On October 2, 2010 under clear blue skies and sublime North Carolina weather a successful and energetic Event Sale took place at Diamond Falls. During the previous 6 months Edge set upon a mission to sell lots via the Event Sales method and interviewed 6 potential firms. After meetings, interviews and reviewing the costs and methods of those 6 firms Edge Consulting and their Client Diamond Falls made their choice. From the beginning we felt certain if we followed the advice of our Event Sales Firm we would have a successful sale. Our intuitions were exceeded when in a single day Diamond Falls sold 75 of 88 lots with over 450 attendees fighting to get their piece of real estate inside this gated community.
WHAT WAS THE GENESIS OF THIS SUCCESS?
Many things went into the success of this huge team effort. In all 140 people (sales staff of 101 in that number) worked to make a 7 hour selling day such a huge success. There is no better word for Event Selling than teamwork. Event Sale's Firms are large bodies of people specializing in rapid and effective single event sales. Similar to Grand Opening sale's events back in the day, event selling takes single day selling to new heights navigating a data base of tough buyers stung by this recession.
To prepare for the sale Edge Consulting's Steve Gravett (the developer manager appointed by Diamond Falls) met 3 months prior to the sale on site with the Event Seller's executives. The Event Seller management team skilled in new home and lot sales began to critique every aspect of the community. Lot lines were moved, new lots were added to increase the variety in price points, extreme clearing of lots was performed just prior to the sale, new landscaping at the entrance was ordered, a complete review and modification of covenants and restrictions was accomplished to minimize buyer objections, lot signage was refreshed, the clubhouse and pool were cleaned spotless, the DF website was totally revamped just for the sale date, over one million brochures were sent out to a database determined by Edge and the Event Sales team,
e-mail and phone follow-up was performed for over 4 weeks, 2000 phone calls were patiently answered, sales contract forms and community buyer's books were assembled, day of sale food for 7 hours was on site, several successful local brokers were recruited for the day, over 120 radios were in use on site the day of the sale, tables and chairs around the pool and clubhouse were set up to accommodate the buyers while signing contracts and Edge and the Event Sales reps congratulated and schmoozed with everyone in attendance. What started as hard detailed work became 7 hours of social fun and economic success.
ARE ALL EVENT SALES THIS SUCCESSFUL?
Most are and a few are not. The ones that are not successful are usually due to a Developer's poor judgement or not fully understanding the short duration. Event Sellers risk a lot of their own money and cannot guess wrong. They do not take every deal. If they see problems on the site, with the owners or with timing issues they will not (and cannot afford to) take the assignment. With a 3 month "before sale" commitment and 4 months "post sale" commitment, the chemistry and good value must be present. We attended several event sales prior to making the commitment for Diamond Falls to get a sense of what "game day" was really like. At one project in particular that we visited the developer raised prices beyond those recommended by the Event Sales company the night before the sale. After about one hour the radios went dead and so did sales. That is important to note, if you do not know the correct pricing of your product then you need to get up to speed prior to hiring an Event Seller. Event Sellers know the market better than the owners/developers. They have to to be successful. They know the thresholds for various lots, stream side, mid mountain, lakeside, lake view, mountain view and others.
DEVELOPER FLEXIBILITY IS A KEY SUCCESS INGREDIENT:
From the moment we signed our agreement with the Event Seller, we heard one mantra throughout -"the buyers will be on site for one day and one day only, after which they are gone forever." In the morning of sale day when the highest motivated buyers are competing in large numbers over the best well priced lots and all contracts come in at full price, you may find yourself forgetting this phrase, but as the day gets shorter and the good lots are all sold and under contract this phrase begins to ring in your head once again. The gates open at 10AM and by 11:45 we had 43 lots under contract. Our more expensive mountain view lots were selling but not as fast as we wanted. Also, the highest priority most fervent buyers had bought and were lounging around the pool savoring their success. As the later appointments showed up, so did offers, some ridiculous but most reasonable. This is the point where the owner/developer can make or break the rest of the day. We chose to take all reasonable offers and decided to maximize our profits for the day. This proved to be the correct move and it was easy to analyze. After 3 hours of selling in the morning you can see which lots are being ignored. It is one of several things: location, price, topography, access, etc. At that moment you have a 3 hour market study in front of you and you need to act upon that market feedback. All of the aforementioned reasons for a lot not selling can be rectified instantly by price discounts. The sales staff was excellent in relaying to us why certain lots were not selling and the mere fact that they were not selling was evidence enough we needed to modify the price this day to illicit a sale. By the end of the day 60% of our sales were at full price and 40% came in as offers. We took the money and in doing so made a successful day for our efforts. The atmosphere was electric, the buyers were happy and the event was just plain FUN.
WHAT HAPPENS NOW?:
In the case of Diamond Falls, our Event Seller, generated over 2000 interested phone calls in a 30 day period. There were many buyers whose schedule would not allow for them to attend. However, our contract gives the Event Seller 120 days to follow up on all leads. Some sales will and have fallen out but new sales from original inquiries have replaced some of those plus there were 15 back up contracts from the sale day. We are now closing deals on a daily basis and will continue to close deals as long as we have buyers. For Diamond Falls it was a matter of sitting and waiting for the one or two people a month that ambled into town and had some interest in buying a lot. We needed to generate sales, stock the HOA with owners and set ourselves up for the next phase, not to mention paying off a lot of debt. Edge Consulting and Diamond Falls generated our own version of selling success by thinking outside the box. If we had not there comes a point where a client (Diamond Falls and others) can no longer carry the land waiting for buyers. Furthermore, a community can get an appearance and reputation of weariness and failure which creates yet more objections to overcome. There are many such projects where an event sales team may be the answer. My advice is to consider this approach. Let Edge Consulting guide you through this process and help you be a success as well.
Call Steve Gravett @ 561-789-3194 or e-mail: steve@echelondev.com
Wednesday, October 27, 2010
Wednesday, January 6, 2010
EDGE'S PROPRIETARY DATA BASE SAVES CONSTRUCTION CLIENTS INSURANCE COSTS
Edge Consulting has designed a competitive pricing model to offer lower Worker's Comp Insurance Costs to builders, developers and subcontractors. There is no charge to Edge Consulting and all you pay fortunately, is a lower premium. ATLANTA to be test market this March 2010. Later, NC, SC, Tenn, Georgia.
