Each week, we share key learnings from some of the homebuilding industry’s best webinars and podcasts. Our goal is to help new home leaders make better decisions overall – and especially during the current COVID-19 outbreak.
This week, we are sharing some new voices – as well as proven sources of wisdom each week, to help you keep up with the latest tools and techniques to survive and thrive today.
As always, we encourage you to use these highlights as a guide and urge you to dig deeper by listening to the full recording of a webinar. We invite leaders from all disciplines of homebuilding to seek out important webinars and podcasts each week, from these and other experts.
Tim Costello, founder and CEO of BDX, opened this weekly podcast with a quick recap of the latest BDX Google Real Estate Search index, before jumping into a lively and insightful conversation with Mike Lyon, founder of DoYouConvert.com.
“For the fifth week in a row, we’ve seen traffic and interest in new homes online increase week-over-week…and now we have favorable year-over-year comparisons, as well,” Costello said.
“The story has changed from the market meltdown…to one where there are more people searching for a new home online then there were a year ago,” he said. “Last week was the first time in nine weeks that NewHomeSource.com produced more leads than last year – and last year was a record year.”
Mike Lyon and his team assist more than 100 Online Sales Specialists for builders across the nation. Lyon is seeing similar rebounds in search volume, web traffic and leads across their clients – while noting that conditions vary by market. “We’re seeing leads reaching the same level as this time last year. We’re seeing people set up and be comfortable with virtual appointments,” Lyon said.
Both experts agreed that over the last 45 days, the amount of less trackable offline home search – driving through a new home community but not registering with the model home, for example – has dropped and been replaced by highly trackable online activity.
Lyon advises builder Online Sales Specialists to lead with empathy and really understand where each customer is at in their journey. He also urges builders to learn to separate objections from what he called conditions. “As a sales professional, if a buyer is concerned about losing their job,” he said, “I’m not going to tell them they’re wrong.”
Costello agreed but also cited Megatel Homes in the DFW market. He noted they are working with an insurance company to offer a Job Loss Mortgage Protection Plan. Both experts agreed this was a great strategy to address a legitimate concern and to help give buyers the confidence to continue.
In an especially lively conversation, Costello and Lyon agreed on a list of four headwinds – what Lyon referred to as conditions – and the pair discussed ways that builders could help home shoppers decide to proceed with a purchase:
- Credit availability, especially for jumbo mortgages
- An increase in minimum credit scores to obtain a mortgage.
- Concern that the price of a new home may drop during or after purchase.
- Difficulty selling a current home to buy a new home.
Both Costello and Lyon agreed on the need for innovative programs – and concise, well-crafted concise answers – to allay the concerns above. In addition to a Job Loss Mortgage Protection Plan, some builders are offering a Price Protection plan. If the price of a home goes down after purchase, the buyer receives a refund for the difference. Costello noted this was primarily a psychological boost to a buyer’s confidence. Even in the Great Recession, Costello added, new home prices typically did not fall. When prices did drop, he added, it was often because a builder deliberately removed features from a home, in order to lower the base price to appeal to more buyers.
Both experts also cited a number of tailwinds that can support new home sales and prices:
- Consumer search for new homes online is now higher than last year.
- Mortgage rates are at historic lows.
- Builders have quick move-in and to-be-built homes – at a time when the inventory of used homes for sale has dropped by 50% or more.
- Many buyers perceive new, never-lived-in new homes as comfortable and easy to tour virtually online – or by private, in-person appointment.
- There is no over-supply of new homes on the market – and no wave of foreclosed homes to drag down the resale value of used homes.
When asked what advice he would give to owners and division presidents of homebuilders, Lyon offered three key points:
- Technology is a Must-Have, Not a Luxury: “Invest in your website and its content,” Lyon said. “And the ability for your customer to experience your product, without being in your product,” he added. “Everything a car dealer has, have that for your new home.”
- Lead Management and Follow-Up: “When someone becomes a lead, have the tools to effectively manage that prospect, “Lyon said. “You need an Online Sales Specialist and the tool where the leads live (a CRM system) – and the communication tools that go along with that.”
- Personalize Buyer Touchpoints – Don’t Overly Script Them: “Leverage your face via video emails and Zoom meetings,” Lyon advised. “Buyers want a trusted advisor.”
While builders have made major advances in just weeks, both experts agreed that selling a new home online was nothing new.
“Twenty years ago, after we took new home shopping online with NewHomeSource.com,” Costello said, “we helped a builder sell a home online to a soldier being re-stationed from Germany to San Antonio.”
