Focus Discussion of the Week:
The Zillow Housing Trends Report is out, and we’ve got insider insight! As millennial, tech-savvy buyers browse the market, are you up to date with your content to ensure an informative experience? Because when buyers have the information they need, they’re able to make a much quicker decision between you or your competitor. Brett Steele from Zillow joins the show to unravel some of the latest trends in homebuying.
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Two thought leaders come together to explore all things sales and marketing from their unique perspectives. Each week, Mollie Elkman, Matt Riley, and others from Group Two dive into a focus discussion to talk about the latest trends, changes, and best practices.
[00:00:00] Brett: 39% of all new construction buyers are millennials. It’s a group in America. That’s about 70 million strong right now. And the reason I bring that up is millennials are tied to being the tech early adopters. They’re tied to wanting things a certain way. A lot of people like to complain about millennials for that reason, but.
Can you really blame them, right? They grew up with the internet. They just have a different set of expectations and the whole idea behind the consumer housing trend report. And the reason that we don’t just keep this information for ourselves, but we share it in avenues like this is to make sure that the builder partners and the industry in reality know what those expectations are these days.
So that’s the main reason that we do this is to try and align everyone with, you know, how do our buyers think. And how do our buyers act in the current market environment?
[00:01:00] Matt: Hi, and welcome to building perspective with Matt Riley and Mollie Elkman. We’re here to bring value to you and your team by exploring all things, sales and marketing related all from different perspectives. All right. And welcome back to another episode of building perspective. And I am super excited because.
It is April, therefore not April showers bring may flowers. It’s April brings the Zillow consumer housing trend report that just rolls right off your tongue so beautifully. And I’m excited that I have Brett Steele at the Zillow group with me. So Brett, welcome to the show.
Brett: Thanks for having me, [00:02:00] Matt. I’m excited.
Matt: Absolutely. And like I said, nothing says springtime, like the annual consumer housing trend report. And, but actually it is really, very timely. It’s very great. It’s, it’s unbelievably great information. You guys spend tons and tons of time and money investing in the research and, and getting that extracting the info out of all the massive amounts of data.
That you guys have at Zillow, and we really appreciate you AE putting those resources together, to share with the new construction side of things and then be, have you actually come on the show and talk through it so greatly, greatly appreciate it. And, so we know that 2020 was a whiplash year, right?
Like, it was. Stuff happened. We didn’t know what was going to happen. And then we it’s just taken off. It’s been gangbusters. And now here we are into 2021. It’s still [00:03:00] gang busters, but yet now we’re dealing with a supply chain issues and shortage of supplies. And I mean, heck we’re even seeing car manufacturers having to shut down car manufacturing plants because they can’t get.
Semiconductors or whatever microchips or super computer, whatever it is that they do with cars. It’s literally now like the whole supply chain is affecting not just housing, but auto and it’s really, these are the two, in my opinion, all the auto manufacturing and housing really drive the economy. Like they’re kind of first in first out kind of deal.
So it’s really, really interesting to see what you guys have. Pulled together, but why don’t we first talk a little bit about Brett, your background and how long what you do at Zillow, what you’ve been doing there and, just a little bit about you and then we’ll dive into the consumer housing
Brett: trend report.
Yeah, well, thanks again for having me. I’m really excited to go through everything. I know it’s a little bit tongue in [00:04:00] cheek, but I am excited for this report, you know, you know, we, we talk a lot with our builders of what we’re seeing in the industry. you know, if anything Zillow is known for knowing our buyer very well, and this report just shows the type of investment that we make in knowing, that potential buyer for everybody.
so a little bit of background on me. I’ve been with Zillow group for just over four years now. prior to that, I was wholesaling mutual funds to private banks. So, you know, your old, boring finance job, You know, needed a complete change of industry. So, you know, started reaching out to different real estate companies because I knew that’s what I was interested in and Zillow kept popping up as one of the absolute best places to work.
We actually just made the fortune 100 list, today I think actually, for top fortune 100 best place to work once again. So I just knew I wanted to work for a really good company. and I was lucky enough to, to get the interview with Zillow. It’s awesome. I have to, I
Matt: have to tell you a couple of things.
One clearly you’re a numbers guy, right? Like [00:05:00] doing mutual funds and then, coming over here doing this, and I’d love to hear a little bit about. You know, why you found what was so interesting, with, with, for real estate for you. But the other thing too is I have been to your corporate office and, it is crazy.
And I can tell you, I can see why it was ranked one of the best places to work. So if you, if, if our builders listening, if you get ever get the opportunity to go visit Zillow in Seattle, you should because the, the office is a sight to be seen. It is. It’s really, really cool. And, and, and really kind of imply, I guess I would say team member first, right?
