Given the insights offered by the American LIVES survey, we asked a number of successful new-home builders and sales managers how they are getting home shoppers to commit to become home buyers. They responded enthusiastically, offering a number of techniques that are working for them.
1. Convince shoppers that there will be no better time to buy.
“Explain that there is no gain to waiting,” suggests Ken Trainer, president of Chesmar Homes in San Antonio. “Interest rates are not going to go to zero. Depreciation is not going to continue to happen. Commodities [used to build homes] are not going to dive in price.”
“We tell them that three or four years from now the folks who bought homes today are going to be considered geniuses,” says Chip Brown, director of sales for Charter Homes in Lancaster, Pa. “You are not going to find a better time to look at buying a new home.”
2. Find out why they are shopping now, and fulfill that need.
“Folks don’t come to model homes these days unless something is going on in their lives” that causes them to really need to make a change, says Brown. “The puppy is now a dog. The baby is in elementary school.”
“The heart of the matter is figuring out how buying a new home improves their life now,” agrees Cathy Bergstrom, vice president of sales for Miller & Smith, a Washington area builder. “In people’s minds there is usually something that triggers them to go and look.” It might be a new job or a new baby or a need for more or less space.
3. Move the focus from making a deal to satisfying emotional needs.
Eighty-two percent of the survey respondents said that spending time at home with their families has become more important, compared with 75 percent in 2010, yet they come into sales centers asking about incentives.
“You try to get people away from thinking about their home as a commodity,” says Brown. “You don’t live in an incentive. You don’t live in a discount. Get them engaged emotionally in the home.”
4. Create urgency to buy now.
“We limit the number of homes that get released at a time, limiting supply,” says Bergstrom. “And we increase our prices with each group. We try to give it a sense of urgency. Not putting as much out there for sale helps focus the customer on the idea that perhaps the home they want will be gone if they wait or the price will change.”
A similar technique has helped Heartland Homes of Pittsburgh. It offers previews of new lots to “preferred customers” before opening them up to the public, resulting in standing room–only grand-opening events where a large number of the lots are spoken for the first day, says Kevin Oakley, Heartland’s director of marketing.
5. Make friends with Realtors.
American LIVES’ survey shows that close to half the home shoppers were using Realtors, and the number has climbed, most likely because they think they need help navigating the existing-home, foreclosure, and short-sale markets.
“I can understand why they answered that way,” says Pat O’Flynn, sales and marketing manager for Chesmar Homes. “I think that the market today gives inexperienced buyers the feeling that they are out of their element and they are looking for a professional to underscore that they are making the right decision. … Professionals who are succeeding in this economy bring something to the process.”
“[Realtors] are tremendous partners of ours,” says Brown. They always have been, and we realize that somewhere between 35 percent to 40 percent of everything we do is coming from that base of Realtors.”
6. Offer a product buyers can’t get in resales or with foreclosures.
“I feel like homes built in the last five years have really changed,” says Oakley. “I think the design and the [architectural] appeal is getting better.”
“Miller & Smith offers a new product for every new community,” says Dale Hall, vice president of operations and a principal with the company. “We build to a specific site, creating a new product for that customer each time. And we have all embraced flexible floor plans, bigger kitchens, and more open spaces,” features that are hard to find in older homes.
7. Use the energy efficiency of new homes to widen the divide between new homes and resales.
“With Charter [Home’s] focus on the energy-efficient designs of our homes, we leverage that as much as we can when comparing our home with a resale. Even if the resale was built five years ago, the difference in energy efficiency is a pretty wide delta,” says Brown.
8. Emphasize the affordability of new homes today and the ease of purchasing new construction.
“I have sold quite a few homes to individuals after they have attempted to take advantage of those perceived good deals [on foreclosures and short sales],” says O’Flynn. “They got frustrated looking for that deal and ended up buying a new home because, frankly, they couldn’t do as well with a resale. The foreclosure price was not as good as they could get with us.”
“I contend that a new home is a known cost,” says Trainer. Many builders also are giving guaranteed energy costs, and include warranties that should keep home buyers from having to face unexpected repair bills for years.
“People get very disenchanted” shopping for a used home, says Bergstrom. “Here they get to build their own dream. They are not conforming to somebody else’s dream.”