No one wants to see market conditions worsen, but recent developments indicate the downturn will cut deeper before the economy heals.
Some economic forecasts show things improving in the fourth quarter, but I think it is unlikely to happen because the global crisis is worsening rather than stabilizing. Furthermore, the governmental stimuli will take considerable time to implement and ultimately affect job growth and consumer confidence. The eleventh hour changes by the House of Representatives to the housing portion of the stimulus bill and the clumsy rollout of a bureaucratic loan modification program all point toward more difficult times in housing.
The unthinkable failure of 12 percent of all mortgages is deepening this economic mess, and it will require the swift reduction of foreclosures to fix it. This means we need to increase the number of home sales and not have the government modify and buy down mortgages. Also note that the only manufacturing sector that exists in every city of this great country is housing, which dwarfs the auto, steel and even oil industries to put people to work in "shovel—read jobs." Unfortunately, this administration does not see housing as a first tier solution but rather a symptom of the economic crisis. Prepare accordingly:
- Combat the media. There are lots of good reasons to buy a home today: interest rates are low, housing prices have corrected and a surplus of new homes means buyers have lots of choices. Salespeople need to share this information with buyers in a convincing way that counters negative news.
- Tap your HBA. Now is the time to work with fellow builders for the sake of the industry. In some markets, the local home builders associations have launched public relations campaigns to promote why now is the time to buy.
- Resale assistance. To close on a new home, Mr. and Mrs. Homebuyer need to sell the home they own. Your salespeople are experts in real-estate and most likely know the best way. Share those best practices with buyers and provide a home staging guide. In some cases, offer to list the home.
- Maximize your referrals. The builder survivors we know all have referral sales higher than 80 percent. Sponsor weekly events that bring prospects and loyal customers together so that potential buyers can hear first-hand what a great builder you are. Studies show that a referred prospect is twice as likely as a regular prospect to give you business.
- Don't ditch quality. The businesses that are able to maximize referrals and gain market share are those that maintained high standards of quality. During these tough times you need to have a pipeline of happy customers making referrals. If you don't have many sales coming from referrals, your chances of survival are greatly reduced.
|Paul Cardis is CEO of Avid Ratings, a research and consulting firm specializing in customer satisfaction for the home building industry. You can reach him at email@example.com.|