Homes are being sold today across the country. While the housing market in many areas of the country will likely remain challenged for the next fifteen to eighteen months, I believe that there is much more that each of us in the homebuilding industry can be doing to increase our sales and our profits,.
My wife and I were in Chicago last month to attend a family wedding. The bride was the daughter of my first cousin and the ninth of ten children in that generation to wed (only our older son remains single). There were several dinners and other family gatherings over the extended wedding weekend but the event that is foremost in my mind is the rehearsal dinner at which my eldest cousin, who is 70 years old, introduced me to his friend as his “baby cousin”. And that reminded me once again that we are all products of our environments and subject to the limitations and specific restrictions of any given situation.
I spend a great deal of my time on the road with clients at their communities around the country and when I am home in Florida with my wife we will often meet people from her environment. She is a school teacher, commonly known as Miss Stephanie, and I am often introduced to her students, past and present, and their families as “Mr. Stephanie”. In New York, Tennessee or North Carolina I may be Daniel Levitan, well known strategic consultant and business coach to the homebuilding industry, but in south Florida I am “Mr. Stephanie” and in Chicago I am “Michael’s youngest cousin”. Everything is relative and situational.
That brings me to the point of this blog – all members of the homebuilding team need to take the time to find out with whom we are dealing. What are their individual needs, wants and desires, and how can we satisfy them to our mutual benefit?
For home sales professionals, we need to understand that the decision by potential home buyers to purchase or not purchase often is impacted greatly by their own background and situation as well as the timing of the moment. When teaching the Institute of Residential Marketing Course I, Understanding Housing Markets and Consumers, I make it a point to expand on the basic course content which includes an introduction to VALS 2 (the Values, Attitudes, and Lifestyles system developed by the Stanford Research Institute). However, if we are to be successful in selling housing, understanding and embracing that system is only a beginning.
One of the best ways that I know of to truly understand our homebuyers is to take the time to ask them questions. During the sales process the visitor interview is essential in giving us direction to position our sales presentation to the individuals with whom we are dealing. Do we understand their motivation in looking for a new home? If not, how can we create a professional presentation that addresses their needs? Have we fully explored the prospects’ opinions on resales, short sales and foreclosures? If not, how can we sell against these competitive opportunities? The interview process requires training and coaching to get it right yet in the currently challenged housing market, many homebuilders have reduced their budgets for sales training and education.
Equally important to understanding our markets is the post-sale interview to discover why our buyers purchased and why others did not and thereby prepare us for the next prospect to walk in the door. But again, much of the consumer research that we used to regularly perform has fallen victim to the housing market and the economy and we are often not even asking the questions.
For homebuilders, a market study will show what home design and sizes need to be built and at what price they will sell. But having that knowledge, how many builders take the time to work with their architects or home designers and subcontractors and suppliers, asking the question of “how can we best work together to hit this target pricing so that we may both prosper?” And how many builders ask the developers “how can we best work together” when the indicated land residual, an absolute factor of the home selling price, is higher than can be afforded?
For developers who need the builders to create real value in the land, how many truly appreciate the limitations that homebuilders are facing today? Financing of the land purchase and the home’s construction, often even when it is pre-sold, is difficult at best. We may have purchased and even developed our ground in a stronger housing market which yields a book value well above what the homebuilder’s land residual will allow. Are there alternatives to lowering the price of our land? How many developers ask the builders “how can we best work together to have you build and sell homes in your community so that we may both profit?”
And for consultants to the homebuilding industry, myself included, we need to stop selling and instead ask the question: “how can I best assist you in selling more homes and increasing your profitability?” And the necessary follow-up question is: “understanding your current cash flow considerations, what is the best way to structure our relationship?”
Unless we ask the correct questions we cannot obtain the answers we need to move forward, sell more homes and prosper. But that’s just my opinion.
Please visit our company’s website at www.levitanassociates.net. to learn more about our background, qualifications and services to the homebuilding industry and how we can assist homebuilders, developers, lenders and Realtors© achieve success.
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