Homebuilders Save Big with AI

A Game-Changer for Homebuilders

Let’s use the example of “Lynch Builders,” a production home builder building 500 homes per year, to understand the transformative power of OpenConnect. By integrating OpenConnect, Lynch Builders achieved remarkable savings:

• Realtor Commission Savings: $675,000 annually
• Carrying Costs Savings: $500,000 annually

Net Annual Savings: $1,094,000 after accounting for the cost of OpenConnect ($81,000)

How Does OpenConnect Work?

OpenConnect streamlines the home-buying process by directly connecting builders with serious buyers, empowering salespeople with insights and information about each lead, and reducing reliance on external realtors. The AI platform aims to understand the buyer’s needs and personalize their buying journey, making the process more efficient and expediting home sales. OpenConnect provides those who wouldn’t use an external consultant in a buying journey (in this case, a realtor) the opportunity to work directly with the builder for their ideal buying experience. 

Let’s Break it Down

Before using OpenConnect, Lynch Builders paid $11.25 million annually in realtor commissions for 500 homes priced at $750,000 each. In the first four months of using OpenConnect, they saved $225,000 thanks to a 6% reduction in realtor reliance. Additionally, by cutting the time to sell homes from 60 to 45 days, Lynch Builders saved $167,000 in carrying costs over the same period.

The Economics of OpenConnect

The cost-effectiveness of OpenConnect is undeniable. Over the first four months, Lynch Builders incurred $27,050 for the AI platform, with an additional $53,950 projected for the remaining eight months, totaling $81,000 annually. The significant savings in realtor commissions and carrying costs far outweigh the tool’s cost, resulting in net annual savings of over $1 million.

Navigating the Homebuilder-Realtor-Buyer Relationship

The relationship between homebuilders, realtors, and buyers has traditionally been complex and often fraught with misconceptions. Some believe that direct communication between buyers and builders could eliminate the need for realtors, thereby saving money. However, this approach overlooks the critical role realtors play in representing buyers’ interests and ensuring fair deals.

We’re not saying realtors should be cut out of the equation. Real estate agents might stop referring clients to builders who bypass them, leading to fewer referrals and declining profits for those builders. Effective collaboration between homebuilders and realtors remains crucial, but AI holds the key to improving the direct buyer-to-builder experience as well (not instead of). 

Mutual Benefits of Collaboration

Despite the potential for tension, collaboration between homebuilders and realtors can be mutually beneficial. Realtors who refer clients to trusted builders facilitate more sales, leading to higher commissions for themselves and increased profits for builders. Moreover, successful realtors can quickly enhance a builder’s visibility, leading to faster sales and more opportunities for profit.