While working as a builder online sales specialist in 2006, Lyon sold a home to a sailor on a submarine. “Communication took longer, since he could only send an email when the sub surfaced,” Lyon noted with a laugh, “but we got it done.”
When asked for parting advice, Lyon said, “Adaptability is key. If you find another gear, you will survive – and you will come out stronger.”
The always informative team of Tim Sullivan and Ali Wolf – a graduate of The Ohio State University, she wants you to know – make this a can’t miss webinar for 4,000+ building industry leaders every week
Wolf, the Chief Economist of Meyers Research, opened the call with her usual graceful summary of a number of important – but disparate – economic metrics that she skillfully weaves together each week. Listen to the recording and join this call every week for full details. Key facts include:
- 91% of renters paid their rent in April – vs. 96% last year.
- 7 million mortgages are in forbearance – up from 6 million last month.
- Phase 1 construction has reopened in Washington State.
- All eyes are on Georgia and Texas, two critical housing states, as each reopens. Many consumers in both states feel reopening is happening too soon.
- Nearly 25% of New York City residents tested showed traces of COVID-19 antibodies – showing the impact there, and the possibility that NYC is closer to herd immunity than thought.
- Weekly Initial Jobless Claims rose again to 26 million and an implied 20% unemployment rate. While both are previously unfathomable numbers, each may reflect an undercount.
In a new data point, Wolf shared Domestic Net Migration for the last six years. Austin, the hometown of BDX, topped the list for five years, Las Vegas once. Wolf joked that she hoped Jeff Meyers wasn’t on the call, thinking he might quibble with her methodology. We sought to help by publishing it again here!
In a topic of keen interest to builders, although 23% of home shoppers expect home prices to decline by 11% to 15% or more, 74% of real estate agents surveyed reported that their sellers had not reduced the price of their home for sale.
As both Wolf and Sullivan noted, builders can point to pent-up demand for homes since the market was white-hot pre-COVID. Builders can also cite declines of 40% to 60% or more in used home inventory as another reason they are not reducing base prices.
Tim Sullivan, Senior Managing Principal of Meyers Research, reported later in the webinar that 88% of builders surveyed kept base prices flat week-over-week – and 9% actually raised base prices.
As he does each week, Sullivan shared the BDX Google Real Estate Search Index, with two vital insights for builders. Online search for new and used homes was up 5% week-over-week nationally. And, for the first time since the pandemic began, BDX reported that the volume of residential real estate search online was up year-over-year – up 8% compared to the same week last year, a record year for online real estate search.
As promising as online search is, Sullivan also discussed some headwinds that homebuyers – and thus builders – face. They include tighter mortgage credit standards overall and for jumbo loans, and increases in credit scores, and higher tax rates that both Wolf and Sullivan see on the horizon.
In sobering news for builders in the Tampa area, Sullivan reported that impact fees for a 2,000 square-foot home in Hillsborough County have nearly doubled, from $12,969 to $25,928. Increases like these are being seen across the country – and will price thousands of serious buyers out of the market.
Sullivan took a fresh look at builder land and lot strategy, which he summarized as a tug-of-war:
- Builders: Land acquisitions on hold, waiting for clarity
- Land Owners: Ready to sell at their price
- Capital lenders: Deals on hold, waiting for land to be re-priced
For other important news for builders – and to see a not-to-be-missed Sullivan family portrait with one heckuva a large snake relaxing on the kitchen counter – check out the webinar replay.
The Hive for Housing podcast has long been an important forum for thought-leadership in the homebuilding industry. Last week’s podcast with CR Herro, VP of Innovation for Meritage Homes, and host Philip Beere is a must-listen for building leaders who seek to pivot, serve homebuyers, and thrive – during and after the COVID-19 pandemic.
Describing his role at Meritage Homes, Herro said, “It’s an opportunity to look at the future potential of the industry…to be more energy efficient…and deploy home automation,” Herro said. “it’s an opportunity to partner with state and local governments and utilities – all aimed at enabling new technologies to be built into a production builder’s business case…to allow us to create new value for consumers.”
Meritage Homes has also been a leader in re-inventing its website to enable and encourage virtual and online home shopping – even allowing consumers to buy a new home online. “It’s important to help the consumer feel safe and inspired through new media,” Herro said. “We all have to be receptive to change and get comfortable as fast as we can.”