Edge Consulting, a broad source real estate consulting firm, has been working with a Dun and Bradstreet data company to develop a program that identifies the top 15-20 companies that provide the lowest policy costs for builders, developers and subcontractors. By reviewing a nominal amount of information from interested employers, savings can be over 60%, general savings approximate 20- 30%.
THERE ARE SOME COMMON MYTHS SURROUNDING WORKER'S COMP RATES YOU MAY WISH TO KNOW.
Myth 1: By law, all Worker's Compensation policy prices are set by the state. "Does this mean I would pay the same price regardless of the insurance company?"
FALSE: Even though coverage, by law, is identical from each insurance carrier and rates are approved by the insurance commissioner, there are over 150 insurance companies that offer coverage, many with different pricing plans. With EDGE CONSULTING'S comparative software data base we can help you find the lowest priced carrier, at no cost to you!
Myth 2: But doesn't my insurance agent know where to find the lowest prices?
FALSE: While well intentioned, most insurance agents represent only 4-5 different insurance carriers. Moreover, they may not represent those companies that specialize in your business; some agencies may not specialize in Worker's Comp. Even if they wanted to, the agency may not be able to get bids from the affordable companies since they may not have a permanent relationship. Finally, insurance agents are paid a commission by their carriers leaving little incentive to lower your costs. EDGE CONSULTING will guide you to those carriers and agents that specialize in Worker's Comp.
SOME IMPORTANT FACTS ABOUT WORKER'S COMP YOU SHOULD BE AWARE OF. Before you renew a Worker's Comp. policy, please read this!
Are ALL Worker's Comp policies the same? - This is TRUE so you should not pay more than anyone else. Many employers don't realize that all Worker's Comp policies follow the same state regulated format. The state requires all insurance companies to use the same policy form! While the policy and format are standardized prices may vary dramatically from carrier to carrier.
Are there price variations among the top 100+ insurance companies? -This is also TRUE. If you are currently insured by an insurance company that has above average rates EDGE CONSULTING will find an insurance agency that specializes in carriers that have affordably priced Worker's Comp policies. These companies specialize in this type of coverage and take pride in offering a competitively priced product. Having coverage with an expert is such a simple concept. Experts know how to prevent or minimize losses, thus they can be more competitive with their prices. EDGE CONSULTING provides a network of agencies that specialize in your type of business. Don't be just another insured employer. Be covered by a company that actually appreciates your business.
Class Codes are a prime determining factor in calculating your premium. TRUE.
Our agents know that slight changes in a worker's responsibility and duties can sometimes help you reclassify yourself into more economical classification. This may help you lower your rating structure. Also, while overall Worker's Comp rates may not change every year, the prices among the different classes often do change. Are you paying at an older, higher rate?
Experience Ratings have a direct correlation to your premium costs. TRUE.
If your annual WC premium is over $5,000 then your business should be experience rated. An experience rating or also know as your "experience modifier" does vary among individual companies. The higher this rating the higher your premium. Think of your experience rating as a company report card. It is based upon the number of accidents you have had over the previous three years, and their cost to the carrier, compared to other similar types of businesses. The experience rating should be adjusted every year and it should be your goal to get this experience modifier at a number below 1.00. Occasionally carriers do not always share their little secrets with their clients. For instance, insurance companies set "reserves" to pay claims and don't often update the file when payment is made and your file is closed. Your experience rating could be left at the higher level! Having an expert in Worker's Comp to evaluate these situations can save you money. EDGE will provide you with companies that do share their cost saving methods.
Do premium audits actually save you money?TRUE.
After the expiration of your policy the insurance company may audit your payroll. Often they audit companies when they are reasonably certain that you will owe them money. We can recommend companies that hire private audit firms that may be able to get you a refund of a previously paid premium. They will conduct an audit for free. They are paid only if you get money back!
Edge Consulting is happy to offer "Clear and Concise" solutions when comparing your Worker's Comp insurance thereby saving you money in the process. We ask nothing of you but a little information to allow us to contact our network of low cost agencies in compiling your quote. Please read below. Thank you.
Employers, you are 1 click away from taking steps to save your company money on affordable Worker's Comp insurance.
Company Name* ____________________________
Your Name*________________________________
Title: ___________________________________
Address* _________________________________
City* ____________________________________
State* Zip* __________________
Phone* ext. __________________
Number of Employees* __________
Projected/estimated annual payroll $_________________
e-mail* _________________________________
Main Business Type(ie: builder,developer, plumber, electrician etc.)____________________________________________________________________
Specific Class (ie: residental, commercial, industrial)____________________________
Brief description of what you do: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
_____________________________________________________________________________________
YOU MAY DOWNLOAD THIS APPLICATION FROM YOUR COMPUTER AND FILL IN THE APPROPRIATE CATEGORIES. RETURN VIA E-MAIL OR FAX TO STEVE GRAVETT.
Return this completed application to us for a free quotation.
Thank you,
The Edge Team
CLEAR VISION, CLEAR STRATEGY
e-mail to Steve Gravett: steve@theedgeconsultants.com
FAX to Steve Gravett: 561-278-7154
Edge Consulting, a broad source real estate consulting firm, has been working with a Dun and Bradstreet data company to develop a program that identifies the top 15-20 companies that provide the lowest policy costs for builders, developers and subcontractors. By reviewing a nominal amount of information from interested employers, savings can be over 60%, general savings approximate 20- 30%.
THERE ARE SOME COMMON MYTHS SURROUNDING WORKER'S COMP RATES YOU MAY WISH TO KNOW.
Myth 1: By law, all Worker's Compensation policy prices are set by the state. "Does this mean I would pay the same price regardless of the insurance company?"
FALSE: Even though coverage, by law, is identical from each insurance carrier and rates are approved by the insurance commissioner, there are over 150 insurance companies that offer coverage, many with different pricing plans. With EDGE CONSULTING'S comparative software data base we can help you find the lowest priced carrier, at no cost to you!
Myth 2: But doesn't my insurance agent know where to find the lowest prices?
