The key to selling in today’s markets is differentiation. Research shows that after six to eight model tours, all the models look the same. However, the one factor that causes one builder to position itself above the others is the highly trained and motivated salesperson. But that in itself is not enough. That salesperson must be trained on how to sell value and neutralize the negotiator. The negotiator or “negot,” by every standard, diminishes builder profits. Maggots eat your food; negots eat your profits. The salesperson who gives away precious profit too early and too often is cheapening the housing market and doing a disservice to the housing industry.

Builders and their sales managers must stem the tide of frivolous discounting and deal mongering. Profits of the future will come not from expanding markets, but from sleeping competitors. Let the competition resort to the erosion of their own product’s value, not yours. And remember, when a trained new home counselor sells price reduction, he or she is selling logically. Who has the deepest discount? When that sales counselor sells to a base of value and lifestyle, the focus changes to emotional coun-SELL-ing. New home selling has always been, and will continue to be, an emotional selling and buying experience. Learn these methods to neutralize negotiation and you will soar well above the competition!

• 1. Adding value is better than cutting price. In the world of negotiating, a builder who cuts price erodes value (the slash-and-burn mentality). Builders who sell with promotions that add to value can persuade buyers to purchase from them where the residual value is higher.
• 2. “Your request for a deal tells me that you’d like to own our home.” Otherwise, why would the negotiator be negotiating? So take the wind out of the negot’s sails by focusing on terms, not price.
• 3. “It’s not the price of the home that matters, it’s how much home you can own for how little per month.” This takes the presentation out of the price arena and puts it strictly under a different set of rules. If you know how to sell and close with your financing – and why wouldn’t you? – you can consistently outsell the competition.
• 4. “What would you like us to take out?” Many buyers want Dom Perignon champagne for a Ripple price. That’s not realistic! Commence taking something out of the home to meet their price criteria and see how quickly the buyer wants you to hold the line on price-to-value.
• 5. Be careful with discretionaries. When a home buyer finds out a friend got a larger discretionary, the builder’s credibility and the salesperson’s believability craters.
• 6. “The ‘deal’ is in the price!” Let them know that your company has factored into the published price all deals and discounts. To provide hassle-free home buying, your builder has already brought the price down to the lowest level possible.
• 7. Know how to use factors. A contract balance of $200,000 sounds infinitely better when expressed in the factor of approximately $1,800 per month. (You calculate $6.00 per thousand dollars per month for financing and $3.00 per thousand for taxes and insurance.) The total is approximately $9.00 per thousand per month to purchase a mortgage.
• 8. Avoid random discounting. When the appraisers find out that there is random discounting in a community, they take the value of the homes to the lowest level of the discounting. There is no free lunch. A home listed at $400,000 is really worth $375,000 after the $25,000 discount. Or, worse yet, it could be worth $350,000 if the builder decides to slash and burn with even deeper discounts.
• 9. “Mr. and Mrs. Buyer, price is not the ultimate amenity.” It is monthly payments. I could price this house at $1,000,000 and unless you were a million dollar home buyer, you probably would not but it. But, if I quote $1,500 per month, you’d think twice. Right? It’s not the price. It’s the financing.
• 10. “Do you know your FICO score?” If they don’t, refer them to www.myfico.com. Explain that lower monthly payments are doable with higher FICO scores.
• 11. “$30,000 discount? Is that all? I heard it was $35,000!” Sow the seed of doubt that our wheeler-dealer competitor held something back. That will teach them not to trust a negot!
• 12. Sell value footage. “With a flawed floor plan, you pay for square footage you don’t need or can’t use. We could build you a home two feet wide and 1,000 feet long, but you couldn’t live in it. Let’s talk value footage where you buy the right plan at the right price (and terms).”
• 13. “You think you’ll wait a few months?” Will Rogers said, “You don’t wait to buy real estate; you buy real estate and wait.”
• 14. “Help me to help you. What can we do, within reason, to make this work?” Stay on the high ground. Don’t resort to discounting. Perhaps there is a service or small gratuity that can swing the deal.
• 15. “Let me show you how it’s a better deal for you if we buy the rate down.” Rate reductions beat lower prices all day long.
• 16. “When other salespeople quote PITI (principal, interest, taxes, and insurance), they don’t take you to the lowest monthly investment!” If the buyer is moving up and not paying cash, there will be a tax deduction of some sort that will lower the monthly mortgage payments.
• 17. “Very interesting! That $30,000 discount was a $15,000 discount last month.” I wonder what it will be next month!
• 18. “The only difference between inflation and appreciation is ownership!” If you own it, inflation becomes appreciation and you can put that in the bank.
• 19. “We are a true-value-for-true-price builder. We don’t mark our homes up just so we can mark them down.” The price of today will be the price of tomorrow!
• 20. “Let’s look at the four types of housing products: 1) highest price and highest product; 2) higher price, lower product; 3) lower price, higher product; and 4) lowest price, lowest product.” Since we are in the highest price, highest product category, we simply can’t go to a lower price.
• 21. “If the government takes away the capital gains tax exemption on homes, how much money would you lose by waiting until later to sell your home?” This is a huge argument for the buyer to trade existing home now and buy new!
• 22. “I trust you are buying a new home for more than just numbers, correct?” Is a discounted price the only reason the buyer would buy a specific home?
• 23. “The sooner you close this year, the quicker you will be able to take advantage of increased tax write-offs.” The buyer buys now or pays Uncle Sam later.
• 24. “It’s not what you negotiate going into a new home transaction that counts … it’s what you receive coming out!” Speak in terms of the buyer’s enhanced lifestyle and increased value at resale.
• 25. “If you buy the discounted house, how would you feel every night when you pull into your driveway and think, ‘I could have had the home I really want’? Don’t compromise with the most important purchase of your life.” Sell the consequences of buying the wrong home.

In summary, this is the best time to buy a new home in the history of the housing industry. Count on it!

—
© 2008 Thomas W. Richey, MIRM, Richey Resources
View Tom’s profile
www.richeyresources.com