As I talk with home builders and new home salespeople in our local marketplace, I often see a look of “Shock and Awe” in regards to how our current market is changing. I’m often asked, “What’s happening” or “Where is the market going?” Since my crystal ball broke many years ago, I must refer to facts and trends.
Facts:
1. You can’t sell the way you used to.
2. The majority of our new home salespeople have been selling for less than five years and have no idea what a normal market is. Selling to most of them involves taking orders.
3. Waiting for someone to walk through the door is not a strategy.
4. Continuing to build models and inventory homes in areas that have a 12+ month supply of homes is not a strategy.
5. Without proper and continual sales, product and process training, our new home salespeople will not make it in today’s market.
Trends:
1. Home inventory levels are continuing to rise on a monthly basis.
2. Top builders and new home salespeople are continuing to take customers away from those that are struggling.
3. Training and education continues to be a popular subject in many home builders’ offices.
As of the date of this writing, according to the Regional Multiple Listing Service of the twin cities, closed sales are down more than 8%. Pending sales are down 9% and home inventory levels are up 42% over one year ago. While this may sound like the sky is falling, keep in mind these figures are compared against the best real estate market in our history. Even with our current inventory levels, we only have a 5.5 supply of homes (less than 6.5 months is considered a sellers market), on average, in the 13 county metro. Yes, some areas are much higher but some areas are much lower!
Get in the game!
Unfortunately sitting on the sidelines will not get us out of this current market; we must get in the game. Getting in the game involves different levels of commitment from home builders and new home salespeople so I will write a bit of this article personally addressed to each.
Dear Home Builders,
I understand things are a bit painful right now and you may find yourself daydreaming of the days when you were stressed about how to get all your homes built on time (ah yes, the good old days). We know stress is not good for anyone so let’s take a look at a few issues that, when implemented, will help you sleep better at night:
Issue #1: Please take the word “think” out of your business vocabulary. When you make a decision it needs to be prefaced with, “based on this data…”
Issue #2: Find out who your target market is and do everything in your power to build homes that appeal to them.
Issue #3: Be very careful on any new land acquisitions until you have researched who your market is and if you can meet their product and price needs.
Issue #4: Pricing your homes is not a “cost + endeavor”. You must research and understand your competition, most importantly the resale market, and price your homes compared to the market. Remember, homes sell because they are the right product, in the right place, properly promoted to the right buyers at the right price by the right salespeople.
Issue #5: Take some time to evaluate your sales staff and determine who wants to make a difference for you and who is buying time. If you haven’t learned to hire right, at least learn to fire right.
Issue #6: Invest in training for your sales staff. With such high inventory levels, an all pro new home salesperson will put your homes in the sold column. You have them on your staff, they just need to be unleashed!
If you follow this advice, you have the opportunity to improve your sales operations and take market share away from your competitors.
Dear New Home Salespeople,
Wow what a difference a year makes! Please understand these changes in the market are necessary and you can pull yourself up, dust off and still become an all pro. Please consider:
Issue #1: You need to prepare everything. You need to know your community and be able to communicate the benefits. You must know your neighborhood and why your prospects would want to live there. Prospects don’t buy features, they buy the benefits.
Issue #2: If you do not hold your model open everyday, you can be sure you are missing opportunities. We are not in the real estate business; we are in the retail business. Tell me, does Target have a note on the door to call for assistance on weekdays? Bottom line, if you aren’t open you can bet your competition is and they will take the business.
Issue #3: 95% of your success depends on what you do when you are not in front of the customer. What are you doing on a daily basis to improve your sales skills? Can you list 10 feature/benefit points about your homes? Are you prepared to answer your top 10 objections? What does you model home look like? Would you buy a home from you knowing that there are over 40% more choices today than a year ago?
Issue #4: You are responsible for traffic and leads. If your builder’s marketing is not delivering 5-15 traffic, phone, Realtor® and email leads a week, you need to make up the difference. What is your Realtor® outreach program? What is your referral program? How are you tracking and following up with your database? What are you doing to generate new leads?
Issue #5: Face it, you don’t know everything; nobody does. All pro salespeople know they need to strive for perfection everyday. They understand they must reinvest in their education over and over again. Just like a sports team, success in the game is determined by the efforts made on the practice field. It’s not an option; you must schedule learning and practice every week!
The extra mile is a lonely stretch of road. Take time each day to learn, understand your market, and improve your sales operations. Do this on a continual basis and your company will be in the winner’s column on game day!
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