ROLAND NAIRNSEY - NEW HOME SALES PLUS BLOG
The Definitive Guide to Priority Lists in 2021 with Kevin Oakley-Guest at The Tropical Sales & Management Retreat
Anya Chrisanthon the popular podcaster, recently had Marketing Guru Kevin Oakley, owner of Do You Convert on her Podcast. Kevin is one of the most trusted names in new home marketing to builders and developers across North America. He has over 17 years of experience running marketing and sales operations for home builders of all shapes, sizes, and areas of expertise. Both Anya and Kevin will be presenting on day 4 of our Tropical Sales and Management retreat at Margaritaville this October.
Here is a link to the whole Podcast, please enjoy Kevin Oakley.
For those that prefer to still read, here is an overview of what they discussed.
As we all know the Housing market is on fire and many builders have either implemented or consider implementing some variation of a priority list in an attempt to regain control.
Priority List Without Target Dates: Salespeople continue to meet with prospects and help them determine the product that fits their needs and guides them on everything they can do to prepare for purchase. No specific dates for purchase availability are given, and instead, they are told to be ready to respond quickly when they get a call or email. No specific dates (ie: at the first of the month, we will release two homes for sale) means more flexibility for the builder to respond to market conditions as they change or as the capacity of construction ebbs and flows.
Priority List With Target Dates: Similar to the above, but specific dates are given for when releases will be made (ie: two homes released at the start of each month). This essentially functions as an ongoing, rolling Presale Without Fail campaign. One downside of this approach is that without careful management – everything else also begins to be limited. “Why does a sales person need to meet with a new prospect when the next 3 months of sales have already been identified?” is a question I’ve heard asked by leadership before. The reality is that market shifts will continue to occur – and you ideally want some margin in lead / appointment count (maybe not a lot – but some!) to make sure that if changes occur you can still hit your goals.
Reservations (with or without base pricing): Some very innovative builders have taken a page from Tesla who famously took $1k deposits on pre-orders for their cars that might not deliver for 8 months or longer. They have allowed home buyers to reserve home sites (with a refundable deposit) in future sections or communities up to one year in advance of them being developed. The key tactic here in today’s market is that they often are not giving base prices on homes until they are within a window of 60 days prior to start.
This method keeps a backlog of highly interested reservations while also preserving margins because base pricing isn’t quoted until a future date when costs are more predictable. It also creates the chance for a smoother flow for the design studio, starts, and closings in the future. In current practice, over 80% of these reservations are turning into firm contracts and presales. While I can imagine a lot of builders will dismiss this option out of hand because of its unique approach, I can’t argue with the results we’re seeing. The big question here is how drastically the “stick rate” of those reservations drops when market conditions adjust.
Price Increases Every X Sales: This well-known process has worked well for builders in normal market conditions, but as I explained previously – it is hard to know what the right increase amount is with the veracity of the current market. Increasing by $10k every two sales doesn’t work if your costs have gone up by $12k or your homes can’t start until Q4 of 2021.
Lottery Release: The return of the lottery is happening across the country. While there are methods to try and make this more of a win-win scenario for the builder and buyers alike, my main concern is still that taking the sales path down a game of chance can make prospects feel like they have lost, and create dissatisfaction that might not serve you well in the long run.
Ebay – Home Builder Edition: We’ve heard reports of some builders choosing to use an auction format for all homes with a minimum bid amount to start. I’ve been told that some “winning” bidders immediately express remorse that they’ve overpaid, and that conversion to sale on these isn’t living up to what had been hoped for. Proceed with caution.
Sell With Escalation Clauses On Costs: If costs rise over a given threshold, then the builder can come back and raise the purchase price on the buyer. This approach works if your buyers are qualified enough to have the ability to absorb these increases and your sales team is proactive and transparent on communication. You can’t slip this in quietly and then call customers two months later and tell them their price has risen by $40k without getting some really bad online reviews. You must keep them informed every step of the way until costs are locked if you go down this path.
Pause Sales Entirely For A Set Amount Of Time: Some are choosing to simply hit the pause button for 30 – 90 days to catch up with their backlog or to wait and see how costs adjust. Others are using this time to start inventory homes that will not be sold until they are beyond drywall when costs are 100% known, and the value of the home is (hopefully) at its peak if market conditions persist. Of course, rolling this out to your sales team will not be easy, and consumers will still expect the ability to speak with someone even though nothing can be sold.
We hope you found this information helpful. If you want to learn more from Kevin, please join us at the Sales and Management Retreat in October where Kevin will be presenting a session on day 4 along with Matt Riley, Mollie Elkman and Anya Chrisanthon, live and in person.
Thank you and happy selling!