This past week I was shopping new home communities in a Midwestern city. Although I was born in the Midwest and spent many years there, I really do not care much for cold weather and that white stuff on the ground is no longer as enticing as when I was a child and would eagerly take advantage of the opportunity to go sledding. But a new assignment is always exciting and I was looking forward to seeing what the local housing market had to offer.
In one community that I visited I was warmly greeted by a young lady named Susan who welcomed me to the development, presented a brief introduction to the property, the area and the builder and then escorted me through the models homes. When we returned to the sales office Susan began her closing presentation which started with the following pitch: “My builder has just reduced prices by $40,000 and now the homes are even a better buy than they were three years ago. With the current low interest rates, now is the perfect time to buy.”
Although this happens rarely, I was stuck for a response as there were so many thoughts that came rushing through my mind, such as “well that is a great starting point, but how much lower will the builder go?” Or, “$40,000 does not seem like much as my home lost 40% of its value over the past three years”. Or, “gee, don’t you even want to know if I liked the homes?”
Susan could become, I suppose, a good new home salesperson. But it was obvious that she was both new to the business and totally untrained. She never qualified me for the home. She never found out anything about me except my name. She never had me become involved in the sales presentation. All she had to offer was a price discount without her first having established for me the underlying value.
Shortly after I first entered the homebuilding business, I was contacted by a citizens group who were interested in developing affordable housing in one of the northern suburbs of Chicago and my wife and I drove up to the north shore one evening to visit with this group at one of the member’s homes, a rather palatial estate on a bluff overlooking Lake Michigan.
After the meeting we were sitting around visiting and my wife, who was talking to one of the ladies in the group, complimented her on the necklace she was wearing. The woman responded that she had bought it in Morocco and asked my wife, “You have been to Morocco, haven’t you?” At the time, my wife and I were in our mid-twenties; we were certainly not wealthy and had definitely not been to Morocco. Until that evening, we were rather proud of the fact that we had managed to travel to England, France and Italy within the first few years of our marriage.
But driving home that evening my wife turned to me, related the conversation and said, “the next time I encounter that woman (I believe she actually used a different term to describe her), you can bet that I will tell her about our recent trip to Morocco.” And within three years, we had made that trip but, unfortunately for my wife, we never again encountered that woman.
To the best of my knowledge, that was the only trip we have ever taken that was motivated primarily by spite. And in all fairness, it was a wonderful vacation. But remembering that trip got me thinking about motivation and the fact that now, more than ever, we need to understand what motivates a customer today to assist them in buying a new home.
When I first started in this business, the motivation of our buyers was fairly simple and homebuilders addressed the needs of the market. Buyers purchased to fulfill the American dream of homeownership. Housing was a secure investment; appreciation usually ranged from two to four percent per year and home values seldom decreased in value. While certainly modest by the standards of a few years ago, that increase in value met the needs of our buyers. By the time the mortgage was paid off, there was typically a substantial nest egg remaining for their retirement needs above the cost of their new move-down home or condominium.
Certainly the business of homebuilding has changed in the past few years, especially from the sales side. Housing became more than just a home in the first half of the past decade, it became an investment commodity. We really did not need to know how to sell as the “build it and they will come” philosophy proved true. Our salespeople became order takers. We saw rapid and dramatic appreciation in housing values in most markets, unfortunately immediately followed by equally rapid and dramatic depreciation, and then came the foreclosures and short sales.
And now the market has returned to “normal” and we have lost, at least for the next several years, any potential for selling the great investment value of housing. But I read a Facebook post today which said that “housing is still the best investment in your family!” And I remembered that was the tried and true selling proposition when I started in this business and that is where we have returned today.
Most of the people selling new homes today never lived through the days when that was the only tool we had available to make the sale. So for the “newbies”, let me share what I believe to be the basics of new home sales. To determine the motivation of a prospective purchaser, all we have to do is ask the proper questions. And the answers will provide the basis for an individually crafted and personally relevant approach to both the demonstration and the closing, variations on the central premise that “a new home is still the best investment in your family”.
Now that we have returned to the need to sell our new homes, perhaps we should consider training our new home sales people to be professionals and learn how to sell. Of course, that would require that we hire back the sales managers and spend money for training, both internal and external. But that’s just my opinion.
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