Like, I think it’s very much set up that way, but you haven’t seen that place in probably no. The
Brett: last time, the last time I was in the office was probably February 20th, somewhere around there of last year while, yeah, I was in market Virginia meeting with a bunch of builders when we got the shutdown notice.
So. it’s been awhile.
Matt: That’s crazy. Well, so what made you say, you know what I’ve been, I’m selling [00:06:00] mutual funds. I want to get into real estate. Like how’d you get there?
Brett: Yeah. So within the financial, I guess, vertical, when you are in the sales role and to the level that I was doing it, you kind of hit a inflection point of your career and you either say.
I want to continue in this exact role for a very long time, or you say, I want to go be an external wholesaler. In which case you are constantly wining and dining building relationships, you live in the territory or you go the complete analytical route and you say, I want to get something called your CFA.
that minimum is like a two to three year. Kind of study track in order to get that certification. And quite honestly, none of those were really appealing to me. I, you know, I think I was pretty good at my job. and then I just like, I didn’t want to do the finance thing anymore. just wasn’t an industry that was exciting to me.
and I was always interested in real estate. I was always interested in the, the leading indicator of how it affected the [00:07:00] economy. I was really interested in. How people make decisions on where they’re going to live and how they’re going to live. at the time I was friends with a lot of people who were becoming, putting all of their money into homes.
And I was like, Oh, there’s a, there’s a very interesting psychological aspect to this industry as well. which is rearing its head these days. you can imagine. but yeah, I’ve just really been interested in real estate for a while now. ever since, you know, I bought my first condo back in 2012. And, you know, Zillow was just a great option.
I’ve been with the new con team the entire time I’ve been at Zillow. So, pretty much all of my experience has been doing a deep dive into the, the new construction line of business here.
Matt: Very good. That’s great. I love it. I love the connection. Okay. so let’s give the people what they came for. Brett.
Let’s get into the consumer housing trend report. So what did you find this year?
[00:08:00] Brett: Yeah. I mean, there were a lot of very interesting, stats to come out of this, last year. The first one is that millennials are just getting, a bigger and bigger slice of the, the new construction buying pie. they are the, the largest cohort of buyers right now.
39% of all new construction buyers are millennials. it’s a group in America. That’s about 70 million strong right now. and the reason I bring that up is millennials are tied to being the tech early adopters. They’re tied to wanting things a certain way. A lot of people like to complain about millennials for that reason, but can you really blame them?
Right. They grew up with the internet. They just have a different set of expectations and the whole idea behind the consumer housing trend report. And the reason that we don’t just keep this information for ourselves, but we share it in a avenues like this. Is to make sure that the builder partners and the industry and reality know what those expectations [00:09:00] are these days.
so that’s the main reason that we do this is to try and align everyone with, you know, how, how do our buyers think and how do our buyers act in the current market environment? the caveat I will give to all of this information is we run this, this giant, this giant survey. And the survey began, late April into early may of last year.
So it’s the very beginning, very beginning of the shutdowns. A lot of States want really fully, responding to COVID, just yet, you had some of the coastal cities kind of shutting down, but it didn’t really hit mainstream America until the middle of may into June. so these numbers, that we’ll talk about, they’re very interesting in and of themselves, but we also take a look at how they were the previous year.
And that’s the first thing that that’s the first time we’re able to do that, but you can imagine, okay. Take a look at the trend from 2019 to [00:10:00] 2020, but then you can kind of take a guess knowing what we know about the industry of where those numbers would be today. Yeah.
Matt: Great. Awesome. Okay. So we know the millennials are such a, what’s always interesting to me is.
You know, anytime we do the generational thing, it’s this large, massive swath of, of buyers. Right. And what is the, the millennial generation is like from 1981 to. What darn near, almost in the early nineties, like 93 or something. I don’t, I don’t even know where it cuts off. I mean, it’s almost like a 15 year swath of people.
And what’s interesting is like, I was born in 80, so I’m 40. And so I’m barely on not a millennial, but like, You know, you go to somebody who was born in 1993 or 1995. That is a massive swing. Yeah. So millennials are, the largest, [00:11:00] buying public out there in almost every segment. Consumer consumer buying segment out there.
and so I really find that interesting right now, 39% of new construction buyers are millennials. Is that the largest cha like, what is the next next step back from that of, of
Brett: new construction buyers? Yeah, pretty sure. It’s gen X is next. and millennial version I’m on the tail end. So you, it’s interesting because, for our definitions, we use anyone 26 to 40 B is defined as a millennial, in terms of this survey and the numbers that we’re doing.
Right. and like I said, they, they constantly get tied to the technology side of things, but they just, you know, they have that new set of expectations, whether it’s with the technology side and floor plans, whether it’s with 3d tours, whether it’s with. Ratings and reviews. you know, smart tech is getting bigger and bigger.
all of these things kind of come together and what they, what they want out of a home right now. so for [00:12:00] example, you know, a third of buyers are saying that rental income is very or extremely important versus 23% of the previous year. and especially with the urban buyer. So yeah, 58% say that rental income is interesting there.
