Through mid-October, San Mateo, Calif.-based Regis Homes—the residential for-sale branch of the builder/developer Sares-Regis Group—has had 5,800 prospects stroll through its four active communities in the Northern California towns of Palo Alto, Mountain View, Fremont, and San Jose. That works out to 52 visitors per week (two of the communities opened later in the year) and has resulted in 132 sales, setting Regis apart from many builders, who are struggling to compete against foreclosures. What's the builder's secret? It isn't a magic wand, says Rob Parker, the company's senior vice president of sales and marketing. Instead, Regis' recent success has stemmed from a company strategy for each community that includes aggressive online marketing and pricing, quicker deliveries, and the recent debut of a new series of homes. (The area's still-strong employment numbers have helped too.)
Here are the components of this successful sales strategy, according to Parker, who spoke to BUILDER earlier this week.
Interest rate buydowns: Buyers willing to pay two points can lower their interest rate on a 30-year fixed-rate mortgage to 4.75%. “You need to lower that rate under 5% to get people’s interest, and we’ve been able to work with our lenders to offer buyers a more affordable way to buy a home," Parker says.
Doubling its online presence: Over the past six months, Regis has drastically reduced its print ads, and has shifted its spending to pay-per-click marketing to ensure that its communities come up as one of the top three in any buyer’s word search on Google. Parker says the keywords his company has focused on are “new home,” the name of the community’s city, and “real estate.” The builder is also trying to get more exposure, via searchable words, on different blogs that home buyers might visit, as well the social networks Facebook and Twitter. “That requires more maintenance and man hours,” Parker says.
Speedier delivery of homes: In the past, Regis would leave its homes unfinished to allow buyers more time to make choices about such amenities as flooring and appliances. Now, to accommodate buyers who want to move in quicker after they sign a contract, Regis is finishing its homes to deliver them within 60 days. Standard features include hardwood floors, window treatments, and an entry-level stainless-steel appliance package. “These homes always sell first,” says Parker.
Selling new homes as if they were resales. With so many unsold existing homes on the market, Regis has dealt with the reality that buyers come to the table with different expectations about price. So the builder encourages an offer-counteroffer give-and-take between Regis buyers and its preferred real estate agents. Parker says this accomplishes two things: It allows agents to understand better what’s important to buyers. And by always giving buyers the last word, “they feel they got a really good deal.” Regis does have a price below which it won’t go, “but we coach our agents to manage [the transaction] to that number,” says Parker, “which means that they become more of an advocate for the buyer."
Lowering price without lowering value: In a down market, “no one cares about the quality of your baseboards,” quips Parker. Instead, price is foremost in any conversation. However, brokers had been telling the builder that its homes were priced at least 15% above comparable models being offered by competitors, and the gap widened significantly against KB Home’s Open Series. “It’s a tricky business right now” balancing price and quality, he says. So about 30 days ago, Regis introduced a series called Signature, which Parker says has been “value engineered” with more economical appliances, molding, hardware, plumbing, and millwork. In some cases, central air conditioning has been taken out as a standard feature. Regis is running separate advertising for these homes, and a certain percentage of its production going forward will be Signature models. Parker says the brand has already become more prevalent in Regis’ higher-priced communities like Cedarbrook in Fremont, Calif. (A 2,325-square-foot Signature home in that community is priced at $799,900.)
Regis Homes currently has 422 attached home units under construction, of which 238 are ready for sale, says Parker. That production should carry the company through 2010, according to Parker.
John Caulfield is senior editor for BUILDER magazine.