For those not in the industry, you may not understand the size and importance of the Wholesale Home Builder. 

If you are in the industry, you should be asking how and why this B2B model is becoming so prominent and successful. 

In the 23/24 FY, the wholesale model made up more than 30% of our project building industry. It is a RAPIDLY growing sector. 

Yet, no one talks about it. 

To be clear, “Wholesale” in this sense indicates builders who don’t typically have publicly available display homes or sales consultants. They rarely take enquiries directly from the public.

Rather, they build partnerships with Referral Groups, who refer their clients to them to build their investment or first / second home. 

It has led to some of the fastest growing home builders in the industry (including one with over 320 contracts in their second full financial year). 

According to Australian Construction Data, 17 of QLD’s top 35 builders are either 100% wholesale or have a significant wholesale arm to their business. Those builders alone contributed 3480 builds last financial year. 

The simplified model difference is: 

Traditional Retail Builder > Client

Wholesale Builder > Referral Group > Client

The Wholesale Builder pays a healthy commission (anywhere from $15k – $45k, typically $30k – $40k) to the Referral Group when their client signs a build contract with them. 

So who are these Referrers? 

The largest referrers can be builder brokers, financial planners, property advisers,  investment advisors, buyers advocates, but also include accountants, real estate agents, mortgage brokers, property developers, buyers agents, ‘property clubs’ and a smorgasbord of other imaginative titles. 

For many of these groups, it is a completely unregulated, unlicensed space. 

Why are the Referrer Groups taking so much market share? 

What it all boils down to, is that Referrer Groups now create 30% of the sales in the home building industry in Queensland. How are they doing it? 

As you would know, and for better or worse, home building at volume is a sales and marketing business. The high performing referrer groups build trust quicker and are providing a higher level of care than many retail builders in the first home buyer and investment sectors. 

How? For first home buyers, the good groups (i.e. buyers advocates or builder brokers) understand finance, educate their buyers and connect them with quality mortgage brokers. They help them negotiate and acquire land, and then hold their hand through the design, quoting and ultimately construction of their new home. 

For investors, they develop long term strategies and take away all the stress and hassle of dealing with land developers, builders, and property managers. They provide cash-flow and depreciation reports and generally make it a seamless process. They also provide an easy pathway to NDIS, Co-living and other higher yield options. 

As in anything, there are some very good ethical operators who are creating significant value for their clients. There are also a few in it for a quick dollar which will and do give this side of the industry a bad name. 

As for the Wholesale Home Builders? 

From our experience, the good ones (and the fastest growing) have some of the highest standard spec in the industry (e.g. ducted a/c, waterfall benches, undermount sinks, solar) and they are genuinely turnkey and fixed price (inc. site costs).  They have highly efficient contracts admin and the ability to source and exclusively access land better than the largest retail builders. 

Many are now successfully developing their own estates to provide stock to meet the demand. 

Some of the largest wholesale builders in the 23 / 24 financial year were:  

• FRD Homes (478 Homes)
• Glenvill (by their brand APlace) (388 Homes)
• Avia Homes (324 Homes)
• Allegra Homes (358 Homes)
• HomeCorp (498 Homes*)
• Gallery Group (252 Homes)
• Karston Homes (213 Homes*) 

*Mix of Wholesale and Retail

Data sourced from builder QBCC licence information. 

What’s next? 

Given that the growth of the wholesale market is largely dependent upon the growth of the Referral Groups who bring the clients to the table, it will be interesting to see how it develops over the coming years. 

We’d love to hear your perspective.

Author: Peter Love

Pete was the General Manager of one of Australia’s largest home builders for six years, before starting his own business as a buyers’ advocate, building over 200 homes in five years across South East Queensland and working with over 20 builders to deliver them. Across this time he has seen most facets of the industry, the good, the bad, and the beautiful.