A.I. Numbers Days Of New Home Sales Agents As 'Gatekeepers'

It may have escaped notice. Or, it may have come as no surprise. But did you catch a data point in the May 23rd Census release on New Home Sales for April?

Sales Price
The median sales price of new houses sold in April 2023 was $420,800. The average sales price was $501,000.

At a "seasonally adjusted annual rate of 683,000," that average sales price would equate to roughly $342.2 billion in new home sales as a current 12-month pace.

The average sale price boggles the mind.

The current talk-track is that tailwinds supporting those sales – despite both high selling prices and mortgage rates bought-down to a "magic number of 6%" – are bumper crop demographic forces colliding with doubly-scarce existing home sellers.

In blunt terms, it's almost as if demand is playing out as an abstract economic force rather being made up of people making the decision and having the wherewithal to buy a new home now.

It's this asymmetric relationship – economic demand both driving and overpowering supply – and what that means for homebuilding's sales associates, managers, and business leaders we wanted to explore. At a moment both of economic volatility and mixed-signals and the dawn of the impact of machines being capable of understanding and responding in full-language conversation, the time seems right to consider the question, what's to come of the sales function in homebuilding as current and one-day buyer prospects engage in their home preferences and pursuits in ever changing ways.

We talked with New Home Star founder and ceo David Rice, whose experience in home sales and mangement go back to his Pulte days more than 15 years ago, and continue through building New Home Star – starting in 2008 – into the nation's largest private seller of new homes. We explored with David his thoughts and ideas on what he sees as an industry community inflection point, not just because of economic conditions and consumer behavior, but also due to the exponential impact of technology on what people who are buying or selling see as value.

Here are a few of David's curated responses on topic areas, ranging from a fundamental role pivot, to an ever more strategic business development position that flips homebuilding firm's model from product focus to a customer value focus. He starts with a level-set that describes buyer and seller sales agent roles as they're currently widely practiced.

Q: Describe the homebuilding sales dynamic today and what's evolving:

Rice: You could divide the sales agent role into, one, being that information provider/gatherer on one side with the seller. And, on the other side, the information provider on the buyer side. You might call that a gatekeeper. A gatekeeper of information. And that might be one major part of their job. The other part of their job would be to facilitate customer experience.

Just about anything that you would imagine that someone's doing in a new home sales roles, especially if it's model based and and to some extent virtual also, nearly anything that they’re doing these days they’re in one of those two buckets. The greatest disruption is going to come on the gatekeeper side."

Q: Why?

Rice: Information – up to now fully in the hands of the gatekeeper -- will more freely flow between supply and demand as as technology has enabled it to do in so many other industries."

Q: Are you saying that asymmetric information relationship between agent and buyer is changing, and that sales people will need to change the way they add value in the customer's buying process?

Rice: That's right. That will be important for builders. To use intelligence – artificial or whatever – for feedback loops they can design into their marketing efforts. These new technology and data-enabled loops will need to replace that feedback loop that they've more traditionally relied on having a human agent who's interacting with customers day in and day out, taking that back into the operating meetings.

New Home Star has made an impression on the industry because we taught, teach and taught salespeople to be business people and to gather information from the field, primarily their customers but also buyers, non-buyers and competition, and then to build business plans every quarter. A salesperson makes recommendations about how to operate more efficiently in that community. If that role is minimized in some way – at least with regard to their transacting data or knowledge or their role as gatekeepers minimized – it will be essential to the customer for the builder to have other reliable feedback loops so they can continue to adapt to what the customers wants and what they don't want."

Artificial intelligence in all its different forms is making it possible for builder to be effective at gaining feedback through technology rather than that human interface. That won't happen overnight. It'll be a slow evolution. Ultimately, even if you can remove the gatekeeper and make all the data available – customers just choosing from it – the builders would lose a big part of having that salesperson feedback loop that they've relied on for so long."

Q: Will you focus for a moment on where A.I. figures into the picture even today?

Rice: We have seen builders putting floor plans on their website that allow a little bit of manipulation on the site. And in more sophisticated ways, a builder's marketing team embeds technology that allows the builder to see what options users most frequently add to their modeling out of a home. They're watching which floor plan is being opened up and viewed most often and for how long.

In the past, the marketing team has done it for a different purpose. The marketing team has watched and put put cookies on someone's browser so that they could see what person was looking at something for the purpose of dishing that information over to sales. And that's not going to win the game if you're reducing the role of gatekeeper. Now, you have to collect that data about all of your prospective buyers and aggregate and learn from those things and customize your offering that way.

So it's not that the technology hasn't before now to some extent been available. Of course it's improved as this technology is developing so quickly. But those same tools have been around for five or six, seven years are now being used prolifically. I would say now, they're used differently. Now they're designed to be part of the feedback loop that guides what you're doing operationally, rather than just designed to capture information about a customer so that you could hand it to your salesperson for conversion. That's a really big difference strategically."

Q: How are the builders' web-based tools evolving around this operational opportunity?

Rice: On any number of sites the builder adds a colorization tool to their website. A customer can pick an elevation that they want to see on a home and then perhaps choose from five different brick colors.

To my knowledge, it's very early in this stage. Few builders are yet set up operationally and from a strategic marketing perspective to be watching which brick color is never bought, and then removing that from their portfolio and adding a new one.

Up until now, builder business leaders have relied on the salesperson to walk into a meeting one day and say, 'Hey, I pulled a report. Nobody chooses this brick color. Can we get one that more people would choose that would give us better variation as we're trying to figure out redundancy issues in the community.'

Technology now can step in and fill all of that. And if you run that way from the beginning, where prospective buyers are looking at things like that, they're getting feedback. That's now being complemented on the backend.

There are builders who are putting online contract writing tools in place. Now, a customer, in theory, could go on and fill out their own agreement and submit it for approval from from the builders website. Right now, builders' still rely on the salesperson very much in the middle of the deal for lot picks and for garage orientations and for elevations and all of those things are almost still exclusively done by the salesperson acting in a gatekeeping capacity where they have information that the customer doesn't have. But you can see that migration of that information onto websites and along with it, some of this feedback loop that I'm describing, but that's in its most nascent form.

You're just now seeing builders even put that capability there and I haven't seen one yet that is actually parsing through the data and getting more strategic from it."

Q: How does this evolve beyond the sales agent as information gatekeeper?

Rice: A more robust marketing team would facilitate more of this data exchange and manage or support the sales process with regard to the data exchange. All the while, you have an increasingly aware and enlightened and empowered customer who likely becomes more discerning and demanding about the experience that they're getting from a homebuilder.

This ends up looking a lot like a sales concierge, more than a sales agent. And to get away from the word all together, you might end up with a customer concierge. A customer concierge may still sitting in a model home, facilitating the visits and the viewing, and walking with customer onsite to look at different color packages and and potentially providing some of the inputs to the marketing office back to corporate that you need to gather at the community level.

Ultimately, the overall experience of the customer becomes the focus of that role, more than the persuasion of the customer.

By the way, some of the imbalance that we've experienced in the past few years between supply and demand, at times has already relegated sales agents to a position much like that. Demand has consistently exceeded supply and the next batch of homes would be released for sale to a waiting list. And there wasn't really an opportunity to negotiate the price down on behalf of the customer or to push the price up because of appraisals on behalf of the seller. So the capacity of a sales agent during this imbalance has really mostly been used on customer concierge and customer experience.

Sales agents who have a propensity towards caring for the customer and being thorough and those other parts of their job are going to be more sustainable than the old fashioned gunslingers who are, you know, really focused on sniping a customer, but have never been too concerned with caring for them."