Centex Homes advertised its "summer clearance" in Fort Myers with "irresistibly low home prices and financing." This offer included "below-market prices" and "some prices reduced up to $228,000," plus "below-market interest rates." The home advertised with a price reduction of $228,000 was originally priced at $458,972, a 48 percent reduction. Wow! This must have brought customers out.

Jamie Pirrello Not to be outdone, Engel Homes offered a "5 7/8 percent, fixed, 30-year mortgage" and "save up to $200K," plus a "Six Percent Bonus Club–Lower closing costs, get a rate buy-down, or apply a 6 percent reduction bonus to your homeowners' association fees." Wow! Centex or Engle? It must have been a tough choice.

Phil Motta, CEO of Los Angeles- and Phoenix-based marketing consultancy The Motta Group, gets real estate. Motta is concerned about the message these ads communicate. "Most advertising messages have both an overt and a subliminal message," he says. "Often, the subliminal message is unintended."

You can communicate in such a way that creates panic. When you advertise price cuts, the subliminal message is: "We're scared. We haven't seen it this bad in a long time. We're so scared, we're willing to sell homes at 50 percent of what we used to sell them for." And builders blame the media for all the negative press!

"When your advertising is focused on extrinsic items, you're not making any claim about the benefits your company offers. Subliminally, you're putting yourself down," Motta argues. If the benefits your brand offers are not worth mentioning, the consumer can only assume your product has no point of differentiation.

Motta advises builders to stop advertising "fire sales" and focus instead on benefits. Builders need to create a bond with customers. Unfortunately, it only takes a couple of builders, reinforcing the message that things are really bad, to cause significant damage for everyone.

"The purpose of a brand is to preempt consumer due diligence," Motta says. "Brands influence customers to short circuit the analysis and evaluation process."

Consumers choose you because they trust you; your brand offers quality and value. You have a choice: Coke or an unknown cola. Is it worth taking the chance, or do you go for the "real thing?"

Motta argues the current climate for home builders is similar to a NASCAR race.

"The yellow flag is out; we haven't stopped the race just as we haven't decided there is no longer a need for housing," he says. "What we have is a temporary change in conditions, and the condition will improve in the future.

"In a NASCAR race, your competitors are strategizing about their next move, but they can't change positions. In home building, there are no such rules, yet some of your competitors are slowing down and letting others pass, while others are pulling off the track and shutting down their engines."

Should builders stop marketing themselves? "When the green flag comes out, you're in the lead and gaining market share at your competitors' expense," Motta says.

Secondly, don't focus on price cuts and other extrinsic items; focus on the value your product offers. "You want to predispose potential customers to you, so when they come back into the market you're the guy they naturally think of," Motta suggests.

When the market recovers, those who marketed themselves as low-value producers will be perceived as such. "People will resist buying from companies who gave things away; they're not one of the premium brands." On a subliminal basis, potential customers will think: "I remember how much they cut their prices. If they had so much fat in their pricing then, they probably have it now."

The message you send today impacts your business tomorrow. How can we ask the media to communicate a positive message when builders continue to paint such a dismal picture? The yellow flag is up. Are you still in the race?

–Jamie M. Pirrello is the CEO of Vision Homes USA, a Fort Myers–based home builder.