New Home Sales Training

Why do people buy? When I ask this to both individuals and audiences, I usually get these logical answers:

1. It was the right price: If a customer really desires the product or service, cost is not a factor.

2. It’s what I need: People seldom buy what they need! In most cases, desire drives the customer to spend beyond his basic needs to purchase what he wants.

3. It’s what I can afford: In this country many of us tend to spend more than we earn, to the point of often living above our means. (Generally, our society is not recognized for its ability to save money)

Your customer buys many products like real estate, furniture, cars, or computer systems for emotional reasons and then justifies the purchase logically. Prices, terms and even quality are the logical explanations, and salespeople and consumers alike believe we become involved because of these. But the truth is, consumers rarely make a purchase based on logic.

We are emotional beings and every choice in life is flushed through emotional levels prior to reaching logical channels. We become excited first and then we rationalize our decision to buy something by saying, “It was the right price or it was what I needed.

In truth your customer never “buys” a product or service. He buys a feeling or perception of satisfaction that your product or service will provide. It is not just a commodity, but a dream fulfillment. Your customer will see himself benefiting in some way by possessing what you have to offer.

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As we’ve been discussing, discounts, deals, and financial incentives seem to be what homebuyers expect today. Last time, we discovered how to lead the prospect to agree to allow the preparation of the paperwork and deposit.

So, after preparing the paperwork and obtaining the deposit check, here’s how to proceed toward your goal:

Super Achiever: Mr. and Mrs. Prospect, I appreciate your position and understand you want assurances that this home/homesite is the best value available. I can assure you that this home is an excellent value; however, I can’t assure you that the home will become yours. In all honesty, it would be out of the ordinary for the builder to accept your reduced-price offer. I don’t want to give you false hope or have you disappointed, so how do you feel about devising a “plan B” scenario?

Let’s review the $20,000 amount that you are asking the builder to reduce from the price. I sincerely appreciate your concern and $20,000 seems like a major amount until you break it down. (Hand the prospects a calculator and allow them to work through the math with you.) At today’s interest rates, for every $1,000 you finance, your monthly investment is $7 per thousand financed. (The number will change according to prevailing rates.) That means the $20,000 difference you seek is in reality $140 a month. I realize also that, at first glance, $140 per month seems like a lot; but break that amount down on a daily basis. In a 30-day month, the $140 becomes only $4.67 a day. Mr. and Mrs. Prospect, I bet you spend $4.67 a day on bottled water, a cup of coffee, or other kinds of insignificant items, don’t you? Well, for the cost of these, you can own the brand new home of your dreams.

I know this may seem ridiculous, but if you reflect on it, $20,000 isn’t really that much over the long term. So, as a backup plan, if your offer is not accepted as presented, you’re not going to let $4.67 a day stand in the way of owning the home you really want and deserve, are you?

When presenting the counteroffer to the prospect that evening or the following day, you can soften its impact by translating the counter-amount into to a daily figure. Seeing it in a smaller number may speed up their decision-making process and lessen the blow of having to make a concession.

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As we discussed last time, discounts, deals, and financial incentives seem to be what homebuyers expect today. The prospect may say, “It costs too much;” or “Your competition is giving bigger discounts;” or even “You’ll have to do better than that.”

Here are some additional scripts that will provide you with insight into how to effectively respond to these statements:

Super Achiever: Mr. and Mrs. Prospect, in many ways, a discount is really an admission of guilt by builders that they made a mistake and that they overcharged many other homebuyers in the past. Now they’re saying, “We overcharged for them at first, but this is what the home is really worth.”

Beyond their admission of guilt, this pricing strategy is the fastest, surest way to insure a meltdown of your personal equity and the meltdown of equity in the entire neighborhood. You won’t get that from this builder or this community.

I’m curious. Mr. and Mrs. Prospect, are you familiar with how true real estate value is determined? In reality, the developer/builder or the salesperson representing the homesite/home does not determine value. Value is based on comparable sales. In other words, a professional appraiser says the property’s market value is a certain amount based on recent sales of comparable properties.

If someone purchased a comparable home yesterday for $350,000, and today you purchase the same model for $300,000, and tomorrow someone negotiates the builder down to $275,000, then what is the true value of that home?

Mr. and Mrs. Prospect, we do everything we can to protect the values of homes within our neighborhood and, consequently, the equity in your home. If a brand new home is going to be one of your single largest investments, then isn’t it reassuring to know that you are doing business with a builder who is concerned with guarding your personal equity and protecting the assessment value of the community?

Our builder knows what his homes are worth. He built value into these new homes from their blueprint conception. This builder has a reputation for not sacrificing superior value for quick sales. He didn’t cut corners or use less-expensive materials so he could afford to reduce prices later when the market tightened. If he didn’t discount them when they were under construction, why would he discount them now?

If the customer firmly demands that you submit a written offer and you are forced to write the agreement for less than the stated value, then proceed with the following strategy:

Super Achiever: Do I understand you correctly, Mr. and Mrs. Prospect? Are you saying you like this home and, if it were $20,000 less, you would own it today?

Prospect: I suppose I would.

Super Achiever: Then may I suggest that, since you seem firm in your position, we prepare the paperwork “subject to” the builder meeting your request for a $20,000 price reduction. This way the process has begun. We have secured your home and if, by chance, the builder does not agree, we will simply start over. That makes perfect sense, doesn’t it?

Prospect: Rather than prepare the paperwork, can you first check with your builder and see if this is even possible?

Super Achiever: For any type of offer to be valid, consideration and an agreement are necessary. In other words, to have a valid and binding agreement, we need to prepare the paperwork complete with your request and the initial investment. So, let’s do that now and I’ll present it in writing to the builder along with your deposit check, okay?

Prospect: We would be much more comfortable if you would simply run this by the builder first verbally and see where he stands. If it’s acceptable, we can prepare the paperwork afterward.

Super Achiever: In addition to not having a valid agreement, Mr. and Mrs. Prospect, without the paperwork and the deposit check, my builder would not even consider your request. And without him looking at it, your answer is an automatic “no.” However, if I present your request with consideration and an agreement, then possibly the answer would be yes or he’d give us a counteroffer. So, as you see, in order to move your request forward, we must prepare the paperwork first. Let’s do that now, so I can present your request by the end of the business day.

This approach has the added benefit of being able to find out how serious your buyers really are.

Next time, we’ll discuss how to proceed with the prospect after preparing the paperwork and obtaining the deposit check.