FALSE: While well intentioned, most insurance agents represent only 4-5 different insurance carriers. Moreover, they may not represent those companies that specialize in your business; some agencies may not specialize in Worker's Comp. Even if they wanted to, the agency may not be able to get bids from the affordable companies since they may not have a permanent relationship. Finally, insurance agents are paid a commission by their carriers leaving little incentive to lower your costs. EDGE CONSULTING will guide you to those carriers and agents that specialize in Worker's Comp.
SOME IMPORTANT FACTS ABOUT WORKER'S COMP YOU SHOULD BE AWARE OF. Before you renew a Worker's Comp. policy, please read this!
Are ALL Worker's Comp policies the same? - This is TRUE so you should not pay more than anyone else. Many employers don't realize that all Worker's Comp policies follow the same state regulated format. The state requires all insurance companies to use the same policy form! While the policy and format are standardized prices may vary dramatically from carrier to carrier.
Are there price variations among the top 100+ insurance companies? -This is also TRUE. If you are currently insured by an insurance company that has above average rates EDGE CONSULTING will find an insurance agency that specializes in carriers that have affordably priced Worker's Comp policies. These companies specialize in this type of coverage and take pride in offering a competitively priced product. Having coverage with an expert is such a simple concept. Experts know how to prevent or minimize losses, thus they can be more competitive with their prices. EDGE CONSULTING provides a network of agencies that specialize in your type of business. Don't be just another insured employer. Be covered by a company that actually appreciates your business.
Class Codes are a prime determining factor in calculating your premium. TRUE.
Our agents know that slight changes in a worker's responsibility and duties can sometimes help you reclassify yourself into more economical classification. This may help you lower your rating structure. Also, while overall Worker's Comp rates may not change every year, the prices among the different classes often do change. Are you paying at an older, higher rate?
Experience Ratings have a direct correlation to your premium costs. TRUE.
If your annual WC premium is over $5,000 then your business should be experience rated. An experience rating or also know as your "experience modifier" does vary among individual companies. The higher this rating the higher your premium. Think of your experience rating as a company report card. It is based upon the number of accidents you have had over the previous three years, and their cost to the carrier, compared to other similar types of businesses. The experience rating should be adjusted every year and it should be your goal to get this experience modifier at a number below 1.00. Occasionally carriers do not always share their little secrets with their clients. For instance, insurance companies set "reserves" to pay claims and don't often update the file when payment is made and your file is closed. Your experience rating could be left at the higher level! Having an expert in Worker's Comp to evaluate these situations can save you money. EDGE will provide you with companies that do share their cost saving methods.
Do premium audits actually save you money?TRUE.
After the expiration of your policy the insurance company may audit your payroll. Often they audit companies when they are reasonably certain that you will owe them money. We can recommend companies that hire private audit firms that may be able to get you a refund of a previously paid premium. They will conduct an audit for free. They are paid only if you get money back!
Edge Consulting is happy to offer "Clear and Concise" solutions when comparing your Worker's Comp insurance thereby saving you money in the process. We ask nothing of you but a little information to allow us to contact our network of low cost agencies in compiling your quote. Please read below. Thank you.
Employers, you are 1 click away from taking steps to save your company money on affordable Worker's Comp insurance.
Company Name* ____________________________
Your Name*________________________________
Title: ___________________________________
Address* _________________________________
City* ____________________________________
State* Zip* __________________
Phone* ext. __________________
Number of Employees* __________
Projected/estimated annual payroll $_________________
e-mail* _________________________________
Main Business Type(ie: builder,developer, plumber, electrician etc.)____________________________________________________________________
Specific Class (ie: residental, commercial, industrial)____________________________
Brief description of what you do: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
_____________________________________________________________________________________
YOU MAY DOWNLOAD THIS APPLICATION FROM YOUR COMPUTER AND FILL IN THE APPROPRIATE CATEGORIES. RETURN VIA E-MAIL OR FAX TO STEVE GRAVETT.
Return this completed application to us for a free quotation.
Thank you,
The Edge Team
CLEAR VISION, CLEAR STRATEGY
e-mail to Steve Gravett: steve@theedgeconsultants.com
FAX to Steve Gravett: 561-278-7154
Monday, October 12, 2009
Banks and their REO -What you Should Know !
We at Edge Consulting are learning the new methods needed to successfully approach Banks wishing to sell their unwanted non-performing assets (REO). Here is a summation of what we are seeing.
Banks today are all over the place when it comes to strength and health. The healthier the bank the less difficult it will be working with them towards a reasonable price. In classifying banks it is the HAVES and HAVE NOTS that determine how you need to approach a bank. In this case we are speaking about REO, so the HAVE NOTS are the ones with less and therefore easier to work with. NOTE: Sometimes the "HAVES" can be just as difficult because they are not desperate to sell; especially if it is a good asset with obvious potential that can wait for better times.
We need to understand the capital pressures banks are under when looking at an asset. Recently Edge was retained to assist another consultant and an interested builder in analysing a large partially built condominium project in a good location. As a potentially profitable asset it suffered the wrong asking prices at the wrong time...a very familiar scenario today. We wondered why the bank was carrying the asset on the books at such an aggressive price. As it turns out this was a HAVE bank; owning lots of REO. So why were they being so difficult? In many cases banks are working with a relatively small overworked staff making for long response times and little back-up data. The REO officer might have been the chief credit officer before or an account rep. As developers and builders we know more about the market, building costs, carry and problems aligned with this process than banks do. Our greatest fear is whether their is a market that will eventually be moving up in values and the market depth when it does. Here is where the clash of cultures begins; an informed party and an overworked banker. Our HAVE bank does not dare lower its prices unless told to do so by the auditors. If they have a recent (or even a year old) appraisal that supports the price on their books, it will stay at that number. Reducing Bank REO prices on their balance sheets can result in an unfavorable event for the bank. If the value of the asset is defensible then auditors will accept the bank's pricing. If on the other hand it cannot be supported the bank must realistically price the asset. By doing this, banks capital requirements and its Federal rating may be lowered. If lowered too much a bank will be taken over by the FDIC and sold to an investor group, a stronger bank or run by the Feds until the bad bank can be sold or merged. This fear of under pricing an asset portfolio can sometimes paralyze a bank's ability to deal with a sale of an asset to a builder. This is true for $2 million dollar assets or $50 million dollar assets and above.
