Perhaps I pay too much attention to what occurs in our industry but I have recently noticed a number of situations in the homebuilding business where the truth seems to be lacking. I am not suggesting that the people involved were actually lying but, rather, that when the truth needed to be told it was conveniently not volunteered. So that would seem to me to make these situations “untruths” by virtue of omission.
Although Colonel Jessup (A Few Good Men, 1992) suggested that we can’t handle the truth, I would disagree. Not only can we handle the truth in the homebuilding industry, we cannot survive and prosper without it. We need to hear the truth every day and listen to it every single time.
A builder who is active in one of the markets in which I work fired his real estate broker last year because he was unhappy with the sales staff consistently bringing in “low-ball” offers. The builder reportedly interviewed six different firms before selecting the one that appeared to him to have all the right answers yet the new sales team soon was bringing in the same “low ball” offers.
If this builder (thankfully not one of my clients) would have asked me, I would have told him that his homes are very ordinary, offering nothing that cannot be obtained from several other builders currently operating all over his local market. When “low ball” offers are made, it is always due to the fact that the buyers do not perceive the value of the homes. Although part of that perception might be due to lack of talent on the part of the sales staff, more probably it is caused by the builder having failed to provide a marketable USP (unique selling proposition) within the home and community. In that situation, price will always win out and this builder will continue to receive low price offers as will his competition and the builder that accepts the low price offer will make the sale.
I was not present when the new broker was hired but I would wager that he was eager to get the listing and either did not know what the reality of the builder’s position in the marketplace was or, giving him the benefit of the doubt as to his knowledge of the market, conveniently failed to inform the builder of the facts. This new broker also has a reputation of using a builder’s new home listings to sell resale housing so I will also wager that within the year the builder will fire this broker too and the cycle will begin again.
One of the talented advertising agencies with whom I have worked created a new marketing campaign as requested by a builder (again, fortunately not one of my clients) and showed me the program as a sample of their recent work. The campaign included major revisions to the homebuilder’s web site and a new social media effort plus new print ads, billboards and direct mail, all of which were admittedly very well done. Thousands of dollars were spent but, from what I have subsequently heard, although traffic increased slightly, there was no discernable improvement in sales and that was no surprise to me.
I am familiar with the market in which this builder operates and I have seen this builder’s homes. Once again, they are simply nothing special. In fact, he has effectively been building these same designs for the past ten years and now almost every other builder in the market offers the same homes. But even worse, now this builder has sold out all of the close-in locations that he had and his new communities are on the far fringes of the urban area. So he is offering stale designs in less desirable locations and competing not only with numerous other builders but also his own resale houses which enjoy superior locations and lower cost basis.
I know that business is slow for many ad agencies in the homebuilding industry but was there not an obligation on the part of this agency to have at least suggested to the builder that prior to changing the web site or running new ads he should look at his market position and strategic plan?
The reality is that even the best new sales team cannot solve the problem of homes lacking competitive superiority. And the best new advertising campaign cannot cure the inherent underlying issues of location and price. In both cases they are “tactical” attempts to correct “strategic” failings and are, therefore, inherently doomed to failure. I believe that the broker in the first situation and the ad agency in the second situation failed in their ethical, moral and business obligations to tell the truth. But I also fault the builders in both situations for failing to seek out the truth.
As my dear friend Bonnie Alfriend said in a reference for me,…”As one mutual builder client shared with me, ‘I may not always like what I hear from Dan but one thing is consistent; he always tells the truth and he is always right.” I am not certain that I am always right but I always tell the truth because while the truth may not set you free (please forgive the adjustment to John 8:32) it is a start to understanding reality and creating an opportunity for success in homebuilding. And I believe that every consultant and related industry professional has an obligation to tell the truth to their builders. But that’s just my opinion.
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