As I travel around the country working with various builders and their marketing/sales organizations, I am astonished at how we undersell against our biggest competition—"used" homes.
We often overly focus on the adjacent new-home builders as our competition, when, on average, only 15% to 20% of homes sold are "new," which means we lose 80% to 85% of the time. This varies significantly by market, and some sales are not just a good fit, but many lost sales should not have been lost. We just needed to adequately sell the value of new versus used.
On top of this, when we win, have we truly sold the value of the new and extracted the premium that the new home lifestyle should command?
Now that we have established our competition and the "premium" objective, let's analyze some great tips for winning:
No More Hijacking the Term 'New'
Let's start with how we cannot buy into using the real estate agent's mantra that every home is "new to you" and that new and used homes are interchangeable. We do not substitute new for used in any other product category, so why do we do it with homes? And we cannot subscribe to the sugar-coated verbiage of resale. Let's be clear—these are used properties, someone else's discarded dream, complete with used toilets and someone else's grunge in the carpets.
Warn Your Buyers of the Joy Gap
We did a longitudinal study several years ago, monitoring the mood swings of buyers as they went through the home shopping process. The ups and downs were identical and all too familiar through most of the process, as buying new or used is a big purchase and stressful. But once the buyers closed, there was a dramatic joy gap between buyers who bought new versus used.
The new-home buyers were focused on celebrating and decorating, while the used home buyers were faced with hiring contractors to make their homes look and feel new. Unfortunately, we need to help buyers understand that predictable joy gap before they make that fateful decision. It is too late once they have bought/closed. And let's face it, HGTV does not help us here—they have trained buyers to think that two hunky guys will show up to fix a house in a one-hour episode.
We know renovations last months and months; it's a terrifying process with many unknowns, and they are miserable to live through (and the contractors are rarely hunky).
New homes are just better without the risk of being a money pit.
Truly new homes come with all new parts and a warranty. It is a roulette wheel of what/how much maintenance/repair will be needed with used homes. And those costs don't get rolled into a mortgage, coming out of the vacation and/or children's college funds.
We can arm our sales folks with facts/figures/costs on the various anticipated repairs of used homes. We also need to ensure buyers are aware of the fallacy of the flip. Used homes may be gussied up with cosmetic enhancements, but they still will have all the costly hidden issues of any used home. We owe it to our buyers to help them open their eyes.
Design for Today's Lifestyle
How we live is a significant factor in today's buying decisions. Even homes just a few years old will not have the latest in new design preferences (home offices, sterile mud rooms, huge great rooms versus formal dining, indoor gardens, garage car charging, community amenities, etc.).
We are selling a new lifestyle, not just the box. We can win even because we have roomy walk-in closets, which many used homes don't have. When was the last time we highlighted walk-in closets as a feature? It can be a simple layup in selling against used.
You might say, "Well, yes, of course, we know all of this."
But have we armed our marketing/sales teams with these critical points and data on how much a new roof or kitchen remodel will cost? We all know it, but we almost know it so well that we take all these great selling features for granted.
When was the last time you trained and drilled your marketing/sales teams on the great new-home advantage? This is a great time to kick sales into a higher gear and consider offering salesperson incentives around selling that premium (which equates to margins). I promise you this topic is always eye-opening and game-changing.