Selling With Numbers In A Tough Economy.

July 14, 2010

In this economy, homes don’t sell themselves – not like they did during the boom times. Today, the best hope to move homes is with consummate sales professionals who can roll up their sleeves and crunch numbers on the spot.

A sales person who can talk numbers removes fear and barriers to purchase, exhibits confidence, and outsells their counterparts every time.

Newer sales people, who perhaps came up during recent booms and bubbles, were probably never trained in this discipline. They never had to develop the skill of selling with numbers – taking out a pencil and calculator and performing meaningful calculations in real time.

Instead, the trend today is to refer even the most basic financial qualifying process to mortgage reps. Well, not on my watch. Don’t get me wrong – a good, solid mortgage rep is an extremely valuable part of the process. But when your staff can’t talk numbers in the here and now, they get in the habit of deferring action to a later date. This is always bad. Once prospects set foot out of your sales center with unresolved issues, you lower the odds of a sale.

Which numbers matter? Often, the monthly payments mean a lot to buyers – more than the asking price of the home itself. Buyers don’t know how much they can really afford, and this can gum up the sales path big-time.

Sales people need to be well-versed in different types of loans and mortgages, interest rates, qualifying debt-to-income ratios and tax issues.

They need to perform benchmark qualification, estimate tax advantages and demonstrate – in numbers – the benefit of owning versus renting for every scenario.

Once mastered, these skills will help you convert the marginal customer or uninformed prospect into a buyer on the spot. I’ve seen it happen. (Equally important, it allows you to identify unqualified traffic, so you know whether to close them or make them a source for future referrals.)

Selling with numbers makes YOU the hero. Buyers light up when you show them in concrete terms how they can become homeowners. With a few strokes of the pencil (or key strokes) YOU have opened up their eyes to a world of possibilities and eliminated fears that hold them back from living out their home buying dreams.

It’s a much easier to sell when you are perceived as the hero. And the best part is, you really ARE a hero. People who come to you need guidance. Providing this guidance makes a difference in their lives and adds a meaningful component to your job.

This is probably the real reason why I’ve so enjoyed this industry for over 30 years. (30 years – whew, talk about eye-opening numbers.)

It’s been a great ride – here’s to 30 more. If you need guidance with sales staff coaching or anything else pertaining to real estate marketing or consulting, you know where to find us.

GB

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AUCTION: The Scarlet “A” Of The Real Estate Industry? Not Anymore.

June 23, 2010

Historically, real estate auctions left a negative stigma. A mark permanently emblazoned on the lapel of a project for all to see.

The public reaction: “Oh look, they’re jumping ship, they must have screwed up, big time.” It looked bad, because usually it WAS bad.

Those days are long over. In our current market, auctions have new meaning. It’s not always a last ditch effort – it can be an aggressive first strike. An auction doesn’t always mean trouble.

An auction means you have a plan. You’re trying to establish value and kick-start and/or monetize your project. It can take place at any time during the life of a project and it doesn’t mean you’re throwing in the towel.

The Grand Opening…Auction? A grand opening auction establishes momentum for projects that could otherwise have been D.O.A. And when sales centers come up against ominous silence, mid-project auctions can work wonders.

Case in point, Vetro: A Chicago South Loop/Printers Row condo development. The market was falling and nobody knew how far. Buyer paralysis set in. To revive sales, they aggressively established market values with a one-day auction.

They sold $11 Million worth of real estate in one hour. With 248 people bidding on homes, there was no doubt where the bottom was, and plenty of people wanted in.

The new prices became the benchmark for future sales. It removed unknowns and restored buyers’ confidence that they were paying fair market value or better.

After that they sold ten homes a month at Vetro. After six months they were SOLD OUT. In this case, the auction wasn’t a last ditch effort. It was a first ditch effort. Sure, they lost some revenue when they dropped prices, but they made it up in volume and a quicker sell-out.

Auctions are powerful stuff. Dropping 35-40% from last asking price turns buyer apathy into urgency within the space of five minutes. Applied correctly, auctions defibrillate your project and give you a new lease on life in the face of any number of challenges.

For instance, if a project is not meeting pre-sale requirements of 31% to qualify for FHA financing, an auction can quickly bring the project to pre-sale level.

Here’s another: if you’re facing the choice of retiring debt or closing up shop, an auction can unload a year of inventory in one day. The velocity makes up for the price adjustments and you live another day. It’s smart business.

