for the sister company can assist new homebuyers and specialize in the resale of existing homes. They also can refer clients to subcontractors for necessary repair work and assist with staging to try to maximize resale value.
Selling a home can be stressful, emotional and time-consuming for buyers, said Melissa Warren, residential marketing specialist.
“Customers frequently asked who we would recommend to sell their homes,” she said.
Warren specializes in listing pre-owned homes. Gayle Pearrow is the designated broker, and there are 10 licensed new homes sales agents.
The 20-year-old contracting company has the highest number of contingent buyers in its history – 30 percent to 40 percent of buyers.
“It maximizes our profits and is a relief for our customers,” said New Tradition Homes President Chris Helmes. “Folks can be more hesitant to close if they’ve got a home to sell. It’s difficult to refer – they want to know how we can help them.”
Helmes hopes the in-house realty company will improve communication and cut down on wasted time in the closing process.
“It’s hard to rely on someone you don’t know,” said Vice President Kelly Helmes. “You hope customers are getting the same quality of care that we give here.”
An in-house realty company allows builders to have more control of their product, said David Roewe, executive director of the Building Industry Association of Clark County.
“It’s one of the evolutions that has occurred over the years of dwindling profit margins,” he said. “It allows quality assurance.”
But Roewe added, just because a builder doesn’t have a formal in-house realty company doesn’t mean the service isn’t offered.
“I know a lot of builders whose wives are Realtors,” he said. “When there’s 2,500 Realtors in the county, how many aren’t related to a builder?”
Setting up shop
Getting the realty company off the ground took about six months of planning and organizing, and start-up costs have been between $50,000 and $100,000 – equivalent to starting a new business, said Chris Helmes.
On the legal side, both brokerage and business licenses had to be secured, and all of the real estate agents working for the company had to transfer their licenses from any previous brokerages.
“We get so many repeat customers, who better to sell their homes than the people who built them?” Pearrow said.
Adding the company didn’t require new hires, just restructuring of its existing workforce. Company leaders, however, see a need for new sales agents in the near future.
In the first two weeks of business, the company listed more than 30 homes.
“We’ve gotten a lot more leads than we expected,” Pearrow said.
The venture has opened another previously untouched market for the company – developer lot and land sales.
“If they’ve got 50 lots, they can unload them and we can get homes built,” Pearrow said. “The new real estate company can then list individual New Tradition homes and advertise those homes exclusively.”
On the way up
The slow residential real estate market doesn’t worry the company.
February was the strongest month New Tradition Homes has seen in some time, and consumer confidence is growing – there is optimism, said Chris Helmes.
Buyers are more aware that prices have likely bottomed out and they are recognizing this area’s good tax structure and good prices, he said.
And fewer real estate agents are renewing and seeking out licenses.
“To me, that says this is better timing than ever,” Helmes said. “There are fewer agents to compete with.”
Since March 2007, the Clark County Realtors Association’s membership has dropped by about 180 to 1,871 primary Realtors.
“This has been a dream of ours for many, many years,” Helmes said. “We’ve had good relationships with local Realtors, but we see this as a good vehicle to help customers sell their existing homes.”
New Tradition Homes listed with Windermere Real Estate for the last three or four years.
Currently, New Tradition Realty only can list homes in Clark County.
“We’re not going national yet,” said Chris Helmes with a wink.
Steering sales
“In this type of market, you need to give buyers the very best customer service and overcome any objections and obstacles they may have in buying a home,” said Matt Lewis, land acquisition manager for Vancouver-based Pacific Lifestyle Homes.
“Obtaining financing is key to 99 percent of home buyers. With the tightening credit market, especially since last August, it’s really become essential to have that relationship with the lender and steer these sales all the way.”
The company launched Pacific Lifestyles Mortgage, a joint venture with Wells Fargo, last fall, along with a home “trade-in program.”
The program allows the company to list a buyer’s current home. The parties enter into an agreement that if the house doesn’t sell within a set period of time, Pacific Lifestyle will buy it.
The venture has been more successful than expected, and already is posting profits, said Sales Manager Steve Bowmer.
“We’re finding that we’re actually helping customers sell their homes and the number of times we’ve had to buy them is less than anticipated,” he said.
Bowmer runs the mortgage company, which has three loan officers.
“The benefit is being a one-stop shop and managing the sales process from beginning to end,” Lewis said. “The most essential part of the transaction is bank financing, and that’s taking place in who knows where. Meanwhile, we’re building this home and taking out loans – to not have the certainty that the financing is solid is not wise.”
The in-house mortgage company can monitor the process and ensure buyers get a solid loan they can afford, he said.
Vancouver-based Manor Homes launched its realty company a year ago, and has one in-house broker and five real estate agents.
So far, the company has listed 12 to 15 homes, said Marketing and Sales Director Michael Shananberger.
“We’ve definitely honed the tools to make sure we’re changing with the market,” he said. “The amount of people coming into subdivisions has declined and the number coming in with houses has increased.”
It is more challenging for buyers to get prequalified, and investors are less frequent.
“The days of 100 percent financing are gone,” he said.
Ridgefield-based custom home builder Cascade West has offered real estate services for a decade.
Designated Broker Darla Wuori said working directly for a builder is a plus.
“You know the ins and outs, so when you meet customers, a lot of times, they trust you more,” she said. “You have the expertise and the relationship with both the builder and the customer, so you can act as a buffer for clarification.”
Megan Patrick-Vaughn can be reached at mpatrick@vbjusa.com.
