Talk of a housing bubble and June’s increase of the federal funds rate – the first increase in four years -have builders and pundits wondering how long the housing boom will last.
“Builders must begin to ask themselves, is their outstanding success due to quality products and smart sales strategies, or simply due to great conditions?” asks Bob Schultz, MIRM, president of New Home Specialist Inc., in Boca Raton, Fla. He says it’s time for builders and their sales staffs to take a serious look at their operating procedures because the days of easy sales may not last forever.
John Dickson, MIRM, director of marketing and business development for DHI Mortgage, a D.R. Horton Co., in Austin, Texas, also expects things to change. “While no one knows how fast or how much interest rates will rise, the increase is certain,” he says. Some experts predict that the board will call for quarter-point increases every month through year’s end.
One strategy for preparing for a more difficult sales environment involves educating builders’ sales staffs on the special loan products available, says Dickson. He mentions special programs for low-income buyers and for the ever-growing immigrant market. He cites flexible credit standards, low/no down payments and reduced income requirements as loan programs that can help place these buyers in homes. Special programs or increased flexibility also exist for professions such as nursing, teaching, law enforcement and fire fighting, as well as for energy efficient properties, Dickson adds.
Schultz counsels builders’ sales staffs to brush up on their selling procedures and make sure they are following a consistent selling sequence that includes preparation, presentation, demonstration, closing, follow-up and customer care. Then, he suggests role-playing the sequence over and over until the sales process is memorized.
“Builders, developers, sales executives and sales people must hear this urgent wake-up call, understand historical patterns and be able to react quickly when the next housing recession hits,” cautions Schultz. “And it will.”