By Oren Jacobson, Market Analyst - New Home Star
While the calendar tells us a new year is well upon us, it is the coming of spring that truly signifies rejuvenation. Most real estate professionals are trying to make it through the dreary weather and put some deals together in anticipation of the always busy spring selling season. But you don’t need to wait, in fact you shouldn’t wait to get a head start on taking advantage of the next seasonal bloom in the industry. For those of you who are proactive professionals, here is a list of things you can do now to make sure you’re ahead of the market, and your peers, when the spring rush comes your way. For everyone else, when you’re being outsold this will be why:
Market your homes to your prospect list earlier.
The difference of a few weeks can make a big difference in terms of the price a seller can capture. Why? Supply and demand. Sure, more buyers are out there in April, but there are a lot more sellers out there too. More supply always works against sellers. More options means buyers want to go to more showings. More showings mean more days on market. More days on market means less leverage and less leverage means a lower price. Having a home ready to hit the market, in prime condition, on the early side of the spring market puts your prospect at an advantage. Think about it, when they sell their home you sell yours. When a prospect sells their home faster, and for more money, their perception of the market is better; they capture more profit and are less likely to demand as deep of a discount too.
Understand the impact of interest rate movements and get comfortable talking about it.
Interest rate movements will have a larger impact on customers than pricing in the short run. You need to be paying attention to those moves. If rates go up, let your customers know the impact and help them avoid more expenses. If they go down, make sure they know what they may gain. If a customer comes in your door and you don't discuss the impact of interest rates with them, you’re failing your customer. Frankly, you’re failing. That may sound harsh but it’s supposed to--this is critical. Nothing that happens with your price in the near term will affect your buyer more. How much does the movement in rates cost someone in your community over the life of the loan? How much cash do they lose per month/year with a move of a quarter, half, or full percent? If you don’t know these answers for every single price band in your community, and aren’t communicating this to every single customer, you’re missing the boat.
Become an expert at defending the value of new versus used, if you aren’t already. If you think you are, you can do better. I know that's true because we lose to resale a lot. All builders do.
90% of the action in the market will be a used home. So why are you dedicating 90% of your time trying to figure out how to sell against the other builders? Your buyers, and many of their agents, wrongly believe that a resale home and a new home should be compared head to head in terms of pricing. They are wrong, but I can’t blame them because we aren’t doing anything to change that perception. Great sales professionals will do three things this month on this topic. First, they will study the various ways in which new homes add value (and lower ownership costs) for their customers and they will figure out how to quantify it (put numbers to it). Second, they will reach out to agents in the area and set up meetings and presentations tailored to educate them about these benefits. Why? Everyone wants information. Information leads to knowledge. Knowledge is key to credibility. Credibility is key to the general resale agent’s ability to earn. That information (benefits of new) helps an agent look smarter and more informed to prospective customers, helping them gain more clients. Quite frankly, people like to do business with people who help them earn more business. It also doesn’t hurt that they will learn that with a new home they can go a little above the buyer’s stated price point and keep the overall cost the same. Finally, the best sales professionals are talking with every customer about this in every presentation.
These three core ideas are the most critical things you can focus on right now. Help accelerate the buyers who have a condition preventing them from buying. Maybe it’s not that they need to sell a home. But, keep the same focus in mind. What is the next step they need to take to be ready to buy? Gain commitment on taking that step. Enough steps and you end up at a purchase. Ensure your customers understand the opportunity and risks of the current market. Be the expert who educates them. Earn their trust and ensure you help them maximize the opportunity and avoid the risks. No one should pay more than they have to and try not to assume they know. Educate them on the impacts. Finally, sell the value of new. Your customer considers the new home and the used home to be the same, it’s your job to make sure that view evolves. If you find yourself calling your sales manager telling them you need a bigger discount because they are looking at a resale too, that is a good sign you aren't strong enough in this area.
Oren Jacobson, Market Analyst
Oren Jacobson holds an MBA with an emphasis in strategic management and is currently working on receiving his master’s degree in economics and policy analysis at DePaul University in Chicago. As the lead strategic marketing analyst for New Home Star, Jacobson specializes in helping builders maximize their asset positioning through market segmentation, consumer alignment, and data analysis. He also leads the NHS team in the creation of training tools and resources to develop and enhance their expertise in sales.