Some people will always be reluctant to go to auction, even when it’s the best move. Denial, wishful thinking and unrealistic expectations are facts of life in residential real estate, even at the top levels.

That’s why it’s important to choose a partner willing and able to help you execute advanced moves like auctions, with the kind of timing and effectiveness that will help you overcome today’s unique challenges. (You know where to find us.)

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Homebuyer Tax Credit A Success. Now What?

April 23, 2010

We’re following up from our post on March 11, where we said the time leading up to April 30th would be very telling. But it’s only telling to a point. The big question is: what happens next?

The hope was there would be a surge, and there was. Home sales were up 6.8%, thanks to the looming tax credit expiration. It didn’t hurt that we also had unseasonably warm weather and slumping home prices.

Bottom line: people are buying homes. That’s a good thing – the housing market is finally stabilizing! Or is it?

The real test will be what happens later this year, when the closings associated with the tax credit start to wane. (People who have written agreements by April 30 can still close as late as June 30.)

Time to take off the training wheels and see how our post-apocalyptic real estate industry can ride on its own.

Will it be wobbly? Yes. Will it be interesting? You bet. We’ll be keeping you posted, right here. And if you need a real estate consultant or marketer during these interesting times, you know where to find us.

We’re free to listen and bounce ideas around any time. Tell us your story. You’re not alone. We can help. This year, the spoils go to the victor. We want that victor to be YOU.

Garrison Insider

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The Upside Of Upkeep: How Struggling Banks Can Survive Foreclosures

March 23, 2010

More homeowners are seeking the refuge of foreclosure, breathing a sigh of relief and saying good riddance as they toss their banks the keys and leave behind empty houses.

It’s almost as if the new American refrain of domestic tranquility has become “foreclosure sweet foreclosure.” I wouldn’t be surprised to find a needlework portrait of that phrase hanging on somebody’s apartment wall.

Meanwhile, banks are struggling to unload these abandoned homes – a process that can take months in this market.

During those long months the homes DETERIORATE from lack of upkeep and drop further in value, adding further to the bank’s loss. No wonder so many banks are in the weeds.

But smart banks are getting creative. Recently, a VP of a five-billion-dollar bank (let’s call him Joe T.) told the Garrison Insider that banks should feel right at home with the foreclosure situation. Literally.

According to Joe, banks should be temporarily offering foreclosed homes to their employees. The idea is to let employees become caretakers – a move that can help preserve the VALUE of a home long enough to find a buyer. (Why didn’t I think of that?!)

Keep in mind the average write-down on a foreclosure is 35%. (On a 100K, the closeout take will be 65K, or even less.) “Some of the 35% often INCLUDES the loss from lack of upkeep when the house sits empty,” says Joe.

If caretakers living in the foreclosed home can keep it in good shape and reduce the average write-downs by even a few percentage points, it can mean significant long-term savings for banks struggling to stay afloat.

The brilliance of this simple idea extends to preserving the value of the neighborhood at large, and could also result in some pretty happy bank employees. Everybody wins.

So banks, give it a try. Discovering the upside of upkeep is yet another way to keep up in this market!

Looking for more ways to keep up? Contact us.

GB


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The Homebuyers’ Tax Credits Are Ending…Again.

March 11, 2010

It’s all about the next 45 days. The time period between now and April 30th will be very telling. The tax credits are set to expire…for real this time.

Consider what happened at the end of last year, when the tax credits were (supposedly) expiring in November. Leading up to September, the market was down 40%. But things rallied in the Fall, and by the end of ‘09, the market was only down 25%.

Down 25% is not exactly reason to party, but the overall annual absorption increase of 15% during 4Q (typically the sleepiest months of the year) made for a happier holiday than I was expecting.

We can credit some of the rally to the other three most important words in real estate: FEAR OF LOSS. In the case of 4Q ‘09, fear of loss meant fear of losing out on the homebuyers’ tax credit. There was urgency, people didn’t want to miss their chance.

This Spring, fear of loss is back. The clock is ticking. The deadline is looming. If history’s any indication, we’ll see a surge in volume over the next 45 days. We’ll see buyers rushing to sign contracts.