Herro noted that construction has been deemed essential in most states and can continue safely within government health and safety guidelines, since homebuilding does not require great density.
“Week-to-week and day-to-day, we get guidance from the CDC,” Herro said. “We have different states taking different postures around personal safety and critical workspaces,” he added. “In the vast majority of our communities, our trades and construction managers are on-site – and our sales centers are open by appointment.”
“As an industry, homebuilding is creating awareness of health (for workers and homeowners) and online purchasing,” Herro said. He noted that the industry has proven remarkably resilient and adaptive.
“We are able to make decisions remotely…and run a very dispersed industry nationally from a laptop,” he said. “The pandemic is forcing people to become comfortable with a new reality – and a new business paradigm—in ways that will likely be very productive…as we come out of the pandemic.”
Herro also noted how profoundly the pandemic has changed how consumers think about their home. He cited three big buckets – Financial, Health and Comfort – in how consumers are re-thinking their definition of home. Herro shared his thoughts on how builders can respond and message to each.
“The technology (for healthy homes and indoor air quality) has existed for decades,” Herro said. “Until now, there hasn’t been the general consumer sophistication to enable and prioritize these better building practices and materials.”
Herro predicts that homebuyers will permanently increase the importance of safety, health and comfort. He expects far more home shoppers will seek out or be receptive to technologies that include smart HVAC systems that reduce particulates, surfaces that are bacteria and virus-resistant, and products that reduce solar gain and increase water quality.
With so many people now home all day, Herro expects future homebuyers will ask, “How does a home live? Does it have the correct architecture for my lifestyle? Is it comfortable, healthy and safe?”
As Herro noted, at its core, building science is rooted in improving the quality of people’s lives. Both Beere and Herro agreed that builder messages around safe and healthy new homes powered by advanced building science will resonate far more deeply with buyers – during and after COVID-19.
“That 36-year old mother of three has seen the fragility of the human condition, and she is much more motivated to protect her family,” Herro said. “I think there’s an opportunity – and, possibly, an obligation – for this industry to step up,” Herro said.
Herro noted that he has often been described as an optimist. While he does not view the world through rose-colored glasses, Herro said, “I really think that most opportunities for growth…and to create new value in a business come during difficult times.”
“The pandemic will create unprecedented opportunities for those who challenge the status quo,” Herro said. In closing thoughts, Herro urged listeners to ask, “Given this new paradigm, how can I adjust to create value? How can I be of service? How can I respond in a productive way to help?”
This webinar delivered important and actionable insights from three acknowledged masters of selling. Hosted by Jeff Shore, noted sales trainer and author of Closing 2.0, the webinar provided more than 2,000 attendees with insights and tools to assist homebuyers virtually online.
Dan Waldschmidt, the author of Edgy Conversations, focused on The Mindset necessary to sell virtually online. James Muir, the author of The Perfect Close, delivered The Toolset needed for success.
“Selling virtually – and specifically, closing virtually – is something that has to take place first in our minds,” said Jeff Shore to kick off this webinar.
“It can be easier for your buyer to make a decision virtually for two reasons: They’re in a place of comfort (their current home) and they have more attentional currency to spend,” Shore added.
“It’s vital that the salesperson have confidence and a mental picture of the virtual conversation with a buyer before it begins,” Shore said. “That requires the right mindset and the right toolset.”
All three experts stressed the need to practice using virtual tools so they become second nature. That allows the salesperson to focus fully on the buyer’s needs – not on how to operate the Zoom platform.
Each expert also underscored the importance of defining the value you as a sales consultant before each customer encounter. Muir said a salesperson must be able to answer these three questions before every sales call – whether virtual or in-person:
- Why should this client see me right now?
- What do I want this client to do as a result of this meeting?
- How can I provide value in this encounter?
Muir urged salespeople to formulate a primary value proposition before each virtual meeting and two back-ups. “There are three components of a value proposition,” Muir explained, “Metric, Direction, and Magnitude.” The example he cited was: “Quality sleep (the metric) improves COVID-19 recovery (the benefit and the direction) by 41% (the magnitude).”
Lack of preparation, Muir added, is why 50% of sales conversations have no outcome. That’s usually because the salesperson did not define a compelling value proposition, did not plan a logical call-to-action, or lacked training in asking for a commitment without damaging trust, he stated.
“No one ever got hurt asking for a sale,” Muir said. “If you ask for it in the right way, you can’t lose.”