You need a strategy that takes into account the bank's nervousness. Here are some scenarios we have encountered when trying to get back-up information from a bank to properly assess our future offer:
1. Banks will make you sign a confidentiality agreement, and they mean it.
2. Getting the much needed data may be difficult, especially if the bank is a HAVE bank with plenty of REO. They are paranoid about letting out potentially unfavorable numbers to someone just kicking the tires and wasting their time.
3. Be prepared to make an offer that may not have the amount of data you feel you need to peg a price. Have "subject too's" that protect your contract rights. Once the bank sees that you are serious, you will get the information you need.
4. Be patient, even if other people are looking at the same asset. They will be handled no differently.
5. Do not be offended by your offer. Show how you arrived at the numbers. Without the full data package you have plenty of unknowns to persuade a bank to consider your value system. If not you may withdraw the offer and stay in touch for a later attempt.
6. Be mindful that if you are interested in one of the better assets the bank may be willing to wait out the market. Again, in this case, stay in touch and offer your expertise and assistance; brownie points never hurt.
7. Be persistent, but not bothersome. Eventually banks do come around. When they do, you want to be the most memorable.
8. There is no deal until the board of directors approves the sale. Be sure you work with people that have the authority to take your offer to the final level.
9. Don't be afraid to ask for terms or financing. If you are buying an "A or B+" property that appraises well at the right price, and it is a good deal for some lender then why not the current one?
The only difference between a non-performing asset and a new properly planned project is the benchmark where a reasonable profit can occur in the existing market. We are currently at work in this very environment where our client and the bank are millions apart. The only thing that can change that now is a revelation in the withheld data that upon issuance to the developer may cause him to increase the price he is willing to offer. Or if the data does not support an increase, a persuasive developer can show the bank why their pricing process may be flawed. The developer has the knowledge and the money, but the bank has the asset. Somewhere in all of this a deal will be struck. Hopefully, it will be your offer and not the next developer to come along. Eventually, all bank REO will get redistributed into the private sector again.
THE EDGE TEAM.
Banks today are all over the place when it comes to strength and health. The healthier the bank the less difficult it will be working with them towards a reasonable price. In classifying banks it is the HAVES and HAVE NOTS that determine how you need to approach a bank. In this case we are speaking about REO, so the HAVE NOTS are the ones with less and therefore easier to work with. NOTE: Sometimes the "HAVES" can be just as difficult because they are not desperate to sell; especially if it is a good asset with obvious potential that can wait for better times.
We need to understand the capital pressures banks are under when looking at an asset. Recently Edge was retained to assist another consultant and an interested builder in analysing a large partially built condominium project in a good location. As a potentially profitable asset it suffered the wrong asking prices at the wrong time...a very familiar scenario today. We wondered why the bank was carrying the asset on the books at such an aggressive price. As it turns out this was a HAVE bank; owning lots of REO. So why were they being so difficult? In many cases banks are working with a relatively small overworked staff making for long response times and little back-up data. The REO officer might have been the chief credit officer before or an account rep. As developers and builders we know more about the market, building costs, carry and problems aligned with this process than banks do. Our greatest fear is whether their is a market that will eventually be moving up in values and the market depth when it does. Here is where the clash of cultures begins; an informed party and an overworked banker. Our HAVE bank does not dare lower its prices unless told to do so by the auditors. If they have a recent (or even a year old) appraisal that supports the price on their books, it will stay at that number. Reducing Bank REO prices on their balance sheets can result in an unfavorable event for the bank. If the value of the asset is defensible then auditors will accept the bank's pricing. If on the other hand it cannot be supported the bank must realistically price the asset. By doing this, banks capital requirements and its Federal rating may be lowered. If lowered too much a bank will be taken over by the FDIC and sold to an investor group, a stronger bank or run by the Feds until the bad bank can be sold or merged. This fear of under pricing an asset portfolio can sometimes paralyze a bank's ability to deal with a sale of an asset to a builder. This is true for $2 million dollar assets or $50 million dollar assets and above.
You need a strategy that takes into account the bank's nervousness. Here are some scenarios we have encountered when trying to get back-up information from a bank to properly assess our future offer:
1. Banks will make you sign a confidentiality agreement, and they mean it.
2. Getting the much needed data may be difficult, especially if the bank is a HAVE bank with plenty of REO. They are paranoid about letting out potentially unfavorable numbers to someone just kicking the tires and wasting their time.
3. Be prepared to make an offer that may not have the amount of data you feel you need to peg a price. Have "subject too's" that protect your contract rights. Once the bank sees that you are serious, you will get the information you need.
4. Be patient, even if other people are looking at the same asset. They will be handled no differently.
5. Do not be offended by your offer. Show how you arrived at the numbers. Without the full data package you have plenty of unknowns to persuade a bank to consider your value system. If not you may withdraw the offer and stay in touch for a later attempt.
6. Be mindful that if you are interested in one of the better assets the bank may be willing to wait out the market. Again, in this case, stay in touch and offer your expertise and assistance; brownie points never hurt.
7. Be persistent, but not bothersome. Eventually banks do come around. When they do, you want to be the most memorable.
8. There is no deal until the board of directors approves the sale. Be sure you work with people that have the authority to take your offer to the final level.
9. Don't be afraid to ask for terms or financing. If you are buying an "A or B+" property that appraises well at the right price, and it is a good deal for some lender then why not the current one?
The only difference between a non-performing asset and a new properly planned project is the benchmark where a reasonable profit can occur in the existing market. We are currently at work in this very environment where our client and the bank are millions apart. The only thing that can change that now is a revelation in the withheld data that upon issuance to the developer may cause him to increase the price he is willing to offer. Or if the data does not support an increase, a persuasive developer can show the bank why their pricing process may be flawed. The developer has the knowledge and the money, but the bank has the asset. Somewhere in all of this a deal will be struck. Hopefully, it will be your offer and not the next developer to come along. Eventually, all bank REO will get redistributed into the private sector again.
THE EDGE TEAM.
Thursday, June 11, 2009
marketing and sales messages and training need to change as consumer psychology and sentiment changes.
While this may sound like common sense, it is not yet a given how deep changes in sales and marketing will go as we exit this recession, but it is a certainty that these changes are now underway and not a coming attraction.