Make sure they’re YOUR contracts. Treat customers like there’s no tomorrow. (There isn’t.) Be attentive and close the deal. After 4/30 there will be fewer buyers, and the ones who show up will be harder sells – to close those deals, you may need to give up $8,000.

GARRISON INSIDER TIP: At Lake Bluff Condominiums in Milwaukee we MATCHED the $8,000 tax credit with every purchase. Take a look at how we packaged the offer. Do this while you still can. Better to spend $8,000 now than to pay the price later when that sale is harder to come by.

Will there be another extension of the tax credits? Not likely. But one thing is certain: if you take on the mindset that this deadline is the real deal, you’ll close more deals.

And if there’s no surge, well, at least we’ll know where we stand. It will mean the market’s not recovering, and that we need to adjust strategies for a tough year ahead.

Either way, knowledge is power, which is why I’m going to enjoy watching the next 45 days unfold. I’ll keep you posted with more tips and news during these exciting times, and always feel free to chime in below.

GB

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How Will Bernanke’s “Extended Period,” Comment Influence Real Estate?

March 2, 2010

Last Wednesday, Ben Bernanke,  Chairman of the Federal Reserve, reaffirmed that short-term interest rates would stay historically low for “an extended period.”

The speech caused a stock market rally of 50 points within one hour. Billions of dollars transacted in under sixty minutes, over a few choice words. Wow.

Words influence the world – a five-minute speech with carefully-chosen words can be the difference between buy and sell. We all know this.

But the ultimate question is: how will the “extended period,” comment influence the struggling residential real estate market?

It should build urgency into the equation. (I said “should,” not “will.” After all, this post is about carefully-chosen words.)

Potential buyers have just been granted about six more months to expect low rates. This should matter to them.

Six months takes us to September. If buyers wait for the Fall buying season, they MIGHT miss out on locking in a low rate this Spring – a low rate that was just assured by Bernanke’s speech.

Potential buyers who see it this way should be marking their calendars for house hunting next month.

Factor in the April 30th deadline for certain homebuyer tax credits and you have even MORE urgency.

It’s starting to feel like “fear of loss,” the magic element that fuels real estate sales. The fear that if you don’t ink the deal NOW, another buyer will snap up your dream home before you do.

Fear of loss can also apply to unique interest rates and tax credits that might slip away if you don’t buy soon. At least that’s the message we HOPE buyers are getting right now.

If a five-minute speech with a few choice words can spur billions of dollars worth of transactions, maybe a 300-word blog post with a few choice words can do the same for the real estate industry.

Okay, that’s a bit of an “extended,” fantasy, to say the least. Heck, if this post results in one sale, it’d pay for itself a million times over. I’ll let you know how it goes.

GB

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Local Developer Hitting Rock Bottom? Time For Rehab.

February 22, 2010

It’s not easy being a local developer in a downturn. National builders have challenges, too, but they’re able to maintain presence in key housing markets and ultimately increase market share.

Lennar posted a gain for seven quarters. DR Horton, KB Home – doing fine. How many local builders do you know who are “doing fine?”

But let’s say you refuse to be weeded out. Fair enough. After all, you’ve worked too hard to give up. The local community knows and trusts you. You’ve earned your reputation with excellent service. You have a right to exist.

You’re a builder. So build. Maybe not homes or communities – at least not right now. Build PARTS of homes, a.k.a. rehabbing.

The people who trusted you to build great homes will also trust you to turn old interiors and floor plans into brand new ones, build additions and give tired kitchens, baths and basements a new lease on life.

There are no national rehab companies. Rehab is a local game. As a seasoned local builder, rehabbing is well within your ability. You just need to rehab you business model a little, so you can weather the storm.

When the market recovers, your name will have endured because you never stopped building lifestyles. You’ll go back to homebuilding but with an increased sphere of local influence.

Consider that 90% of the NAHB is made up of homebuilders who build only ten homes or less, annually. Small, local builders are in the vast majority. Let’s keep it that way. Weather the storm any way you can.

Rehabbing is merely one option for local and regional builders intent on keeping their name alive no matter what. For more options, contact us.

– Garrison Insider

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How To Spark A 200% Increase In Online Registrations.

February 15, 2010

Presenting a new update on, well, new updates. A recent study indicates that swapping out old pictures of residential offerings with newer ones can be an effective way to stimulate new interest. (Most real estate marketers know this in theory, but it’s not always put into practice.)

