Why homebuilders should know their customers' values

How much would you be willing to pay for Barry Bonds' 756 home run baseball? Yes, that's the baseball that Barry Bonds hit to break Hank Aaron's all-time major league home run record. It's a question I recently asked a group of 25 new-home sales professionals. The scenario for determining a price was based on simple set of circumstances: They are independently wealthy and can afford to pay whatever they want for the baseball, but whatever bid they offered would mean they would forgo something equal to that amount.

We then asked everyone at the meeting to submit a sealed bid, and we then posted the results at the front of the room. It was no surprise to me and almost everyone else in the group that the bids showed huge disparities. Two associates bid zero, and the bids topped out at $1 million. (Note that the baseball was actually auctioned off for $752,000 in 2007.)

As easy as it may be to see how different people would place tremendously different values on a historic baseball, we often lose site of how differently our customers place values on aspects of our homes and our communities. For some home buyers, an oversized home site is a maintenance headache and not worth the price of added lawn care. Others place tremendous value on the privacy and added space for family activities it will provide. We simply don't know — until we understand their values.

The No. 1 mistake made in most new home sales presentations is spending too much time demonstrating the home and community rather than asking customers questions about what they value in a new home. Mistake No. 2 is to assume that the values of the sales professional are the same values of the customer. The sales professional says, "What I really like about this home is the oversized home site and the privacy it affords you." And the customer thinks, I really don't want the extra yard work.

Becoming a great new home sales professional requires we uncover values and needs of each customer before beginning our demonstration. This requires skill. It's not always easy, but it is essential to maximizing the value of your homes and community with each customer. Using the baseball example above, a great presenter could spend 30 minutes telling me the detailed history of the 756 home run baseball and its significance in history, but unless I'm a sports nut, chances are I'm not buying — not even at a steep discount.

Uncover "the value recipe" for each customer by beginning with a simple question: "What's important about the new home you plan to purchase?" It's a simple question, but one that many customers have never heard before and might have to think about before answering. It will often stop customers who just want to look at the models and get a price sheet while giving you some time to understand their underlying needs. The information you get is invaluable to matching your demonstration to a customer's values.