New Home Sales: When Business Is Good, Make It Better

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For many builders, business is good if not excellent. When that is the case, the possibility that success can lead to complacency becomes more prevalent.

September 11, 2014

Have you ever experienced one of these scenarios? You’re in a restaurant, hotel, or store. The place is full of customers, but service is slow and inconsistent. The waitperson who  has kept you waiting for 15 minutes says, “I’m sorry but we’re busy right now.” The hotel front desk takes 20 rings to pick up your call. And when they finally answer, in a hurried and frazzled voice they say, “Please hold.” The store clerk says, “I’m sorry I can’t help you now because I have so many other people here to help.” Essentially they are making excuses by saying, “Hey, business is good for us. Take your turn.” The question is: How do you feel when you are on the receiving end in those situations?

Think about your answer in terms of the question, “Doing what we are doing, the way we are currently doing it, how many sales are we missing?” I am constantly looking for any and all possible ways to close the gap and to capture sales that we should be getting but are not. Now, for most builders, business is good if not excellent. When that is the case, the possibility that success can lead to complacency becomes more prevalent. I am hearing about many homebuyers who have had or are having problems with the condition of their brand-new homes at closing or after they move in. They typically bring their concerns right back to the salesperson. This situation is not good for sales.
 
For companies who are not on top of this, the excuses those customers often hear goes something like, “We are selling a lot of homes. We’re busy. We’ll get to it when we can.” If you believe, as I do, that the entire company is the sales team, then all of the activities of a home building company must be focused on making sales. Focusing on sales in a way that is congruent with each department’s specific field of expertise is a holistic approach to becoming a high-performing, sales-revenue-producing home building operation.
 
I believe that builders are in the retail business and, with that in mind, here is a simple tactic that you can easily implement to eliminate a lot of the issues that cause delayed closings and unhappy customers, and something that can become a part of your sales presentation. In the world of your homebuyer, the time from two weeks to 10 days prior to closing can be a most emotionally trying experience. They will be filling out final mortgage papers, transferring school records, dealing with the movers, and crossing their fingers that their existing home sells in time and that their new home is finished on time as promised. This is about the time the builder calls and announces cheerfully, “It’s time to do your walkthrough!” Already stressed to the limit, your buyers are likely to interpret this as, “We’ve made 117 mistakes and we want you to come out and find them.”
 
It seems home building is the only industry in the world in which we ask the customer to complete our work for us. 
 
Years ago Hanes, famous for its comfortable cotton underwear, promoted a quality assurance program touted by a stern-looking Inspector No. 12 announcing, “It doesn’t say Hanes until I say it says Hanes!” It’s been reported that this slogan, heard often on national television, is one of the most remembered advertising slogans of all time. 
 
When I ask builders the average number of items that a buyer usually finds on a walkthrough, the numbers range from two to as high as 30 or 40. This is evidence that some builders are leaving too many things unfinished when a buyer walks through the supposedly finished house. I know one new-home salesperson who jokingly calls this event, “the day of the hostile takeover.” Don’t let this be the case in your company. Start with giving this event and customer interaction a positive name. I suggest calling it their “new-home orientation.” My research shows that the majority of items a buyer notes during a new-home orientation are almost always cosmetic. Using the apparel giant Hanes as an example, the concept is to implement a quality control program that will catch cosmetic errors before your customers do. The program can then become a marketing tool. I suggest hiring an independent buyer’s advocate to serve as your own version of Hanes’ Inspector No. 12.
 
Your inspector probably should be a woman. Why? According to author John Gray in his popular book, “Men Are From Mars, Women Are From Venus,” men and women do not always think and act alike. Women tend to be more attuned to noticing cosmetic items. Also, because the majority of construction superintendents are still men and come from the “we built it, it must be good” frame of reference, a female provides a needed balance to the pre-inspection process. There are, of course, men who would be great at this job as well. Just make sure when you’re hiring that the candidate has the right qualifications. Where do you find such a person? Someone from a home inspection company or even the owner of your cleaning company would be a good choice, as he or she will be going through each of your houses with a white glove anyway.
 
There should be a three-day preparation period for the new-home orientation. The first day is a mock walkthrough done with the company inspector and the superintendent. There are then 72 hours to fix the items the inspector notes for correction. The inspector then goes in again and re-inspects. They both sign off when all items are complete. Builders who have implemented such a program have found that if given three uninterrupted days, they can fix all of the noted items for correction. But once a customer has moved into a house, the same items could take as many as 60 days, incurring angry homeowners, harried subcontractors, and unnecessary expense.  
 
The next part of this program is to turn the inspector and superintendent into a team and offer a financial incentive to both of them for turning in a punch-free list. For example, create a bonus pool of $100. The money will easily be recovered from the savings of fixing the errors early. Challenge the superintendent and inspector: For every walkthrough in which the new-home buyer finds three or fewer punch-list items, they get to split the $100. This gives the inspector a strong incentive to find fixable items and gives the superintendent an incentive to fix them right away.
 
Then promote the inspector process in the sales presentation. Consider making your inspector into an icon. Put the person’s picture in your sales office with a caption like, “It doesn’t say Sherlock Homes until I say it says Sherlock Homes.” When you have a 100-percent commitment to customer satisfaction and a well-executed process, the happier your buyers will be, the greater opportunity your sales team has to obtain customer referrals, and you will attain the ultimate goal: more profitable sales. PB
 
Bob Schultz, MIRM, CSP, is a global leader in new-home sales and management. He is the president and CEO of New Home Specialist Inc., (www.newhomespecialist.com), and is the author of two best-selling books, “The Official Handbook for New Home Salespeople” and “Smart Selling Techniques.”
 

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