John Rymer - New Home Knowledge

October 01, 2006
Professional Builder Magazine

Protecting Your Backlog

Professional Builder Magazine, October 2006
by John Rymer - NewHomeKnowledge

With rising interest rates and a softening market, many builders face high cancellation rates as customers reconsider and or walk away from their original purchase decision. Although no builder is immune from cancellations, builders and sales agents can use several strategies to minimize cancelled customers.

Smart builders escalate relationships with their backlog customers by keeping in touch. No news is good news for customers who believe they may have made a bad decision when agreeing to buy a home. If customers don't hear from the builder, they might think there's no progress on the construction of the home — and wonder if there's a good way out of the deal.

At the same time, a sales agent does not look forward to calling customers who they think may be considering canceling their home. Again, they assume no news is good news. Many sales agents assume that by not calling the customer they have eliminated or postponed the chance of a cancellation.

It is very important to communicate regularly with every customer in backlog a minimum of once every two weeks. Ask yourself, from a customer's perspective, who would you rather disappoint: a company and a sales person who you barely know and haven't heard from, or a trusted friend and company representative who calls and keeps you abreast of the status of your home?

So how do you stay in touch and provide purposeful information for customers in backlog? Begin with the following premise to every phone call:

1. I personally walked your homes this week and this is what I observed.

2. I spoke to the builder (or superintendent) who is building your home this week, and this is what he/she said about your home.

Note there are no commitments for closing dates or even necessarily that any progress has been made on the home — just personal interest taken by the sales agent in providing an update to the customer. If little progress is occurring on the home, think about progress outside of construction, such as new schools that are opening; road work that is being completed; or new area restaurants or shopping.

If your market is seeing significant discounts since homes in backlog were sold, sales agents need to be armed with guidelines on how to deal with customers seeking a price reduction prior to closing.

Setting guidelines with sales agents doesn't mean giving them the keys to discount a home in backlog. If a customer says, "I see that the price of my home on the Internet has decreased, so what are you going to do for me if I go ahead and close?" The sales agent might say, "I understand that you expect to pay a fair price for your home in today's market. Let me discuss it with my division president/sales manager, and we will get back to you within 48 hours." By doing this, the sales agent is still the point person and the relationship is still in tact.

In the News

Stephen R. Toth
Chief Operating Officer
Novare Realty
Atlanta, Georgia
"The New Home Knowledge training program really appeals to a new generation of sales people as well as a new generation of customer. It does away with the old "textbook" solutions and gives our agents a real word view of how to engage customers when they are shopping for a new home. "