And the question is why, right? So is it the fact that, you know, we need to be able to afford this place with the rental income? Is it that we want to go travel and have that kind of lifestyle as well? And we don’t want empty apartment or are there investors buying up a lot of the urban properties and they want to just use it for rental income?
Sure. and then you’ve got the other things like smart home tech. so 45% say that having a smart home is very or extremely important versus 34% the previous year. so you can, again, you can see that trend from the previous year, in which way we’re heading as an industry, which I just think is very fascinating.
Matt: And so the 45% number is the [00:13:00] 45% of the total number, not of the millennial, correct? Yep.
Brett: Yeah. Okay. yeah, so I would imagine that, you know, me personally, I’m 33 now God, I had to stop and think about that. like having a smart home is very important to me or at least having the capability to do it because most of my house is automated and runs through the Google network.
Yeah. And that’s, you know, it’s just something that’s really nice to have when everything kind of works harmoniously to go.
Matt: My personally, my wife hates it all, but it’s still my housemate. That’s great. Yeah, exactly.
Brett: But it’s so nice to just like be in bed and just say, you know, I can’t say now because my Google everything’s going to be listening, but to just say good night and it shuts off all my lights that, you know, any of the outlets that might be running a space heater or anything, it all shuts down.
Matt: I love it. I mean, that hat to me has got to be a vital part of your business, right. As a, as a home builder. Right. Because it’s, it’s not going away. It’s going to only continue to evolve.
[00:14:00] Matt: definitely. So what were some other, were there some other product type housing type slash like product.
Things that really stood out for you.
Brett: Yeah. I mean, the number one product thing is the 3d tours, and kind of what’s going on 3d tour space. So, you know, the, the brace, but if you take away the record revenue, if you take away the, you know, outselling, you know, nine months out, probably the brightest part for us as an industry with COVID is the adoption of technology.
and yes, a lot of that adoption of technology was forced upon us because of the pandemic, but it kind of gave us like a three to five year kind of bump up, to make sure that we were kind of staying in line with what expectations were. So, you know, one of the reasons for technology is to just be able to do things more efficiently, right?
Like that’s the whole idea of technology. And now with something like 3d tours, you can do. [00:15:00] You know, call it a weekend’s worth of open houses or weekends worth of walk-throughs in an hour. and it’s just a very efficient way of doing it. And the buyers are getting more and more, interested in this technology and they’re expecting it a lot more.
So one of the numbers that came out of it. Was 71% of all new construction buyers agree that 3d tours would give them a better feel for the space. And that’s up 10 basis points from the previous year and 60% want more 3d tours compared to 51% last year. so again, you start to see this trend of, you know, people want more 3d tours.
I don’t care if you’re doing a virtual walkthrough or using the free 3d tour tech through Zillow, or doing a Matterport, whatever you have, whatever you have the capability of doing, please, please, please add it to your listings. Add it to your floor plans because it’s something we met our buyers, mom.
Matt: Yeah, absolutely. I mean, Even when I tell [00:16:00] you one of the things that, I, that we saw quite a bit, working with builders was, even helped the salespeople, right? Like, especially in the state. So we had, we had builders, we had builder partners in every state that had a didn’t consider housing. essential essentially.
So we had builders in every single state that were shut down. Like they couldn’t close any homes, they couldn’t get permits. They couldn’t construct anything. Salespeople weren’t even allowed to go show them homes in the model. Right. They couldn’t even, I mean, it was shut down. Well, they used the Matterport tours, the 3d tour, specifically 3d tours.
They use those as a selling tool. All of a sudden now virtually the builders who had invested and they had 3d tours of all of their plans and all of their product, that they were able to continue showing homes virtually and had record breaking sales [00:17:00] and didn’t even go in the sales. Yeah. I mean selections and the whole nine yards, right?
Like yeah. 3d tours of the design center and
Brett: all of it. Yeah. And, you know, a lot of builders that we talk to, they think that, you know, you’re just investing in. the buyer, but you’re really investing in all of your future leads when you adopt this technology, because anyone that is able to see this, you are giving them, you’re bringing them lower in the funnel by giving them more to look at so that if they look at all of the content with the community, with the 3d walkthrough, all of these things, by the time they get to you, they’re pretty motivated.
And they know they want to move forward with seeing it in person. they know they want to move forward with, I mean, some of these people are submitting leads without actually seeing the home. so, you know, one of the most surprising numbers that we came from this was, 47% of first-time buyers. And 49% of millennials [00:18:00] felt very, or extremely confident making an offer without seeing a home in person.
And you know, how do we get that higher is by investing more in the technology.