LakeBluffCondos.com had been featuring the same pictures – both interior and exterior – for two years. The site’s color scheme had been changed in an attempt to give the project a fresher feel, but it wasn’t enough to improve the low registration count.

Finally, action was taken, the website was given a complete overhaul with a new layout, and most importantly, new photos. Registrations soared.

Constant updates have constant upside. In real estate, the story is always changing. Prices and trends change. The weather changes, the atmosphere changes, the competition changes.

A living, breathing site reflects these changes and tells a more relevant story about a given product. At the very least, start with the product – package it as today’s product, not something from two years ago.

Start with seasonal updates. Don’t show snow on the ground in summer. Let viewers regard the project, and the team marketing it, as vibrant and current.

Exploit your updates by spreading the word via Twitter, email and your blog. Call it out loud and clear on your home page. Write a press release. Give everyone an exciting new reason to take another look.

Budget is no excuse. Take new pictures with your phone if you have to. Today, the importance of immediacy trumps the importance of gloss. It’s a Facebook world.

Give your website the facelift it needs. It’s one of the simplest ways to give your sales board the lift it needs.

– Garrison Insider

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Has Real Estate Turned A Corner?

February 11, 2010

Take a look at this piece of reporting from Inman News, which basically summarizes the NAR’s ‘09 Q4 report on home sales.

Allow me to break it down further, to the bare essentials of what happened during the fourth quarter of 2009.

1. Sales of existing homes were up 27.2% during the last three months of 2009.

2. Single-family prices fell 4% – the smallest price decline in more than two years.

3. Garry Benson (that’s me) asserted in a Q4 Crain’s article that “the market has stopped going down.” One commenter asked me if I was insane. I replied with a post entitled: Garry Benson, Are You Insane?

Hindsight is 20/20 of course, but during the time of my quote and article (Q4), things WERE indeed getting a little better, or at least slowly correcting, reversing course – no insanity necessary.

Please don’t interpret this as gloating. My comment had been based on a gut feeling after watching 12 mil worth of real estate sell in one day.

Today I stand on much more solid ground when I suggest that maybe the market has stopped going down. That’s good news for all of us – we can really build a case for rational optimism for 2010.

Go ahead and check out the original NAR report, and let me know how you choose to interpret the new data. We at Garrison Partners would love to hear your take on it, insane or otherwise.

GB

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Top Five Ways To Make Your Lender Your Partner:

February 8, 2010

This year, the builders left standing won’t necessarily be the ones able to build the best homes – but the ones able to build the best case.

The case, that is, for partnership…with their banks. As a developer you’ll be best served if you enter into 2010 with a new mindset regarding bankers: bankers of 2010 are not just your lenders. They’re your partners.

Work with them. Bankers are looking for ways to cut their losses. If you have a compelling idea, they’ll listen. Give them rational reasons to be receptive to your plans. Consider these five ideas:

1. Take a higher interest rate on loan renewal, but have some of it accrue. Recently I’ve seen more than a few banks accept these terms. Banks, more than anything, want to have a performing loan. Accruing interest and collecting some interest is better than nothing.

2. Defer points and refinancing charges to the back end of the deal. Again, many banks will welcome this as an acceptable alternative to NOTHING. Put it on the table, see what they say. You have nothing to lose.

3. Add new capital to the deal. Banks love new capital. Do whatever it takes to find an investor by offering to pay 20-25% returns. That’s high, but sometimes you have to be willing to pay returns in order to get returns. If it keeps you in the room, it’s worth it.

4. Use your history to prove your future. Don’t overstate your pro forma. Banks respond to sober truth and facts, today more than ever. Be ready to back up your claims with plenty of objective justification. Modest expectations based on solid evidence are far more attractive to banks than grandiose speculations based on gut feeling.

5. $plit profits. An offer to spread the wealth is the ultimate form of making your bank your partner. Your lender is looking for a reason to be in the deal. If all else fails, splitting profits might be the ticket. If it buys your project another lease on life, it’s worth it.

It’s a fact: banks are literally becoming developer’s partners. Perhaps it’s happened before over the years, but not to the large degree that I’m seeing it today. Keep this “partnership,” concept firmly in mind, and let it set the tone for your dealings with lenders going forward.

Good luck, and let us know if you have any questions – or if you can share any brilliant new ideas about partnering with lenders that have worked for you.

GB

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