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Home prices in many areas of the country, including the New York metropolitan area, were up in the first quarter of 2010 over the first quarter of 2009, according to the latest survey from the National Association of Realtors. Meanwhile, home prices in New Jersey rose 2% from the previous year, to a median price of $436,900, in another sign that the housing market is stabilizing. Lawrence Yun, the NAR’s chief economist, has attributed this increase in part to the federal tax credit for first-time and repeat homebuyers, which he says has been highly effective in drawing down excess inventory, with about one million additional sales resulting directly from the stimulus. With the federal tax credit having expired on April 30, the question now is: what can sales and marketing teams for new developments do to maintain sales momentum? 

  • Offer your own credit: To win over buyers who may have been disappointed that they missed out on the federal tax credit, offer your own credit. The federal government offered an $8,000 tax credit for first-time homebuyers and a $6,500 tax credit for repeat homebuyers who met certain income qualifications. Most pricing structures contain at least this much wiggle room. Instead of offering pricing concessions during negotiations, offer them up front in order to stimulate traffic. Indeed, you can make your credit even better than the federal government’s by offering $8,000 to everyone, including repeat buyers and regardless of income. Create a sense of urgency by including a deadline. And don’t forget to promote it–it won’t help if no one knows about it.
  • Roll up your shirtsleeves: The real estate market typically enters the doldrums when school lets out, whether your target market is families or “double income, no kids.” The summer mentality takes hold even for those who don’t have families, and calendars quickly fill up. The same is true of sales and marketing teams, who tend to slow down when temperatures start to climb. But no one can afford to take it easy in a challenging real estate market. In order to keep the momentum going, sales and marketing teams have to double down on their sales efforts. The teams who remain committed to sales basics–including being as responsive as possible, taking the time to educate buyers and following up–will be those who have positive numbers to report come September.
  • Be prepared to offer buy-downs: Mortgage rates remain near historic lows. According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed rate mortgage was 5% in the first quarter of 2010, which is down slightly from the rate of 5.06% in the first quarter of 2009, but up slightly from a record low of 4.92% in the fourth quarter of 2009. At this writing, rates have once again dropped to a national average of 4.75%. But they are eventually expected to climb. When that happens, sales and marketing teams should be prepared to offer mortgage buydowns, picking up the tab for the difference between the real mortgage rate and the rate at which a buyer qualifies or is prepared to make the leap. This incentive is generally not a huge dollar cost to the developer.
  • Marketing is more important than ever: If you can’t see prospective buyers, you can’t sell them. You have to get them in the door. And since the expiration of the federal tax credit has eliminated the sense of urgency that contributed to the recent uptick in sales, the only way to accomplish this is through marketing. In order to create buzz, you have to keep your name out there through routes other than traditional advertising, including networking, visiting local real estate offices and follow-up letters to agents. One of the most effective strategies is media relations: media relations is more cost-effective than traditional advertising, as well as more credible.
  • Be prepared to hold buyers’ hands: The good news is that there is a lot of buyer traffic; the bad news is that buyers are taking forever to make up their minds. Which makes it more important than ever not to give up on them. Today’s buyers require hand holding: they are worried they will lose their jobs; that the stock market will take another nosedive; and that prices, having started to climb, will go down again. The latter is their biggest concern. You have to hammer home the point that the chances of a double dip are slim, but if the market continues to strengthen they risk missing out on buying at the bottom of the curve, as well as losing the home of their choice.  

Jodi Stasee is president of Pennington, NJ-based Stasse & Co., which manages sales and marketing for CANCOlofts and Trump Plaza Residences in Jersey City, The Residences at the Heldrich in New Brunswick and The Residences at Palmer Square in Princeton. The views expressed here are the author’s own.

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