Matt: Well, but between Google maps street view, you know, and a Matterport tour. Yep. I mean, you’ve got a really good idea. Of what a, what the area looks like now, even in a lockdown mode, I can get my car and I can go drive around, right.
And, and not, and kind of check that box of the surrounding area and then drive past the house on the outside and see what it is. Peek through the windows, not interact with anybody. And if all of that lines up with like what I saw, I’m lifted up my notepad, what I saw on the, on the iPad or my laptop or whatever, to the virtual tour, then.
I mean, yeah, absolutely. I I’d feel a hundred percent comfortable with that, you know, and it’s a totally, totally see that. I mean, I’ve even seen [00:19:00] large, large developments, where they had, you know, where it’s half a dozen builders and they’re empty, you know, thousands of, lot developments where they’re doing.
Ariel, like essentially 3d tours from a drone from place to place to place in, in, throughout the community. So you can see the amenities, you can see the streets, you can see all that stuff. And then literally like kind of like a bird dive bomb in and walk through, you know, the clubhouse, the restaurant, the gym, the model homes, literally it’s all interconnected where you’re able to just like zoom from the air all the way through the end of the front door.
I mean, when you start putting yourself in a position, like when you start putting content out there like that. Absolutely. You take the people who 41 and it was 41 and 49%. Those are your numbers, right?
Brett: 47 and 49. Yeah.
Matt: 47 and 49. If you string together content like I was just talking about. Yeah. I think you could even take that number.
[00:20:00] Higher. Oh yeah,
Brett: definitely. I mean, we now have a complete picture. Yeah. I mean, we, we do a really good job of it, of it with all of our spec homes, but the neighborhood is just as important. So, you know, for what people said was, considered highly important to them. 88% said that neighborhood feeling safe was very important to them.
65% said a walkable neighborhood was very important to them. And then 60% were kind of preferred location with regards to, you know, the, the restaurants and all that, that you were mentioning. So that kind of content, it just gives more confidence to the builders or to the buyers. And when buyers feel more confident, they make decisions a lot quicker.
when they have that education, in front of them and they’re able to kind of do it on their own, they are making decisions a lot quicker. We’re seeing that in the local market here in Seattle, where, you know, we have a ton of homes that will go on on a Friday. Reviews are [00:21:00] the, the review date is on Sunday night and they’re getting 13 home offers.
Like it’s very easy to do that. When you leverage the heck the technology high level, the average time to buy a new construction home in 2019, it was three months this past year. It was two months. And again, that’s, that’s an entire month difference, but then that was before the pandemic. Yeah, well, yeah,
Matt: you’re never reflected the wild wild West.
Right? What do you think it is now? I bet. It’s I bet it’s two weeks.
Brett: It very, I mean,
Matt: I mean, I was kind of tongue in cheek, but I bet it’s at least
Brett: I bet it’s a month. It probably is. Yeah. From everything we’re hearing, it’s, it’s a very short timeframe these days. So investing in that technology helps.
Matt: Yeah, absolutely.
I mean, you’re seeing. You look through the MLS, you know, you, I mean, you look at like agent remarks or whatever in the local [00:22:00] MLS is. It’ll say I can’t, I actually don’t recall the last time I saw a listing and I’m sure it’s out there, but I look at the listings often just to, I guess, keep an eye on like, just.
Finger on the pulse of like, even from a realtor perspective, my real estate license. And, it is, I mean, all of them be like, you know, house goes live on, you know, seller, rev, seller reviewing all bids on X, right? Like it’s like three days later giving everybody a chance to like, get their stuff in. And I’m seeing, builders like large builders, national builders do the same thing.
So it’s going from resale because then when you get into this. Massive bid scenario, you know, I think it’s. Everybody’s it’s like, it’s gotta be a blind bid process. It’s what is it like the, you remember the, the, the Pepsi challenge, it’s like the double blind tasting the test or whatever it is, which by the way, there is a, there is a, something, I think it’s on Netflix about Coca-Cola and the [00:23:00] Pepsi, Coca Cola thing.
Really. I haven’t seen that. You should check that out. Cause they D they they’re all about the taste test and then Coke comes out and it’s like, we’ve got to change our recipe to beat Pepsi. And then they started doing their own double blind taste testing anyway, rabbit hole. however, I think when you get into that, like, Well, I don’t even know where the heck I was going with that, but, Oh, the bids.
And so it’s like you put yourself in a legal position where like, it’s just bringing all the bids and then I’ll just sift through whatever’s the highest and best, but think about how all that comes down and just the virtual content and the type of content that we’re putting out there. Because if you didn’t have that, Then we saw right out of the gate, a performance difference, between the builders who had that content and the builders who didn’t have that content when the pandemic first started and, well, the one thing, and I’m going to like beat on this drum even for just a second in this meeting.
