Choosing the right approach to marketing your new homes is an important decision for any developer. Timing, pricing, presentation and selecting a suitable sales agent and service are all important elements, several of which will be influenced by the type of properties offered and the developer’s target market. With the possibility of some sectors of the UK’s residential property market becoming more challenging in some areas, making the right choices about how to sell your new homes could be critical to the success of a development project.
Ready, steady, sell!
There are two starting points for developers when it comes to marketing their new homes; starting to think about how to sell them and actually putting them on the market. Developers should be starting to think about their marketing approach before a brick has even been laid.
Some types of developments may be suitable for off-plan sales. Typically these will be developments where the end products are going to be quite similar and where the prospective buyer can get a good impression of what they will be buying by looking at a show unit. It has been known for investment buyers to purchase off-plan without visiting the site, but in the main you want to be able to show potential buyers what they can expect from their new home, albeit on a different floor or plot. Developers must not rely on buyers having the imagination to envisage what the finished product will look like. When you’re asking someone to commit a substantial amount of money to something which is yet to be built they must buy into the promise of what their home will be like once it’s completed.
[color_quote]Even with off-plan sales it’s important to offer a reasonable timescale between when a sale is agreed and when the purchaser can expect to move in. Leaving too long a gap, especially if there may be fears of a dip in the property market or the economy as a whole, may deter buyers from signing up because of worries about what might happen to property values and/or their own personal circumstances between exchange of contracts and completion.[/color_quote] Mortgage offers for example typically last for 3 to 6 months meaning that a purchaser may have to reapply for a mortgage during the period when they are committed to purchase but do not yet have a completed property. If in the meantime there are changes to their employment status, their relationship or perhaps interest rates move up, they may find it difficult to obtain the mortgage necessary to complete their purchase, even though they had a valid mortgage offer at exchange of contracts which subsequently lapsed.
First impressions last
Think carefully before rushing the properties on to the market before they’re ready. Commencing marketing too soon could lead to a protracted marketing period which could give the impression that the properties just aren’t shifting when in fact it could be that buyers aren’t signing up because the development still looks like a building site. Get the roads and landscaping completed, on an initial phase at least on larger developments, so that purchasers aren’t negotiating muddy digger tracks to get to their potential new doorstep. As well as leaving the potential buyers with the task of imaging how their home could look when not surrounded by a muddy bog, they may also be wondering how much longer they may have to put up with construction plant and building works after they move in but before the rest of the development is complete.
Also bear in mind things like the weather and holiday periods when launching your marketing activity. Avoid the dead of winter for a launch date if you can, especially if the properties are in a more rural location, and avoid the summer holidays if your target market is families. Of course, if you are hoping to attract buyers looking for a holiday home then it makes sense to market them in the holiday season. The key, as with most things in property development, is to understand your market and your buyers and to plan accordingly.
No one is sure what’s going to happen to the property market in the short to medium term. However, a slower market becomes more competitive with the best and worst homes of their type standing out much more than when it was a race for buyers just to get a viewing before an offer flew in and the sale was agreed. Kerb appeal and creating the right first impression are essential when the viewers may have half a dozen or so other homes to compare. Make an impact with the landscaping and the interior presentation so that when the potential purchasers look back on their many viewings your properties are memorable for all the right reasons.
[pull_quote]Fit your floor coverings and consider dressing the properties with high quality furnishings.[/pull_quote] Imagine going into a home with bare concrete floors and the protective plastic wrapping still on the kitchen appliances and windows. Then think what it could look like with the carpets or wood flooring fitted, attractive décor and some suitable, aspirational furniture and accessories which make the most of the space and showcase the home’s best features. Leave your potential buyers with the ‘wow!’ factor not the ‘how?’ factor.
The price is right
When setting your marketing prices redo your homework. Has anything changed during your build which might cause you to alter the prices you intended to set when you were in the planning stages? Has the market moved up or down? Is there more or less competition now than when you started? Has anything significant happened to the local economy? Are there new jobs in the area or has a large employer closed down? Be objective about your prices and if you have to consider setting them lower than intended be realistic and decisive. Stay ahead of the market and achieve some sales rather than following the market down and always looking top heavy.
When setting your prices prepare for some degree of negotiation but don’t start too high. Online systems enable buyers to easily search within defined price parameters. Set your price too high and your homes may not appear in search results for your target market willing to spend the sort of money you’d be prepared to consider. Keep within reasonable expectations.
Decide if some sort of marketing offer or incentive would help to persuade a perspective purchaser to choose your home over another. Are you able to offer Help to Buy, or to fund the stamp duty or to include an extra sum for carpets and furnishings? If you feel your target market should be able to raise a mortgage but not have too much cash available, can you do anything to help them meet their cash expenses and keep some money in reserve for creating their home once they’ve moved in? Could you offer a part exchange or chain breaking service? Or provide a period of free furniture storage for those who are downsizing and would appreciate time to be able to decide what to take to their smaller new home. There may be things that are more important to the purchaser than the asking price.
When considering early offers don’t be too quick to dismiss those coming in at just under your target. Easing your cash flow or being able to settle some of your debts can take some of the pressure off and give you more time to achieve or even exceed your target prices on later sales. Cash in the bank may also enable you to acquire your next site or pump funds into another ongoing project. Look at what that sale would enable you to do rather than becoming fixated on it being under your expected level and missing an opportunity.
Choosing an agent
When selecting a sales agent choose one which is right for the type of property you’re selling. A high end product deserves a high end service and although the commissions may be a little more, premium agents should attract the sort of purchasers willing to pay more for a high spec, well-appointed property.
Establish at the outset what the agent will do for their fee. How much advertising is included in the commission and what will you be expected to contribute more towards. What signage will you have and who will provide it?
Should you pay extra for a high quality brochure rather than the standard presentation details and would professional photography show the property off to best effect? Although ‘the camera never lies’, the skilled use of lighting, lenses and the right perspective can give results vastly to superior to a few quick snaps with a compact camera or iPhone. One of our clients produced brochures for their development with each one costing £25.00. They considered it a worthwhile investment when attracting buyers to spend upwards of £2m on one of their homes.
For some developments it may be appropriate to create a website to showcase the development as well as having details on the agent’s site and Rightmove or Zoopla etc. If so, ensure that it works well and looks professional, that the copy and photography give the best impression and that the website is regularly updated, especially if the site includes pricing and availability information.
When selecting an agent, consider if you will need them to man a sales office on site, in which case who will be responsible for providing the staff and who will pick up the costs? If you just expect them to accompany viewings, do they have sufficient cover to be able to do them at short notice, especially at weekends when most buyers tend to look?
Once on the market, have regular update meetings or conversations with the agents so that you’re kept appraised of activity not just on your development but in the wider market. If there’s brisk activity on other similar properties in the area but your site is lacking viewings, why might that be? If you feel your agent isn’t giving you the support and advice you need, consider switching to a new agent or at least giving them notice of your intention to do so to see if that spurs them on.
The moment of truth…
It can take many months, if not years, of hard work to complete a development. From the acquisition of the site, through planning and then construction, everything has been leading to the moment when a buyer comes to look at what you have created and decides they want to buy it. Doing your research and making sensible decisions early on in the project will help to ensure that when you do throw open the doors of your show apartment or luxury home, you get the reaction your hard work deserves.