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.