Cause in our conversation, even though it’s not really, it’s not on topic, but it [00:24:00] is. Is, you got to take what’s happening right now. And I’m actually really glad that your data doesn’t factor in some of the COVID data, you know, because we’ve got to take what’s happening right now and throw it out the window because it’s make-believe land, right?
Like it is a fairytale world and it is not the way that it’s going to stay. Now. I do believe that, you need to change your floor plans and your product offering too. to kind of basically pivot on how people now realize that they want to live, in their home because, because of the pandemic, I think those things will carry forward, but like the reactions of people, I think we have to throw out the
Brett: window and I liked that you brought this up a few episodes ago and call them at GMs, the good market syndrome.
Like let’s, let’s not forget that, this is not a norm. and God forbid the biggest, the biggest, Worry that I have for our industry is that we take some of the things we take some of the worst aspects of how we’re, kind of treating buyers these days [00:25:00] and continuing that moving forward. Yeah. you know, one of the things that, that came out of the survey, as well as, you know, 56% of buyers agree or somewhat agree that they wasted time viewing properties that they would have skipped, have they understood the floor plan better.
So to your point like that, that content piece. you know, how does that translate to, to build our waste, in the industry? And again, you’re, you’re not seeing it today because today is the good market syndrome, but what is it going to be when we get another sense of normalcy? Yeah,
Matt: I, I totally agree.
And it was funny, you mentioned, 85% of people surveyed said that having a community that was like a safe neighborhood is important to them. I’d love to meet the people the 15% who said feeling safe. Wasn’t there.
It doesn’t matter. You know what I don’t do under the Sage? I don’t care where I live. It’s totally fine.
Anyway. All right. All right. So what, what else, what [00:26:00] were some other big things, that, and what we’ll also do by the way, for everybody listening, we’ll put, we’ll put a link out to the housing report in case you don’t have it in case you haven’t seen it. we’ll put a link in the show notes where people can get, get to Zillow’s website and pull it down.
So, but what, what were some of the other, what were some of the other big things?
Brett: Yeah. Well, I actually want to kind of dive a little bit deeper into, I believe it was Alexis that you had on, your last show. When you guys did the, the builder survey on your side, because God 17 hours on average, it took to get to a response from some of these leads.
Yeah. A nine hour improvement over 20. Was it 2019? Something like that. Yeah, that’s right. That’s right. and 50% are just going to choose the first one that gets back to you. So it’s like, okay, why aren’t we doing this more? and you know, all of the numbers that you guys ran through, I thought it was a very eye-opening, episode, but it’s it, I’m tying it [00:27:00] to this idea of ratings and reviews.
so we keep hearing this in the industry over and over again. you know, one of the things that came out of our survey is that, the. now where was I going with this? that’s all right. I did the same
Brett: Oh, I think there’s 39% of, of, urban buyers say that they would go to the builder who, has the best online ratings.
And we are as an industry, we are not holding up our part of the bargain of being, you know, the best we can be when it comes to consumer leads.
Matt: So I would say like on the reviews, I want to get like, here’s a pro tip and I think this is something that people, a lot of builders miss. So, and the reason why we don’t see a lot of a, the squeaky wheel, right?
The squeaky wheel always gets the grease or the oil or whatever the saying is. So the only people that are going to proactively go and leave a review [00:28:00] typically are the ones that aren’t happy. Right. And then the ones that are happy, you have to ask them to do it. And then they will. But one of the things that we see builders do all the time is they’ll have the reviews get spread out across too many places, right?
So each, each community can have a Facebook page. So the people that bought in that neighborhood might leave a review over here, and then they believe somebody else in this community leaves a review over here. Or then each community has its own Google, my business listing. And then so people are going in and leaving their Google, my business listing at the community level.
And so you’ve got to. Funnel all of your reviews into one central place, right? Meaning on the platform. So one Google, you’re going to leave all your reviews, essentially on the corporate quote, unquote business, Facebook, or a Google my business page. So all your hard work compiles into one location. And then the second one is on the, on the Facebook side of things, have them all funnel into the main company, Facebook page, not these separate [00:29:00] individual community level ones, because these.
When you sell out, they’re gone and they never carry over. So central, make it a point to centralize your, your customer ratings into those main buckets, Facebook and Google, like parent, like root folder, you know, w review a thing. So, sorry. Anyway, I just, just, like I said, an important point all over the place.
Brett: And honestly, I can’t believe how many builder partners of ours don’t have a section of their website. That is just ratings and reviews. the ratings and reviews are forever. Once they go online. Right? There’s no tearing them down. There’s no, nothing like that. So you want to try and work with a company who knows your industry.
