The housing market has presented challenges for a few years. First, there was startlingly high demand and limited inventory. Then the buyers stepped back when rates rose. If you want to sell new construction homes in any market, you need to know the basics of price resistance so you can put it in the right perspective.
Let’s first look at the basics of the most common price objections.
Price resistance fundamental #1: The home always costs too much.
Almost every prospect will ask the price of the new home and then, when told, flinch at the figure. No one will ever tell you, “Wow. I didn’t think the price would be so low!”
Buyers are intoxicated with the idea of obtaining a bargain. This goes back to our basic instinct of wanting something for nothing. We feel good when we know we’ve received the best price possible. However, the paradox is that, regardless of how much you quote for the price, the prospective homebuyer’s initial reaction is likely to be, “Unfortunately, that’s really more than we want to pay.”
Reminder: They’re rarely honest about this point so don’t accept this statement as truth.
Point #2: Price is the common denominator.
It’s inevitable that the price discussion will come up early in the sales conversation. Why? Because it represents something we all have in common: the concern for money—or, more accurately, the concern for saving money. And when you’re preparing to make a massive investment, saving dollars is a big issue.
Think about the conversation starter when you meet someone new. “What do you do for a living?” “Where do you live?” These are basics that relate to anyone. Price represents that same commonality. Be prepared to handle it as soon as the issue arises.
Point #3: You must sell yourself first.
A price objection stems from a buyer who isn’t convinced of the value. We all establish value for items. How much are you willing to pay for a car, going out to eat, a vacation, or a pair of shoes? Every person has their own determination of the value of an item. We individually define what’s “reasonable”. When the price and the value match in the buyer’s mind, the purchase happens.
If your homebuyers aren’t convinced, maybe you need to look at how you’re presenting the home, the community, the builder, and yourself.
Are your prospects objecting to the price—or are you? How do you feel about the pricing of your new homes in relation to the value of the neighborhood and the property? If you have an issue here, you’ll likely convey that subliminal message to your customers. They will pick up on your reluctance—evidenced in your demeanor and hesitation. How can you even begin to overcome their objections when you feel the same way?
You can’t effectively sell a home when you aren’t 100 percent convinced of its value. Be honest with yourself. Determine how you feel about the pricing. If you need to be convinced, revisit the property’s amenities and benefits. Listen to the sales pitch of a colleague. Or find another job.
Discounts are a cop-out.
Some salespeople respond to the price objection by offering bargain-chip incentives, reducing the price, and going to almost any extreme to get a sale. I recently heard of a builder who was offering to pay off a boat loan to close a deal. That sounds pretty desperate to me.
Any low-level order taker can give away homes, upgrades, and services at a cheaper price. That’s the easy way to make a sale—but a far less profitable one. The professional new home salesperson is a Super Achiever who knows the true value of his or her homes and can convincingly convey that worth to the buyer.
Just like the new homes you’re selling, you must maintain standards. Don’t lower them just to get a sale, especially when that compromise slices through the profitability for your builder and diminishes the brand value of the company and the community. Remember that successful selling results from communicating value. Cutting price communicates a lack of value!
Practice the price pitch
Never allow yourself to start a presentation until you have shifted to the right negotiation mindset. That means you should be prepared to address price resistance. The objections are predictable. Practice your response. Role-play with your colleagues.
Just like you practice negotiation skills (or SHOULD), commit to mastering the techniques for managing price objections. If you need help with negotiation or other new home sales training let’s talk!