We are seeing more and more clients who have developments in place or about to start new developments and want to know where they need to be as far as product, price and selling methods. Top executives in charge of Marketing and Sales are seeking answers to those questions as well. The scars of this recession have created an even more wary consumer looking for affordable alternatives yet frozen with doubt when he finds what he thinks he wants only to be mentally paralyzed and unable to complete the purchase. Brokers in general real estate and new home sales are frustrated that showings and traffic are increasing but prying people loose to make a deposit and go to purchase contracts is yet another dilemma. There are sales being made, but most are due to large once in a lifetime discounts. When these discounted sales are gone what methods will lure the consumer back into the housing market?
Closing Tools for the timid. How do we nudge the consumer to make that deposit and then close? This is becoming an art form for sales associates. Here are some suggestions:
1. If your appraisals are strong and reflect your true market, be sure to emphasize this in your sales presentation. If you think they are strong but are not sure it may be worth your while to hire a couple of appraisers and confirm your suspicions by getting product appraised independently.
2. If you are considering price discounts to draw traffic, be sure to have a deadline on the length of time the reduced offering is in affect. Before you decide to discount use your appraiser as we discussed above. Take a couple of homes or home sites and pay for your own appraisal. After you lower the prices, the appraisal becomes your closing tool. You may also be better equipped on what the actual discount should be; it may not be as bad as you think.
3. After sale freebies offered to induce a closing.
a. Pay 1st year HOA dues, or whatever period makes financial sense.
b. New homes to be built- sewer hook-up fees or septic tank approvals
c. Various closing costs pre-paid
d. Cash towards moving fees
e. Free lawn service for a period of time
f. Gas cards
4. Be sure your sales staff quotes subtle housing news improvements: National
inventories down, housing starts up, prices begin edging up.
5. Now that the news media is quoting more optimism, insist that your sales director and sales staff read and understand daily financial papers-WSJ for example. Information in the Wall Street Journal has been positive the last two months on the housing recovery and continues to report as such. Builder stocks are up. These are strong closing tools to be shared.
6. Sales staffs need to be well read and well spoken and exhibit confidence in facts pertaining to the housing recovery.
7. Here is what is back in vogue for selling:
a. Dress professional and exhibit a sincere interest in your customer
b. Bring back polite etiquette and thorough follow-up.
c. Follow up in personal ways: sending interesting news clips or magazine
articles, include monthly newsletter, develop specials for clients that have
visited the sales office - make them feel special.
8. Enlist neighbors who have already purchased in the community to come by the sales office and chat with prospects - pay them a modest hourly fee if necessary,or use other spiffs.
9. Don't forget the referral base from others who have already bought. Post closing spiffs to your buyers for new home clients are more important than ever.
While it is hard to see a silver lining in our worst recession since the depression consider this. In the surge of easy sales in the last run up selling skills were replaced by order takers; you could sell snow to an Eskimo. Today the pendulum has swung way back to where no matter what skillful tactics worked before sales are slow and difficult. While the selling landscape and consumer habits are forever changed, basics, hard work, persistence and follow-up will eventually show results. Going forward, those old skills that rusted a little during the crazy days should be brought back and polished. The good sales people will actually be relieved to get back to a more sane and predictable market that will have a much longer and stable shelf life.
Happy selling,
The Edge Team
We are seeing more and more clients who have developments in place or about to start new developments and want to know where they need to be as far as product, price and selling methods. Top executives in charge of Marketing and Sales are seeking answers to those questions as well. The scars of this recession have created an even more wary consumer looking for affordable alternatives yet frozen with doubt when he finds what he thinks he wants only to be mentally paralyzed and unable to complete the purchase. Brokers in general real estate and new home sales are frustrated that showings and traffic are increasing but prying people loose to make a deposit and go to purchase contracts is yet another dilemma. There are sales being made, but most are due to large once in a lifetime discounts. When these discounted sales are gone what methods will lure the consumer back into the housing market?
Closing Tools for the timid. How do we nudge the consumer to make that deposit and then close? This is becoming an art form for sales associates. Here are some suggestions:
1. If your appraisals are strong and reflect your true market, be sure to emphasize this in your sales presentation. If you think they are strong but are not sure it may be worth your while to hire a couple of appraisers and confirm your suspicions by getting product appraised independently.
2. If you are considering price discounts to draw traffic, be sure to have a deadline on the length of time the reduced offering is in affect. Before you decide to discount use your appraiser as we discussed above. Take a couple of homes or home sites and pay for your own appraisal. After you lower the prices, the appraisal becomes your closing tool. You may also be better equipped on what the actual discount should be; it may not be as bad as you think.
3. After sale freebies offered to induce a closing.
a. Pay 1st year HOA dues, or whatever period makes financial sense.
b. New homes to be built- sewer hook-up fees or septic tank approvals
c. Various closing costs pre-paid
d. Cash towards moving fees
e. Free lawn service for a period of time
f. Gas cards
4. Be sure your sales staff quotes subtle housing news improvements: National
inventories down, housing starts up, prices begin edging up.
5. Now that the news media is quoting more optimism, insist that your sales director and sales staff read and understand daily financial papers-WSJ for example. Information in the Wall Street Journal has been positive the last two months on the housing recovery and continues to report as such. Builder stocks are up. These are strong closing tools to be shared.
6. Sales staffs need to be well read and well spoken and exhibit confidence in facts pertaining to the housing recovery.
7. Here is what is back in vogue for selling:
a. Dress professional and exhibit a sincere interest in your customer
b. Bring back polite etiquette and thorough follow-up.
c. Follow up in personal ways: sending interesting news clips or magazine
articles, include monthly newsletter, develop specials for clients that have
visited the sales office - make them feel special.
8. Enlist neighbors who have already purchased in the community to come by the sales office and chat with prospects - pay them a modest hourly fee if necessary,or use other spiffs.
9. Don't forget the referral base from others who have already bought. Post closing spiffs to your buyers for new home clients are more important than ever.
While it is hard to see a silver lining in our worst recession since the depression consider this. In the surge of easy sales in the last run up selling skills were replaced by order takers; you could sell snow to an Eskimo. Today the pendulum has swung way back to where no matter what skillful tactics worked before sales are slow and difficult. While the selling landscape and consumer habits are forever changed, basics, hard work, persistence and follow-up will eventually show results. Going forward, those old skills that rusted a little during the crazy days should be brought back and polished. The good sales people will actually be relieved to get back to a more sane and predictable market that will have a much longer and stable shelf life.
