Home Sales Fuel Distributor Optimism

The real estate market keeps the American economy robust—and profitable for distributors.

In its 2004 Performance and Accountability Report, the U.S. Department of Housing and Urban Development (HUD) reported that the nation's homeownership rate reached a record high of 69 percent, an increase of 0.6 percent from the homeownership rate at the end of 2003. The document also showed that the United States gained an estimated 1,594,000 new homeowners—attaining a new high of 73.7 million homeowners.

Based on these findings, it is clear that the real estate market is thriving. And, distributors looking to become household names should consider its many opportunities.

According to Suzanne Alber, manager at Broker Forms, Grand Rapids, Mich., there appears to be a dual agency when it comes to the sale of real estate products. "The market tends to go up and down based on interest rates," she explained. "If interest rates are low, more people will buy and refinance homes, and the need for compliant forms goes up."

Alber said that Broker Forms, which carries a complete line of compliant stock mortgage forms used by banks, credit unions, mortgage companies and mortgage brokers, receives 30 percent of its sales from real estate.

She added that these forms are unique because many of them are federally mandated to be used during the mortgage process. "With more than 20 years of experience in compliant government forms, Broker Forms guarantees that all of its mortgage documents are 100 percent compatible with federal regulations," she said. "We have an established department that works solely to assure that our forms meet federal regulations."

David Spangenberg, director of business development at Carlson Craft Business Solutions, North Mankato, Minn.—a wholesale manufacturer of business products, including stationery, presentation folders, engraved signs and full-color badges—said that the products are unique because they allow the company to provide a complete marketing solution. "We find that most segments of the real estate market wish to portray a very polished and professional image, and require products that can help support this goal," he said. "Our full-color products allow for photos, creative designs and quality business stationery."

Brian Nelson, director of marketing and sales at Townsend, Massachusetts-based The DFS Group, said that listing folders, door knob hangers, various kinds of postcards and closing gifts are some of the products that are available for sale to the real estate market. "All of our products are manufactured domestically, and we are proud to serve this market that is core to the American economy," he said.

According to Nelson, sales have been stable. "Real estate products have consistently performed in up-and-down economies," he said. "Our revenue from these products continues to exceed projections."

A Changing Market

Evolving technology has affected sales of products used in the real estate market. "Laser printers have allowed companies to turn to electronic formats for many of their mortgage forms needs," Alber noted. "But, there are still a large variety of booklet and folder-formatted products that do not lend themselves to electronic technology." She added that Broker Forms only initiates new products when the federal government mandates changes.

Spangenberg said that although manufacturing full-color products for self-promotion is not new to Carlson Craft Business Solutions, he has witnessed a consistent increase in their sales to the real estate market. "Utilizing color is a well-documented method of improving return rates, and our short-run digital press equipment allows us to provide colorful products at a good price. These services are not just for the big players anymore," he said.

Nelson said that legislation continues to put pressure on the market. "Having the right tools for real estate professionals helps them to be better organized and to minimize workflow interruptions that occur with new policies and procedures," he observed.

There are many challenges that result from producing real estate products, the manufacturers said. "There is a high turnover rate of agents from year to year," explained Nelson. "So, special care is taken to meet the expectations of this changing audience."

Opening Doors

To help distributors open doors to increased profits, manufacturers offered helpful tips. Nelson suggested that distributors consider the time of year when selling to the real estate market. "An understanding of the seasonal aspect of the market is critical," he explained. "Agents tend to promote more heavily in slower seasons and need more transactional products in busier seasons."

In addition, he said that distributors should "partner with large local firms and leverage the experiences gained to sell to other firms."

Spangenberg believes that the real estate market is a very price-conscious one, and suggested that distributors sell customers solutions, not products. "We recommend selling a complete marketing solution and showing the value of all of the products, not just focusing on a particular item," he said.

Spangenberg added that Carlson Craft Business Solutions offers a non-branded, leave-behind brochure with real estate products.

Alber said that another way that distributors can sell to the real estate market is by first establishing good relationships with financial institutions. "Only 70 percent of the stock forms currently utilized in this market are being supplied by direct mail business," she noted. "However, because of the personal service and competitive pricing being offered through the independent supply channel, companies are responding favorably to establishing relationships with mortgage forms distributors."

Bringing It Home

In sum, the manufacturers agreed that the real estate market will continue to flourish. Spangenberg said that end-users will benefit from the "organization, commitment and professionalism" that printed products demonstrate.

Alber encouraged distributors to tap into the largely un-penetrated market. "This is a very easy area to get into," she said. "The services and compliant forms that are available through a partnership with Broker Forms can help distributors realize successful opportunities."

By Cynthia T. Graham