Who’s going to put your best foot forward. cause like you said, people don’t leave reviews when they’re happy. They tend to do it when they’re not happy. And right now I can imagine like, yes, we are doing some things in the industry that. Probably is creating some [00:30:00] friction with our buyers. yes, they are buying the homes, but once they’re in that home, they close, they have all the right in the world to talk about how that process was for them.
so you want to make sure you’re putting your best foot forward and you want to make sure that you are just being, being forthright with the best reviews that you can. So give them an opportunity. As you mentioned to view your ratings and reviews. make it easy for them so that they don’t dig because once they dig, then they get into the, the, the Yelps, the better business Bureau.
They’re the ones that you don’t want them going to, because where the worst ones are
Matt: that’s right. Well, yeah, I mean, you look at that. And so it’s this, you know, you think about. We talk about, everybody wants everything to look pretty. We do too. Obviously we’re a marketing company. We want things to look great, but you look at some of the basic places like Amazon, it is not a beautiful site.
Right. But they make it really crystal clear when you get there, what [00:31:00] you, the product you’re looking at the review, right? Because people are going to believe. What other people say about you and your product? They’re not, they expect you, they don’t expect you to say, yeah, we suck. Do you want to buy our, whatever?
No, you’re going to talk about how great you are. So they don’t believe you. Right. So it’s that it’s third party. It’s that social, you know, search social verification, right? Whether it be social media or actually in a social one-to-one they’re friends. Yeah. Yeah. but the people people don’t expect, they don’t, they don’t necessarily believe you.
They will believe a total stranger saying whatever it is that’s online, over you, especially when it’s something that you don’t do, you being the consumer, you don’t do on a regular basis. You typically, most people don’t buy homes all the time. Yeah. So I know for me, when I come across something and I’m buying something that I don’t fully know a ton about, I take, Oh, I put a lot of weight in those reviews, but I will go research and a little and understand a little bit [00:32:00] more.
now if I feel like I’m really, really competent in that field, I CA I take some of those reviews with a grain of salt, but unfortunately, For us, we’re in a industry that consumers, they don’t buy homes on a,
Brett: on a monthly basis. Yeah. So, I mean, I have, my wife and I are both millennials. I now have an eight month old.
And the amount of research that my wife did for our baby registry. She wanted the best of every version of everything she knew. I’m not kidding that she probably put in five to 10 hours of research just on a baby registry. Imagine what people are doing for trying to choose which home builder to use for.
Right, right. So it definitely, I mean, I don’t know what the dollar amount is, but bad reviews do have a cost to your business, especially in the future of your business. so yeah, invest in it, invest early so that it can pay dividends down the road.
Matt: There’s there’s no way to co I mean, I [00:33:00] figured out a way to quantify how much a bad review actually costs.
I mean, I know you can make up a number and throw it at it, but like, but it absolutely costs money because I got to bury that bad review. I’ve got to, you know, I’ve got to, or I’ve got, I’ve got to ch you know, my marketing message has to get people. I, I have to bury that review and additional positive reviews.
I’ve got to make sure that we’re out there and more places or. There is a cost to it, even if it’s not a D even if you can’t say it costs me X dollars. Cause I got that bad review. There’s man hours, people, hours there’s brain damage. It’s it’s
Brett: just, yeah. The ulcers that comes with. Yeah. And it’s funny because there’s definitely a psychology behind it too, where people trust a 4.8 more than a 5.0.
That’s right. Isn’t that strange? Like I would rather it be a little bit honest and be like, Oh, okay, I’ve got a couple of threes, but for the most part they’re fours and fives versus nothing but five star reviews. Right. [00:34:00] Nobody that has that expectation of our builders and our builders have to accept like the expectations.
Aren’t completely ridiculous from the buyer. They just want communication. They want education, they want transparency and that’s what gets you the good
Matt: reviews. Yeah. If I see something with 300, five star reviews and not a single poor review, I think it’s fake. Right, exactly. Right. I know that you can’t make everybody happy.
Yeah. So if someone gave you a one-star review, it’s not the end of the world, reply to it. Right. And then continue to get your new with anyway, we’re going way down a rabbit hole about customer service, but it is important because you, as you stated your numbers, people find that to be unbelievably important.
Brett: Yeah, definitely.
Matt: Okay. So as we keep going, what, what else, what else are some of the big. Highlight consumer trends that we’re
Brett: seeing. Yeah, the, probably the, one of the biggest jumps is, the percent of buyers who [00:35:00] want their agent to do all of the communication with the builder. So, 36% of first-time buyers site conflict between an agent and the builder as a pain point, taking it back, 80% of buyers find some part of the process challenging.
but 90% of those working with an agent want their agent to have some or all of the communication with the builder and 51%, want them to have all the communication. So that 51% that’s a jump up 17 basis points from the previous year. And that 90% is a jump from 81% the previous year. So you see these buyers and again, this is pre pandemic pre all that craziness.