Happy selling,
The Edge Team
Monday, May 18, 2009
How does Florida's resurgent home market affect North Carolina and surrounding states?
As home sales begin to climb in certain parts of Florida at noticeable and significant rates, builders for the first time in three years are planning to acquire new parcels. Our national builder clients in Florida are once again cautiously optimistic that the worst is over. They are now looking for sensible vacant land parcels where they can begin the process they virtually abandoned over 3 years ago. Home inventories are shrinking thanks to short sales, foreclosures, and increased selling. In addition, the luxury market is slowly improving due to great pricing opportunities. Banks are cautiously lending once again (including Jumbo mortgages at higher rates) and new buyers are visiting model home sites. As we advise our Florida clients on these land parcels, we cannot help but to visualize the affect of Florida's improving housing market on our northern neighbors.
Eventually, this bodes well for North Carolina, South Carolina, Georgia and Tennessee. These are echo states to Florida; meaning that Florida's real estate eventually has an affect on theirs. Thousands of sellers in Florida are anxious to move to these states as they sell their existing Florida homes. Floridians seeking a change in lifestyle and economics are looking northward. But a word of caution about this relatively new echo phenomenon. These buyers have faced a devaluation of their net worth with diminished home values and lower stock portfolios. Builders and developers in these echo states will see buyers with lower expectations looking for value and wishing to stay more liquid. Builders will need to be flexible on re-positioning their old yet-to-be-sold-out subdivisions or they will be left behind realizing slower sales and longer hold times.
However, the plethora of Floridians previously (pre-recession) looking to make this northern move will be somewhat smaller in numbers. Let's not forget Florida's awesome year round weather. Many parts of Florida have once again become affordable as a result of this recession. The panhandle especially. With the new international airport nearing completion in Panama City and with St.Joe Paper ready to begin developing its inland properties, this area will redirect some of those people previously committed to the mid Atlantic states. Other regions of Florida will also benefit by the new affordability and lower interest rates. However, Builders and Developers in all regions will need to factor in more strict bank approvals and more conservative appraisals.
In western North Carolina, where Edge has several clients, the market is actually slumping below 2008 levels this winter and spring. The summer season is nearing and we are optimistic improvement will start to show here when Floridians begin their annual summer trek to the Carolina's and surrounding states. But, builders should be ready for buyers wanting discounts, looking for deals and having less disposal cash than they did 3 years ago. FLEXIBILITY IS KEY THIS SUMMER. Be flexible on your pricing, downsize and be flexible on your home and home sites for sale, re-do and lower those HOA fees where possible and cherish every advertising dollar left in your original proforma. The resumption of the northern trek by this group of Floridians will be different than before. Those builders who are flexible in pricing and product will do well. The rest will be left in the dust. Let Edge help you plan for your future.
Eventually, this bodes well for North Carolina, South Carolina, Georgia and Tennessee. These are echo states to Florida; meaning that Florida's real estate eventually has an affect on theirs. Thousands of sellers in Florida are anxious to move to these states as they sell their existing Florida homes. Floridians seeking a change in lifestyle and economics are looking northward. But a word of caution about this relatively new echo phenomenon. These buyers have faced a devaluation of their net worth with diminished home values and lower stock portfolios. Builders and developers in these echo states will see buyers with lower expectations looking for value and wishing to stay more liquid. Builders will need to be flexible on re-positioning their old yet-to-be-sold-out subdivisions or they will be left behind realizing slower sales and longer hold times.
However, the plethora of Floridians previously (pre-recession) looking to make this northern move will be somewhat smaller in numbers. Let's not forget Florida's awesome year round weather. Many parts of Florida have once again become affordable as a result of this recession. The panhandle especially. With the new international airport nearing completion in Panama City and with St.Joe Paper ready to begin developing its inland properties, this area will redirect some of those people previously committed to the mid Atlantic states. Other regions of Florida will also benefit by the new affordability and lower interest rates. However, Builders and Developers in all regions will need to factor in more strict bank approvals and more conservative appraisals.
In western North Carolina, where Edge has several clients, the market is actually slumping below 2008 levels this winter and spring. The summer season is nearing and we are optimistic improvement will start to show here when Floridians begin their annual summer trek to the Carolina's and surrounding states. But, builders should be ready for buyers wanting discounts, looking for deals and having less disposal cash than they did 3 years ago. FLEXIBILITY IS KEY THIS SUMMER. Be flexible on your pricing, downsize and be flexible on your home and home sites for sale, re-do and lower those HOA fees where possible and cherish every advertising dollar left in your original proforma. The resumption of the northern trek by this group of Floridians will be different than before. Those builders who are flexible in pricing and product will do well. The rest will be left in the dust. Let Edge help you plan for your future.
Monday, April 20, 2009
A Consultant’s input is valuable- before, during and after a Real Estate Cycle occurs. Consultants earn their keep by minimizing a firm’s overhead during typical Real Estate cycles. In the end Consultants are less expensive than typical employee overhead. But, consultants keep giving long after they first associate with their clients.
Beginning of a Cycle
Now (at the beginning of a Cycle) is the time when different ideas and new approaches are needed to set the stage for the successful long run ahead. Latest stories from around our industry are fairly predictable when it comes to builders and developer’s positioning themselves at the beginning of a new housing cycle. While many of the usual strategies are applied, there are a few twists emerging in this cycle that we are seeing nationally as builders/developers unveil the next generation of housing.
Many of the giant national builders and not so large building firms are introducing downsized new models while maintaining the same standard of interior luxuries as before. In addition, developers are minting smaller home sites. No surprises there. However different strategies are afoot to make homes “Green” and Energy efficient as never before. There is also the appearance that these new strategies as well as the tried and true strategies that worked in the past will last much further into the coming cycle. With more oversight ahead a noticeable change will be the consultant’s corporate role. They will provide better research, objective and creative marketing strategies, proforma realities and lender required oversight.
Because this has been such an evasive and deep recession touching so many sectors (financial, auto, housing, finance, travel, etc.) Americans are re-thinking their lives and their spending habits. Today’s Wall Street Journal (4-16-09) noted that for the first time since 1955 Consumer Prices on average are down. Even in past recessions this has never occurred. Or in other words, this statistic points to a rabidly consuming nation going on a crash spending diet that will last well beyond the duration of this deep recession. This recession will be a lasting memory point for our country.
