By Pat Curry. It takes a long time to get water lined up in Arizona. Once you have it, you don't want to waste a day recouping your investment. The last thing Del Webb wanted to do as it prepared to launch its first active adult country club community, Corte Bella, near Phoenix, was to put off selling until the models could be built.
"We wanted to get the community to market a lot faster," says Deborah Blake, director of marketing for Del Webb's active adult communities in Arizona. "We needed to sell a vision."
What the buyers saw were computer-generated, virtual models. From their home computers, they studied floor plans, chose options, and picked elevations. They printed out e-brochures with directions to the sales center.
What Del Webb observed was the sweet smell of success. "We sold 38 homes in 30 days with not a stick in the ground. And 15 golf memberships," Blake says. She estimates she'll close 75 homes by the end of the fiscal year. Without the virtual models, she thinks she might have done a third of that. Plus, the community is quickly building its backlog, and she's able to hold off building the model park. It all helps the pro forma.
A virtual tour of the golf course and clubhouse will allow them to phase in the amenities package. "That's the true benefit," Blake says. "We can show them the whole community, even though they'll only have the fitness center next year, the social center the year after, and the golf course the year after that. We can create the urgency early on.
By putting off a $2 million amenity for a year, Del Webb saved $420,000 in carrying costs, Blake says. "If you can push off model parks six months, [you're delaying spending] millions of dollars. From a business standpoint, there are a lot of opportunities. A guy running a business would have to say it's worth looking at."
While computer generated rendering programs have been available for years, their true set up and operating costs and their limited acceptance by buyers rendered most of those programs a disappointment to builders. But that's changing, especially as set ups have become much easier to build and an increasing number of buyers are more comfortable interacting with sales center kiosks or investigating their options from the convenience of their own home offices.
As a result, builders across the country are looking closely at a range of virtual tools, from community overviews to design centers that allow buyers to pick their options from home, calculating the impact of cherry versus oakcabinets on their monthly mortgage payment. Buyers record their preferences on their own Web page, making design center appointments a pleasure instead of an exercise in frustration.
One of the primary driving factors is tremendous savings in model homes. Blake says virtual reality kiosks in the sales center at Anthem's country club community allowed her to showcase five popular new floor plans without adding any of them to the 12 model homes already in the park. People started playing with the plans on the screens and asking questions.
"It kicked off the qualifying process," she says. It cost $11,000 per plan, a "single-digit percent of what I would have spent on a model, and I got incremental sales."
Real estate marketing experts say that a major benefit of virtual reality is its ability to capture the character and essence of a community, and the flexibility to update the sales presentation with new floor plans and clubhouse images.
"It's so much livelier than standing and looking at a static display," says Rich Carlson, president of active adult marketing consultants Carlson Communications. A salesperson can tailor a presentation to the buyer's interests, burn a CD, and give it to the customer to take home.
Counting the Cost
The price range on computer-created virtual models runs between $5,000 and $10,000 per floor plan, the vendors say. Aareas Interactive Inc., in Naples, Fla., prices its virtual design center in the $25,000 to $30,000 range. A community lifestyle virtual tour, like the one Del Webb is doing for Corte Bella, will be in the six figures, Blake says, but notes that it's no more expensive than printing a high-quality, four-color brochure that can quickly become outdated.
One thing builders need to understand about virtual reality is that it takes time to accurately depict their models and interior merchandising, says Marc Lamoureux, president of Alpha Vision, a Montreal-based company working on Corte Bella. You need at least three, and preferably six, months of pre-sales to justify the cost. That needs to be prefaced by a minimum of three months for design.
Bernie Glieberman, president of Crosswinds Communities, in Novi, Mich., likes virtual reality so much he bought a company to do it in-house. It's allowed him to cut back on his other advertising, taking out smaller ads that drive traffic to the Web site. As a result, it hasn't added to his marketing cost, he says.
Glieberman, along with other builders, says the systems have saved costs in other ways, particularly in correcting countless architectural issues, from window placement to interior traffic patterns, which can be more clearly seen by making the plans 3-D. Crosswinds also has used the renderings to help planning boards visualize a site plan, to present a business case to bankers, as well as to convince buyers to write checks.
"With a floor plan, people wouldn't firm up deposits," Glieberman says. "Virtual reality speeds up the whole process. If I start out with pre-sales, taking firm deposits before construction, I could be picking up six months." (Crosswind's online offering can be seen at www.crosswindstides.com.)
WCI Communities, based in Bonita Springs, Fla., is another builder that has profited from using virtual reality extensively because of its emphasis on high-end condominiums. They take one to two years to build, and pre-selling is critical. The tours can be viewed on the company's Web site and in the sales center. They also are available on CDs and DVDs, says Mike Curtin, senior vice president of sales and marketing.
Where WCI gets the real bang for its buck, he says, is on its golf course tour.
"Golfers are crazy people, they really are," says Curtin, counting himself among them. The course has to be to their liking, but it's tough to tell how good a course will be until it's grown in. That can take a year or more.
WCI's virtual tour is from a bird's-eye view, flying the course 100 feet off the ground. The buyers can get a feel for the holes, the terrain, the hazards, and the difficulty of the course. Plus, buyers can preview lots that line the course and see their view before the course is even built.
Curtin should know. He used virtual reality to review every lot in Waterlefe, a community in which he bought a home.
"It's remarkable," he says. "I could show you the virtual view I have and the real picture, and it's very difficult to tell the difference. It's very, very realistic."
It had better be, Glieberman says. Planning commissions, banks, and buyers will allow a fudge factor on a rendering, but virtual reality needs to be a mirror image of the real deal.
"It looks so real, you have to make sure the lights and landscaping looks like that," he says. "You must follow through. They see it as a picture, not a rendering. We're very careful. The house has to look like that when it's finished."
An emerging area of the field is virtual design centers. Home buyers have remote access to all the options and upgrades available on their floor plan. They can sit at home and click between oak and cherry cabinets, see what it will look like installed, and calculate the impact on their mortgage payment.
"By the time the customer is ready to sit down with the designer, the builder's life is a lot easier," says Aareas Interactive president Frank Guido. "You don't go through 'Do I pick beige or taupe?' Now the designer can give you good critique or design tips, or concentrate on selling upgrades."
Builders, vendors, and analysts are unanimous that virtual reality won't ever replace models. A home purchase is too large -- and too emotional -- to be done without them.
Marketing consultant John Schleimer, of Roseville, Calif., says builders cannot overlook the importance of fully merchandised, on-site models, especially for first-time buyers who are emotionally stimulated by models. Active adult buyers tend to be more skeptical of builders' claims of quality and execution and want to see for themselves.
Models won't disappear, but they'll be used more efficiently, supplemented by cyber-versions, because they give builders more time that can be spent selling.
"Nothing to date will take the place," says development consultant Dan Levitan, of Ft. Lauderdale, Fla., "of a live salesperson touring a live buyer through a live model."
Levitan, though, says he believes virtual models are great in pre-sale situations because "most buyers can't read a plan" and it's tough to interact with a customer while he's viewing one. He prefers to use them for warm-ups, or for holding customers until they can meet with a salesperson. He recommends, however, limiting their use to the sales center, staying away from Web-based tours that prospects can access from home.
"I think it's dangerous, to be honest," he says. "The model itself is small, the photography is not especially good, and it's not a selling experience. The physical model that's available is often not seen if someone sees a virtual model and gets turned off. You can't make a sale because of it, but you can lose a sale because of it. If it's in an environment where a sales person is present, it can be a very positive experience."
"We're all about saving time and customer satisfaction," Blake says. "This helps bring the two together."