You see, these buyers just won. Support, they want education. They want transparency. They want somebody in their corner who is an expert who is not just the builder representing them. Yep. and I think, you know, a lot of builders that we talked to, they, you know, they are [00:36:00] still putting up walls against working with an agent.
If that’s what the buyer wants, you have to find a way to be able to do that.
Matt: Sure. So I am pro realtor. I am pro builders having a, a good working relationship and most especially a great reputation with realtors. I also will say, though, if buyers find a pinch point working directly with a builder, and they want their own represent, they want their own realtor to take all the communication or help them.
I think, honestly, I do believe that. You can fix some of that and may even possibly lower your inadvertently, but in a positive way, lower your realtor. Co-op by having. transparent information and re and educational resources available to buyers on your website. So if they feel like they are getting all their questions answered and they fully understand based on the [00:37:00] information that you’re giving them, what the process looks like, what they can expect along the way, what the D what are the different steps.
Those are, those people are going to be less likely to feel like that they need someone to help hold their hand. And walk them through the process because you’ve already, essentially done that for them right now. That doesn’t mean you I’m not in any way, shape or form advocating that we should, you should try to cut realtors out of deals or put that wall up.
But I think that that’s going to, that’s going to happen. Kind of naturally to a certain extent, because you’re going to put people more and more at ease. Right. and I think that’s going to be a positive, that’s going to be a by-product of having really great resources.
Brett: And again, it goes back to invest in the education of the buyer.
That’s a, the number of builders that when I, you know, when I used to go and market, and I would just say, Hey, where’s, where’s your process page on your website? And they’re like, what do you mean? And I’m like, I assume that, you know, nothing. All right. And I’m, I go back to, my [00:38:00] expertise with the fall. I call it expertise, my, education on the financial side, but like assume I’m in fourth grade and you have to explain something to me.
That’s what a lot of buyers are coming to, especially the first time buyers. So if you don’t have your process of like, Hey, you know, figure out what your priority list is. Figure out where you want to live. you know, look into a preapproval, like literally walk it out. Step-by-step right. And not just bullet points, but expand upon it and give somebody the confidence that okay.
If I work with you as a builder, this is all the information I’m getting upfront. I don’t need to go to them to ask more. I don’t need somebody in my corner to your point, or I have less of a need for somebody in my corner. so I might not want to work with an agent, but, it’s again, it’s that investment in the, in the education of the buyer that just makes it a better lead for you when they do finally reach out.
It’s a combination
Matt: of that. And, you know, tying that back in a little bit to [00:39:00] our shop results that we did, right? When the, in the timeliness and having some of this dedicated there to answer all their questions in a timely manner, you know, a lot of times buyers haven’t engaged with a real estate agent until later in the process.
And so if you’re, if you can be timely and respond and have a dedicated, online sales team person slash team, that is fast to respond. customer service oriented fast to get resources and answer questions, like all of these things as a snowball effect, right? Like it leads to a better customer experience, higher ratings.
You’re going to take them out of the market sooner, rather. Maybe some of them still pick up a real estate agent, maybe some of them don’t, but you know, either is okay with me, but I guarantee you you’re going to not, you know, if you’ve got to, you know, 98% realtor cooperating, then you, I guarantee you, you’re going to be able to knock that percentage down some simply because you’re just doing a better job.
Right. Definitely. So, anyway, all right. So [00:40:00] as we start kind of putting a big red bow, on our. Our housing trend report and some of these numbers, what, what do you feel what’s what’s what’s for you. Like that big takeaway, like if I’m a home builder, what am I, you know, maybe it’s not a new stat that, you know, but what is from that report and comparing that report to previous data, what are your, what are your biggest, like if I’m a home builder, these are the things that I’m going to do based
Brett: on this information.
Yeah. I mean, it goes a little bit back to your, your GMs, right? That good market syndrome. yeah. Pain points today will become lost contracts tomorrow. Maybe not tomorrow. But at some point when we get a, a reshuffling and, an equilibrium in the market, all of those pain points that we see from, from buyers, they will find a solution to them.
And it’s up to us to take advantage of the opportunity we have right now with this market, invest in the relationships that we, [00:41:00] we know that are important, invest in the technology that we know that is important. Take, you know, we completely understand that, you know, communities are selling out. Some people are pulling back on their marketing, invest that in the education of the buyer.
And you will see a return on that investment within the next three or three years. Yep.
Matt: No, I, I, 100% agree with that. I mean, people are right now. I think buyers are putting up with more than they’re willing to put up with in normal circumstances. And it’s just going to be a matter of when enough becomes enough.
You know, and things start to settle back down. I was talking to somebody the other day and I was like, you know, one day we’re gonna wake up and snap our fingers and we’re going to be back to reality. Now here’s the good news. We could see a 40, we could snap our fingers, see a 40% decline overnight. Guess what market we’re in 29.