We see the following trends emerging for the foreseeable future in all walks of housing:
1. More smaller model homes with great architecture.
2. More energy efficient homes with use of re-cycled products and new construction procedures.
3. Reasonable land opportunities that come from this cycle’s pricing pressures.
4. Look for more panelization to speed home production. Builders want it sold and closed faster to contain costs and improve productivity.
5. Smaller home sites in single family and more density in multifamily sites. Cities, now realize that increased density is more efficient for services charged by them and it incentivizes builders to re-think vacant sites not earning tax dollars.
6. Reduced expectations among the 75 million people in the USA that are currently over 50. In some of the expensive locales empty nesters and seniors will rent instead of owning. Home price appreciation is not worth the exposure to higher taxes, insurance and higher costing city services. This is especially true of coastal cities.
7. Better designed rentals and their amenities to capture the over 50/empty nester that is a discriminating buyer and renter.
8. Look for ownership of homes to still dominate the marketplace.
We see this as just a few of the trends in the coming months as a new cycle begins to emerge. It is imperative that any planning for the next cycle be exact and detailed. Longer planning time frames will occur. THIS IS WHEN YOUR REAL ESTATE PROFESSIONALS ARE MOST IMPORTANT TO BUILDERS, DEVELOPERS, BANKS, INVESTORS AND MUNICIPALITIES. Next month’s blog will address the Consultants role during the stable part of a cycle.
Call your Real Estate Consultant and give yourself the “EDGE.”
Beginning of a Cycle
Now (at the beginning of a Cycle) is the time when different ideas and new approaches are needed to set the stage for the successful long run ahead. Latest stories from around our industry are fairly predictable when it comes to builders and developer’s positioning themselves at the beginning of a new housing cycle. While many of the usual strategies are applied, there are a few twists emerging in this cycle that we are seeing nationally as builders/developers unveil the next generation of housing.
Many of the giant national builders and not so large building firms are introducing downsized new models while maintaining the same standard of interior luxuries as before. In addition, developers are minting smaller home sites. No surprises there. However different strategies are afoot to make homes “Green” and Energy efficient as never before. There is also the appearance that these new strategies as well as the tried and true strategies that worked in the past will last much further into the coming cycle. With more oversight ahead a noticeable change will be the consultant’s corporate role. They will provide better research, objective and creative marketing strategies, proforma realities and lender required oversight.
Because this has been such an evasive and deep recession touching so many sectors (financial, auto, housing, finance, travel, etc.) Americans are re-thinking their lives and their spending habits. Today’s Wall Street Journal (4-16-09) noted that for the first time since 1955 Consumer Prices on average are down. Even in past recessions this has never occurred. Or in other words, this statistic points to a rabidly consuming nation going on a crash spending diet that will last well beyond the duration of this deep recession. This recession will be a lasting memory point for our country.
We see the following trends emerging for the foreseeable future in all walks of housing:
1. More smaller model homes with great architecture.
2. More energy efficient homes with use of re-cycled products and new construction procedures.
3. Reasonable land opportunities that come from this cycle’s pricing pressures.
4. Look for more panelization to speed home production. Builders want it sold and closed faster to contain costs and improve productivity.
5. Smaller home sites in single family and more density in multifamily sites. Cities, now realize that increased density is more efficient for services charged by them and it incentivizes builders to re-think vacant sites not earning tax dollars.
6. Reduced expectations among the 75 million people in the USA that are currently over 50. In some of the expensive locales empty nesters and seniors will rent instead of owning. Home price appreciation is not worth the exposure to higher taxes, insurance and higher costing city services. This is especially true of coastal cities.
7. Better designed rentals and their amenities to capture the over 50/empty nester that is a discriminating buyer and renter.
8. Look for ownership of homes to still dominate the marketplace.
We see this as just a few of the trends in the coming months as a new cycle begins to emerge. It is imperative that any planning for the next cycle be exact and detailed. Longer planning time frames will occur. THIS IS WHEN YOUR REAL ESTATE PROFESSIONALS ARE MOST IMPORTANT TO BUILDERS, DEVELOPERS, BANKS, INVESTORS AND MUNICIPALITIES. Next month’s blog will address the Consultants role during the stable part of a cycle.
Call your Real Estate Consultant and give yourself the “EDGE.”
Friday, March 27, 2009
Positive Signs ahead or more economic Slight of Hand?
It certainly has been a rough recession (is there any other kind?). For us in the Carolina's, Georgia and Tennessee we felt the drop about a year after South Florida. South Florida officially started down in Real Estate in July of 2005; now going on 4 years. Now that the dates are known when will we book an official bottom and even more importantly, when will we see positive economic growth again in Real Estate and beyond?
This month (March 2009) many indices are pointing to better times ahead. First came the report of February existing home sales, multi-home sales nationwide and more recently new home sales and durable goods. Interestingly, these aforementioned items generally lead us into a recession, but do not necessarily lead us to a recovery. However, in this case, since our government has put such an emphasis on Real Estate it looks as though this will be the leader. Hard times are still ahead for automobiles as projections of new units are at a low 10 million cars a year in 2009, down from record highs around 16 million/year just 2 years ago.
As consultants it is our job to look where ever we can for reliable changes in the market. Reliable changes being the key phrase. While it appears good for February and March in the housing sector, what will April and May bring? Again, let's look at some trends in housing.
Mortgages are at their all time lows and mortgage brokers and banks are busy writing business again.
Nearly all of the original $700 billion stimulus has been spent, although we have no detailed reports as of yet where exactly the money went, it will soon show results.
Real Estate inventory around Florida is falling, so are prices but not as drastically. The minute foreclosures begin dropping as a large percentage of sales, prices will begin to rise...slowly. This is a buying opportunity.
In Atlanta last summer the MLS billboard along the interstate showed approximately 102,000 homes listed. Last week it was around 82,000.
AS WHEN ENTERING ANY RECESSION, IT IS NEVER JUST ONE ITEM THAT BRINGS DOWN THE ECONOMY TO NEGATIVE GROWTH LEVELS. IT IS A SERIES OF INTER-RELATED FACTORS THAT BEGIN THE ACTUAL AND PERCEIVED DOWNTURN AND THE ACCOMPANYING HUMAN PESSIMISM.
