Start building your builder business just like builders do themselves: Stay close to home,
control costs at first and then expand. There may be one or more builders geographically
close to you, so keep your eyes open and do your research upfront. Go online and learn a
bit about the history of the builder, location of the project, schools, etc.
You may not initially notice a builder’s model or sales center on your way to work or
the gym. Sometimes it’s a small trailer with limited signage. Don’t be afraid. Stop in. If the
builder’s salesperson isn’t around, try again later. When you do get a chance to talk, be
friendly and build rapport. Keep coming back. The business will follow.
Becoming involved in your local homebuilders association and other industry-related
organizations is key, because that’s how many builders and developers often seek out
opportunities. A cordial cocktail with a builder executive or salesperson at a function
might end up being more effective than repeated phone calls, e-mails or drop-ins.
Business
A good loan originator needs a basic understanding of a builder’s product and philosophy.
Builders and their employees are passionate about their craft. They’re proud to drive
through a community and point to homes they helped in some way to put up — even if
they personally didn’t swing a hammer. Houses are real. They are symbols of progress,
protection and achievement.
Builders and their teams work in inclement weather and chase city officials for permits.
A builder may think to themselves, “We built an entire house from the ground up. All we
ask is that you close the darn loan on time!” They’re right. Enter the relationship with due
deference and solemn appreciation for what they do.
Every builder has a unique approach, whether it’s upgraded architecture, green design,
value, etc. Learn a bit about the builder’s sweet spots. If you can talk confidently with a
salesperson or customer and speak to the advantages of a specific plan type or community location, you’re immediately on the inside.
Just be sure you close on time, and don’t leave any details unchecked, like expired docs
or project approvals. The extended loan cycle on a new-home sale, which can take from
four months to a year or more, can leave a lot of room for error. Work with your ops team
to accommodate for builder-specific needs like last-minute final inspections and occupancy certificates, escrow holdback waivers, etc. When you uphold your end of the transaction without false promises or missed closings, you’ll have a loyal partner in return.
Rates and programs
New-construction sales, as mentioned, often require an extended loan cycle. Only about
one in 10 lenders offer true extended rate-lock protection products, however. If you can
offer such a product, this could well be the foundation of your builder toolkit.
Borrowers may have anxiety over future payments, especially in a rising-rate environment. When they purchase rate-lock protection, you also reassure builders that their buyers
are qualified, serious and committed. If a builder or developer regularly has customers
who are tightly qualified or perhaps a developer needs to reach a pre-sale requirement
for a condo project, an originator who can present extended rate lock programs gives that
builder or developer a chance to book sales with solid contracts.
Loan officers also benefit from rate locks because buyers are likely to shop around
before closing. Extended rate-lock programs mitigate the perceptual risk you take on
with every transaction.
n n n
In the end, if you take anything away from this information, let it be this: If you’re a producer looking to stay ahead of the curve, the time is right to build your builder business. n
Jim Colella is vice president, national builder program manager at Guaranteed
Rate. He has nearly 25 years of combined experience in mortgage and homebuilding, including leadership roles in sales, marketing, operations and land development. Colella is the company’s lead resource for new construction initiatives
and recruiting centered around growing builder volume. He is directly involved with developing
strategic business plans for loan officers and market managers to capture builder and condominium
developer accounts. Reach him at jim.colella@rate.com.
“The extended
loan cycle on
a new home
sale … can
leave a lot of
room for error.”
60 Scotsman Guide Residential Edition | ScotsmanGuide.com | December 2017
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