[00:42:00] Yeah. I’d call that a good market. Yeah. Right. So we could see a 40% decline overnight and we’re still in a really, really great market. However, you still have to do a re you still have to do a great job to get. The business. And so, I totally agree. I think that this is really, really good information. I think that, you know, if, if I’m a home builder, I’m absolutely looking at this and I’m saying, how can I, how can I reduce the friction?
You know? And I think it really all comes down to the. How much friction we’re creating or not creating in order to make a great buying experience. Right. And what people expect. I’m looking down at my notes from the numbers and stuff that you were, that you were rattling off. And it really does. You know, you talked about GMs, good markets syndrome, but it really does come down to how much friction can we reduce.
For the buyer sec, you know, for the buyer and it doesn’t matter what age group they’re in. Right. If you make [00:43:00] it easy to do business with you in any
Brett: industry. Yeah, exactly. Yeah. The fact, I mean the one number I want people to remember is 80% of our buyers are saying that it’s a challenging process, buying a new construction home.
We need to do better as an industry. Zillow plays a part in that marketing firms, such as yours plays a part in that builders are obviously, the decision makers in a lot of that, but we can do better. We absolutely can. we have the tools at our disposal and we know what we need to do. It’s just going to be a little bit of hard work, but that’s not something that we shy away from.
Totally agree. That’s
Matt: right. 80%. That’s a big number. That’s a big, big number, 80% remove the friction. Right? If you can, if you can do, if you could remove half the friction. Oh my goodness. Yep. I mean, you’re a bit you’re, you’re plugging along. So that is the quote, quote of the episode is move the friction 80% find it difficult.
Or there’s a, there’s a pain point. There’s a pinch point, [00:44:00] in the process and, That’s that’s, that’s the big takeaway. So, all right, Brett. All right. I’d like to ask everybody as we close something down, Couple of questions. These are like rapid fire. What do you, what are you binge watching? What are you reading?
What are you listening
Brett: to? Okay. Listening to a podcast called revolutions. cause I’m a huge history nut. So they literally just go through the different types of revolutions, whether it’s the American revolution, the French revolution, English, Russian, very interesting. if you’re interested into history, reading right now, I’m reading a book, what is it?
The, the rise and fall of the American city, by Jane Jacobs, from back in like the sixties, I want to say, but a very, very interesting read on kind of how the American city came to be and you know, what she saw as some part of the decline of it and why. and then bingeing, Ooh. I’m a big parks and rec fan.
I absolutely love anything, Michael. Sure. Be it [00:45:00] Brooklyn nine, nine, the office, but parks and rec is, is constantly up there for me. so I think we’re my wife, you know, puts it on pretty much every night. So I think we’re on like our 10th way of going through all that.
Matt: Yeah, that’s fine. Have you seen the history channel, did this and it’s several, a few years ago?
it was, I think it was called the men, the men who built America. I’ve I’ve
Brett: heard that it is out there. I have not watched it yet. Is it good?
Matt: Really good. And they go through, Rockefeller van. Well, I start with Vanderbelt, Rockefeller, Thomas Edison, Henry Ford, JP Morgan, all of these guys, and then they, so the reason I asked that is there actually, I just saw it on TV to the day they’re promoting.
another iteration of that, I forget what the title of it is, but it’s like 2.0, and they’re, they’re kind of revisiting, what it was. I think this one’s like the Titans that built America or something along those lines, but, those are really, really cool. And you can, I think you can [00:46:00] buy the DVD of the first one online.
If you. I said DVD, like who has a D that’s probably why or something like that. Right.
Brett: You’re showing your upper millennial limit right now that
Matt: it was a DVD player. It’s like my kids, like a DVD’s and I’m like, what is this cassette? It’s like, they look at a cassette tape or something like how I looked at eight track.
My parents had the eight track player and the LP instead of the record. Anyway. So yeah. Check that out. It was really great, but, but Brad, it was really awesome having you on the show. Thank you so much. We’ll have to make sure that, we do a check-in before the next year to see if you’re, if you guys have an opportunity to, to kind of follow along and see what some of the numbers look like during COVID
Brett: Mexicans, here’s going to be very interesting.
Matt: Yeah. I mean, it would be really interesting. Here’s my, here’s my, My service re service requests. Right. It’s do a mid-year because we’re in such a, [00:47:00] a weird time period. So like do a six month. You shouldn’t do this all the time. Cause it takes a ton of time, but do like a six month and then do it a year.
And so hopefully we’ll see like what we had in during COVID. So we’ll see, like before, during, and then post. and it’ll be interesting to see what, if anything, like we start to see what shifted, what dropped back down, what continued on. anyway, be
Brett: it’d be, I love it. Well, thanks for having me, man. I really appreciate it.
Matt: Absolutely. Thanks so much, Brett. And, we’ll talk to you soon.
Brett: Sounds good.