SO TO IS THE BEGINNING OF A RENEWED ECONOMIC TREND TO THE POSITIVE. TODAY'S WALL STREET JOURNAL IS REPORTING MUCH LESS PAIN AND AGONY AS THEY WERE FROM OCTOBER 2008 UNTIL MARCH 1ST 2009.
LOOK AROUND AND OBSERVE THE NEWS AND ITS TONE. FINALLY AMERICANS ARE STARTING TO GET TIRED OF SITTING AROUND COMPLAINING AND WE SEEM TO BE TOUCHING OUR TOE IN THE ECONOMIC WATERS THAT AWAIT.
AS CONSULTANTS, WE OBSERVE, WE ANALYSE, WE QUESTION AND WE ARRANGE FACTS IN A LOGICAL FASHION IN ORDER TO MAKE DECISIONS FAVORABLE TO OUR CLIENTS. SO WHAT ADVICE DO WE GIVE OUR CLIENTS TODAY....."IT IS TIME TO BE WATCHFUL AND PREPARED." REAL ESTATE GOES ON IN A SLOWER BUT CHANGING ENVIRONMENT. OUR CLIENTS ARE IN VARIOUS STAGES; SOME ARE MOVING INVENTORY, SOME ARE RETOOLING PRODUCT WITH NEW DESIGNS AND MARKETING CAMPAIGNS,SOME ARE BEGINNING TO LOOK AT ADDING LAND TO THEIR INVENTORIES FOR NEW COMMUNITIES AS OTHERS SELL OR JOINT VENTURE EXISTING LAND HOLDINGS. AS PART OF THESE OPERATIONS BUILDERS AND DEVELOPERS ARE REVISITING THEIR BANKS AND MODIFYING THEIR FINANCING TERMS OR PLACING NEW FINANCING. TIMING IN OUR BUSINESS IS EVERYTHING BECAUSE REAL ESTATE TAKES TIME TO SPOOL UP, AND TIME MEANS EXPOSURE TO MARKETS THAT CHANGE IN CYCLES. NO ONE SAID IT WAS EASY, BUT KEYS TO THE FUTURE ARE IN THE NEWS EVERY SINGLE DAY.......AND TO, THAT IS WHERE YOUR CONSULTANT SHOULD BE! GET THE EDGE.
SINCERELY,
THE EDGE TEAM
This month (March 2009) many indices are pointing to better times ahead. First came the report of February existing home sales, multi-home sales nationwide and more recently new home sales and durable goods. Interestingly, these aforementioned items generally lead us into a recession, but do not necessarily lead us to a recovery. However, in this case, since our government has put such an emphasis on Real Estate it looks as though this will be the leader. Hard times are still ahead for automobiles as projections of new units are at a low 10 million cars a year in 2009, down from record highs around 16 million/year just 2 years ago.
As consultants it is our job to look where ever we can for reliable changes in the market. Reliable changes being the key phrase. While it appears good for February and March in the housing sector, what will April and May bring? Again, let's look at some trends in housing.
Mortgages are at their all time lows and mortgage brokers and banks are busy writing business again.
Nearly all of the original $700 billion stimulus has been spent, although we have no detailed reports as of yet where exactly the money went, it will soon show results.
Real Estate inventory around Florida is falling, so are prices but not as drastically. The minute foreclosures begin dropping as a large percentage of sales, prices will begin to rise...slowly. This is a buying opportunity.
In Atlanta last summer the MLS billboard along the interstate showed approximately 102,000 homes listed. Last week it was around 82,000.
AS WHEN ENTERING ANY RECESSION, IT IS NEVER JUST ONE ITEM THAT BRINGS DOWN THE ECONOMY TO NEGATIVE GROWTH LEVELS. IT IS A SERIES OF INTER-RELATED FACTORS THAT BEGIN THE ACTUAL AND PERCEIVED DOWNTURN AND THE ACCOMPANYING HUMAN PESSIMISM.
SO TO IS THE BEGINNING OF A RENEWED ECONOMIC TREND TO THE POSITIVE. TODAY'S WALL STREET JOURNAL IS REPORTING MUCH LESS PAIN AND AGONY AS THEY WERE FROM OCTOBER 2008 UNTIL MARCH 1ST 2009.
LOOK AROUND AND OBSERVE THE NEWS AND ITS TONE. FINALLY AMERICANS ARE STARTING TO GET TIRED OF SITTING AROUND COMPLAINING AND WE SEEM TO BE TOUCHING OUR TOE IN THE ECONOMIC WATERS THAT AWAIT.
AS CONSULTANTS, WE OBSERVE, WE ANALYSE, WE QUESTION AND WE ARRANGE FACTS IN A LOGICAL FASHION IN ORDER TO MAKE DECISIONS FAVORABLE TO OUR CLIENTS. SO WHAT ADVICE DO WE GIVE OUR CLIENTS TODAY....."IT IS TIME TO BE WATCHFUL AND PREPARED." REAL ESTATE GOES ON IN A SLOWER BUT CHANGING ENVIRONMENT. OUR CLIENTS ARE IN VARIOUS STAGES; SOME ARE MOVING INVENTORY, SOME ARE RETOOLING PRODUCT WITH NEW DESIGNS AND MARKETING CAMPAIGNS,SOME ARE BEGINNING TO LOOK AT ADDING LAND TO THEIR INVENTORIES FOR NEW COMMUNITIES AS OTHERS SELL OR JOINT VENTURE EXISTING LAND HOLDINGS. AS PART OF THESE OPERATIONS BUILDERS AND DEVELOPERS ARE REVISITING THEIR BANKS AND MODIFYING THEIR FINANCING TERMS OR PLACING NEW FINANCING. TIMING IN OUR BUSINESS IS EVERYTHING BECAUSE REAL ESTATE TAKES TIME TO SPOOL UP, AND TIME MEANS EXPOSURE TO MARKETS THAT CHANGE IN CYCLES. NO ONE SAID IT WAS EASY, BUT KEYS TO THE FUTURE ARE IN THE NEWS EVERY SINGLE DAY.......AND TO, THAT IS WHERE YOUR CONSULTANT SHOULD BE! GET THE EDGE.
SINCERELY,
THE EDGE TEAM
Subscribe to:
Comments (Atom)