The growing popularity of collective buying websites that offer substantial discounts to registered users with a host of different businesses and services has finally spilled into a housing market that, over the past four years, has tried all kinds of creative incentives, giveaways, and other gimmicks to get reluctant home buyers into builders’ sales offices and models.
About a week ago, Van Metre Homes in Northern Virginia started offering customers a way to save up to $5,000 in closing costs by purchasing a $50 coupon through HouseTipper.com, which touts itself as the only collective buying platform for the real estate and home and garden sectors.
Through 1 p.m. on Tuesday, HouseTipper.com had sold 10 vouchers, which buyers can use as part of their purchase of a Van Metre–built home through October 8. This promotional campaign, the first to involve a home builder, is scheduled to continue through next Monday.
HouseTipper.com is the latest iteration of the wildly successful buying site Groupon, which recently filed with the U.S. Securities and Exchange Commission its intention to launch an initial public offering by 2013 that is expected to raise at least $1 billion. Between 300 and 400 copycat collective buying sites have emerged since Gropon launched in November 2008.
Indeed, the founders of HouseTipper.com—Tigue Bonneval, a broker with Coldwell Banker One in Baton Rouge, La.; and his first cousin (who asked to remain anonymous), whose background is in business and venture capital—initially wanted to focus on restaurants. “Then we realized that real estate was virtually untapped,” says Bonneval, who spoke with Builder on Tuesday morning.
Here’s how HouseTipper.com works: It negotiates deals with developers, Realtors, property managers, store owners, and a variety of other businesses. Customers who come to HouseTipper’s site and are interested in the discount being offered can buy a voucher. Once a preset number of vouchers are sold—in Van Metre’s case the number was three sales—the “deal” goes into effect, the customer is eligible for the discount, and his or her credit card is billed.
Since it started seven months ago, HouseTipper.com has been generating a lot of publicity, with articles appearing on Fox News, Bankrate.com, Inman News, and UrbanTurf.com, which focuses on the real estate markets of Washington, D.C., and Chicago, and where Van Metre Homes first became aware of the platform.
Van Metre, according to its director of marketing and design Krista Peterson, had been looking to include collective buying in its marketing for a while. It tried the Washington Post’s“Capitol Deal” program, with only fitful results. The builder also was interested (and still is) in doing something through Groupon.
The builder and its ad agency, Fraser Wallace Advertising, developed a promotional campaign that included banner ads and e-flyers to prospective customers. Customers can use the vouchers for up to $2,500 in closing costs on homes valued under $500,000 and for up to $5,000 on closing costs for homes priced above $500,000.
Van Metre also promoted the vouchers in conjunction with its involvement in a new HGTV show called Showhouse Showdown. Two interior designers were each given $72,000 budgets to create competing interior designs for two identical Van Metre townhouse models. The show premieres on September 12.
As part of the HGTV event, Van Metre offered $2,500 in house design upgrades to customers who purchased a house by July 31. Last week, it had nine gross sales, and Peterson says that several buyers wielded HouseTipper vouchers they had bought.
HouseTipper makes its money selling the vouchers, and the goal, explains Bonneval, is to create a volume platform that has myriad deals cooking every day with all kinds of housing- and real estate–related businesses across the country. For example, it’s currently offering $48 vouchers that entitle the buyer to $1,200 toward the design and home installation of solar panels from South Coast Solar. A recent promotion with a pest control company in Baton Rouge sold 26 vouchers, at $14 a piece, over three days. Bonneval adds that his company eventually intends to hire salespeople to negotiate deals in cities nationwide.
Right now Bonneval and his cousin are financing HouseTipper.com out of pocket. “But we’re looking for venture capital,” says the cousin, who sees this site as a marketing tool that “gets people off the fence, offers them a great deal, and creates some urgency for the product.” He and Bonneval say Lennar has shown some interest in their collective buying platform, and Bonneval plans to pitch to D.R. Horton soon. “We’re trying to build a community of builders, brokers, and real estate agents,” the cousin says.
John Caulfield is senior editor for Builder magazine.
Learn more about markets featured in this article: Baton Rouge, LA.