Shore noted that closing is a series of smaller commits that build agreement and momentum, not a single major commit. “When people say yes to smaller commits, it’s easier for them to say yes to the bigger commit,” Shore said. “People don’t argue with themselves.”
Muir said the ultimate closing question should begin with the words, “Does it make sense…?” As an example, he recommended asking a prospect, “Does it make sense for us to assess your needs and look at some options?” Most prospects will say yes to this question, he noted, giving permission to proceed.
For the few who say no, Muir recommended asking, “OK, what do you think is the right next step?” In that case, most buyers will answer honestly – and usually in ways that advance the sale, he added.
“The best close is one that paces at the rate the other person is ready for,” Muir said. “You can’t lose by asking the ‘does it make sense?’ question.”
Tim Woliver, owner and founder of Oxland Advisors, a Dallas-based real estate consultancy, moderated a lively panel on reimagining the homebuyer’s journey.
Panelists covered the full spectrum of the industry and included a leading developer, a divisional VP of sales for a national builder, a software provider to the industry, and an advertising and marketing agency with many developer and builder clients.
Each weighed in on how technology was already reshaping the new homebuyer’s customer journey pre-COVID, and how the pandemic has accelerated that digital transformation.
Amy Levi is president of Denver based Strada, an advertising and marketing firm that works with top master-planned communities coast to coast. “Our clients who had their tech platforms in place are faring the best,” Levi said. “They’ve got a ‘one-two’ punch of a powerful technology platform plus a highly differentiated brand.”
When asked if clients were altering marketing budgets, Levi said, “We’re definitely seeing some cuts – but also investment, as well. A lot of dollars planned for physical, on-site events in the community are migrating to the digital eco-system.”
“Newland Communities stayed the course with ad budgets,” Levi said, “and they are seeing new buyers come into the funnel,” Levi added. “We’re seeing online events. Pulte Homes had success opening a model home with Facebook Live video.”
“We’re really encouraging the on-site sales team to get creative and shoot (smartphone) video,” Levi said. “We’ll overlay brand messages on that.”
When asked where Strada recommends that clients focus their marketing investment, Levi listed tuning up the website, video, online chat and email as areas of investment. She recommended moving away from templated email communication to carefully crafted messages that change in tone and content weekly, as events unfold and the mood of the consumer evolves.
Heath Melton, Executive VP of master-planned communities for Howard Hughes Corporation, shared the developer’s perspective.
“We’re on the hunt for an interactive platform for developers for decision-making,” Melton said. He noted that his firm started investing in the digital and online homebuying journey many years ago with tools like interactive site plans and interactive floor plans that convey a strong sense of place.
Melton said a top goal with technology and visual and interactive content online is to have buyers “80% to 90% ready” on their first visit to a community. His team focuses on “how to shrink the time from point of contact to point of contract,” Melton said.
Chis Hartley, VP of Sales for K. Hovnanian Homes in DFW and a member of Professional Builder’s “40 Under 40,” list got straight to the point.
“There are three types of builders out there with respect to technology,” Hartley said. He listed them as Avoiders – dinosaurs on the road to extinction; Adapters – applying technology, but in reactive as opposed to proactive ways; and Accelerators – eagerly seeking competitive advantage via technology.
“If you are not an Accelerator, you will become an Avoider,” Hartley said. Technology tools that Hartley recommends include Online Design Centers and “House on a Lot”’ visualizers.
“The builder who uses technology will replace the builder who does not,” Hartley said. “The old general rule was if you have 100 homes in a community, you built two model homes. As we start to watch our dollars and leverage technology more, you may see one (physical) model home and one virtual.”
Overall, Hartley reminded builders and developers alike, “Your number-one job is to be a place-maker.”
As the homebuyer’s journey evolves during COVID-19 and after the virus abates, Nicole Godfrey shared her thoughts on a formula for marketing success for builders and developers. Godfrey is Global President of Runway, a software and technology provider to builders and developers in Australia and the U.S.
“It’s about great content, story-telling, and giving the consumer what they want…and giving them confidence,” Godfrey said. “You need to get your house in order in terms of content, data, images and social media.”
“The big opportunity (after the pandemic) is not to go back,” Godfrey said. “It’s to understand the consumer more – and to re-engineer the sales process with technology.”
Melton offered a fitting capstone to this webinar by noting that their focus as a leading developer is to be Accelerators, as well as creators of culture and memorable places, and a firm that helps bring homeowners together around values that include family, fitness and wellness.
About the AuthorMore Content by Jay McKenzie