How to Crush New Home Price Objections
Do your sales professionals dread talking about price with potential new home buyers?
Too many in our industry do, even with today’s strong demand for new homes.
All too often, they trip, stumble and lurch their way through the common concerns that new home buyers have about “price”.
And sometimes by sheer luck, the sales pro makes it through to the sale anyway.
Unfortunately, sometimes they don’t, and their prospective buyers end up not making the best choice.
Your company loses the sale…
The sales pro goes home empty handed…
And worst of all, a family compromises on one of the most important decisions they’ll ever make: Where they’ll live their lives for the next 5-7 years or more.
The good news is, with a little coaching, every new home sales pro can learn to love price objections when they invariably come up.
This article will cover that.
But before we begin, if you’d like to fast-track the learning curve for your sales team, call my office at 888-738-4020 and request a free sales diagnostic consultation.
Okay, let’s dive in…
No doubt, 2020 will be a watershed year for homebuilders.
If it weren’t for the challenge of finding buildable land, the chronic shortage of skilled labor and most recently, the spike in lumber prices…
Heck, it might have been a pretty normal year.
Oh yeah, and then there was the pandemic.
So now we’re seeing a massive shift in buyer interest from urban to suburban living, driven by the need for affordable space to work, get educated and exercise in.
And even though demand is strong, your sales people are taking their share of flak over price — and no doubt passing it along to you.
But price has always been a hurdle. And it always will be.
No matter which way prices go, it’s important for your sales pros to stick with the fundamentals.
So, let’s see how we can help them conquer home buyer concerns, and in turn help more families own the homes they truly desire and deserve.
Getting to Yes — If Only They Knew How
Most of the time, buyers would make the right decision if only they knew how. Yet sadly, too many sales people just don’t know how to lead them to it.
You’d be surprised how many people in our industry can’t even tell you how to figure out what the monthly payment for a new home is…
And these are “professionals”!
The truth is, every sales professional needs coaching on how to explain the value of owning a new home to prospective buyers, and how to minimize their pain around pricing.
When you break it down and really look at the facts, it’s just not all that painful!
So let’s pretend we’re a couple of flies on the wall and listen in on how a well-coached sales pro might handle a buyer’s concerns about price…
Sales Pro: “… so with lumber prices skyrocketing as I’m sure you’ve heard, we’ve had to raise the price on that model by $12,500.”
Home Buyer: “Wow, that’s a big price jump… I mean, I was hoping we could find something here for $312,500 or less. But now you’re saying it’s now $325,000?? There’s no way we can afford that!”
Sales Pro: “Well Mr./Mrs. Home buyer, were you paying all cash for this house, or putting so much down and paying some each month?”
Home Buyer: “Well, we’ll be taking out a loan for sure…”
Sales Pro: “Okay, great! So the good news is, prices have gone up, but interest rates have gone down. In fact, the offset is crazy right now.
“If you had come to me a year ago and prices were lower but the interest rates were higher, we’d be at the exact same number. That lower interest rate has completely offset the price increase — and then some.
“In fact, let’s run the numbers… So you’re putting how much down?”
Home Buyer: “Well, let’s figure 10%.”
Sales Pro: “Okay (running the calculator) so 10% down… On a 30 year loan… At 4.25% interest, the P&I is $1383…
“But then, even with the price increase, at today’s interest rate at, let’s say 3.25%…
“Your payment actually dropped to $1272!”
Would You Let Just Twenty Bucks Stand in The Way?
The other day I was coaching a new home sales professional who worked for one of our Sales Management Consulting & Coaching clients.
They’d just had a $4,000 price increase on one of their townhomes, and a buyer was stuck on the difference. So, I coached the sales pro on how to show them the difference on their monthly payment. It was less than $20 dollars a month…
Just twenty bucks!
Did the buyer realize that? No, they didn’t!
And at 5% down, the only difference up front was around $200!
They got it at that point…
But when you say four thousand bucks, it’s just a lot harder to swallow.
Sales velocity has been so good lately that most builders I work with haven’t skipped a beat. Many can’t even keep up with the volume.
In one case, a client of ours was thinking of raising prices by a thousand or two per unit. After talking it through with them, they decided on raising prices three to five thousand.
As we pointed out to them, why lock in your revenue at a lower price when you can’t even keep up?
At least if you start at a high enough price, then no matter what lumber does, you’re covered.
On the other hand, I know of one builder who locked in prices too low. He had to go back to his buyers and return their deposits, because with the spike in lumber costs he simply couldn’t build for the price they were pre-approved for.
If your sales team isn’t able to guide buyers to move forward by overcoming their price concerns, you have less options, and you could be headed for trouble.
You simply may not be able to meet your sales or profit goals if your sales people aren’t equipped to handle price objections when they invariably come up.
How to Rest Easy Knowing Price Isn’t Really an Issue
This is where a good sales coach can help.
When a prospective home buyer is stuck on price, they can coach your sales people on what to say… In what scenario… And how to win the sale.
In new home sales, being able to handle price objections is no small deal.
There’s no money for second place. You either win or you don’t.
And as the old saying goes, if you ain’t first, you’re last.
Our home builder clients love the coaching we do for their sales people because they know at the very least it helps them get a sale here and there that they wouldn’t have otherwise.
And once the salesperson gets the tools they need to handle price objections, they can use them with every prospective home buyer who walks in the door of one of your model homes.
How do I know?
I’ve personally sold over $2 billion in real estate and have served as a VP of Sales as well as a highly profitable Division President doing 300 homes a year.
Interest rates, lumber prices, labor rates, land costs go up… And they go down… Either way, I can sell a new home.
And that’s because somebody taught me.
A little coaching for your sales team goes a long, long way toward helping you meet your sales and profit goals…
It can help your sales people conquer buyer concerns, help home buyers own the home of their dreams…
And let you rest easier, knowing price just isn’t an issue — for you, or for your buyers.