COVID-19 shook the real estate industry on a massive level. For the first time in more than a decade, new home construction and sales ground to a halt. In California stay-at-home orders meant the market stood still for an unprecedented 45-60 days—an eternity in the building industry.
The pendulum swung back hard in the opposite direction around June 2020. The Fed cut interest rates, work-from-home opportunities enabled buyer relocation, and locked-down homeowners were itching for a change.
Demand for houses was suddenly off the charts. The volume of U.S. home sales reached a 14-year high. Many builders faced an explosion of interested buyers—but lacked the appropriate fulfillment processes to accommodate them.
During our decades of real estate sales and marketing consulting, we have never seen an about-face this profound in such a short period. The landscape has shifted, resulting in notable changes to the way builders sell homes.
Hurry up and wait
The effects of the COVID-related international work stoppage of 2020 started to ripple outward across the globe during the last year. Supply shipments that previously ran like clockwork are now subject to significant delays.
Builders can no longer count on construction timelines that have worked in the past. Most are struggling to deliver product, balancing the impact of materials delays on construction scheduling, community openings, and sales and marketing for new homes. What once took 4-6 months may now require 8-10 months, maybe a full year.
Builders must include additional time in each phase estimate and be ready to quickly reprioritize in the event of delays.
Increased transparency with buyers
Buyers, too, are feeling the impact of construction delays. Standard 12-month contracts are subject to shifting timelines. Before COVID-19, most builders had sales structures in place that only communicated completion commitment roughly 60 days from final closing.
Many builders today have increased transparency into their new home sales processes to become more proactive about sharing the realities of project completion. To manage buyer expectations, many builders are now outlining a window for closing, rather than a hard date.
Buyers get nervous when they drive through their new community and see what appears to be very little activity. Builders are working closely with real estate sales partners to streamline communication to keep buyers informed. Many builders are adding more touchpoints, outlining the work that has already been completed, any current or upcoming delays, and what is next in the queue. Much of this communication can be automated, proactively informing buyers about project milestones.
Our long history of real estate sales consulting for builders has taught us that more communication with customers is always better. We encourage our entire team of seasoned sales associates to share as much information as possible with buyers as often as possible. Frequent communication addresses buyer concerns and reminds them they are top-of-mind with their builder.
Holding back homes for release
With delivery dates so far out ahead, many new home builders are facing a gap between the first round of sales and final delivery. This gap can stall the builder’s sales and marketing efforts, leaving sales teams idle while construction catches up.
One beneficial strategy we have developed over decades of real estate sales consulting is to withhold a few houses during the initial release. Instead, we encourage builders to release these homes approximately 30 to 45 days before delivery.
This tactic offers a few advantages for builders: the ability to gain more margin on a product that has appreciated since initial sales rounds as well as keeping sales teams engaged between the first round of sales and the final delivery.
Incorporating more digital resources
Stay-at-home orders across the west have transformed how people work, collaborate, and connect socially. Video calls have replaced many in-person meetings, online shopping has skyrocketed, and buyers demand to access information online at any time.
This shift toward digital has builders rethinking their sales and marketing processes as well. Modern, responsive web design showcases the essence of new communities, virtual tours give buyers the chance to check out a property without leaving home, and video calls enable sales teams to connect with buyers in distant locations. Many new home sales teams are also releasing frequent video updates to provide buyers with a detailed look at construction progress.
Though builders are incorporating digital elements into their sales and marketing processes, personalized attention still reigns supreme. Digital resources can enhance the relationship between builder and buyer but will never replace a strong connection.
Keep advertising efforts consistent
Because of the recent surge in demand, some builders deprioritized new home sales and marketing. Some felt it was unnecessary due to long buyer waitlists, others were concerned they could not meet demand, and others were challenged with appropriately pricing houses due to major fluctuations in material costs.
However, nothing lasts forever. When the market settles and supply chains are more dependable, builders without strong sales strategies will end up lagging behind competitors. Working with experienced real estate sales and marketing consultants provides a significant advantage.
Seasoned partners like The Advantage Group deliver comprehensive insight into the entire development process, from new home pricing recommendations to real estate marketing strategies all the way through to closing. Support from experienced professionals alleviates builders from the detail-heavy sales process, so they can direct their focus toward more essential matters.
As we head into the new year, builders will still face delays and disruptions due to COVID-19. However, with innovation, flexibility, and support from experienced real estate sales and marketing consultants, builders can establish a new normal that positions them for an even stronger future.
Contact our team of real estate sales and marketing experts today to discuss how we can help you bring in more buyers.