This Redmond townhome project began construction in early 2007 and delivered product beginning in the Spring of 2008. With presales made during the prior 12 months not closing due to market conditions, we were faced with 94 units of inventory coming online quickly and no closings, limited financing options, and an interest clock ticking.
First we selected a new location for a sales center that was easy to find and worked well with a merchandising effort far beyond what was anticipated. The presentation on site improved dramatically as we created a memorable experience for buyers through three model homes, improved landscaping, and interactive sales office displays. With financing guidelines getting more and more restrictive we were running out of options for our targeted buyer profile. This led us to quickly run the project through the approval process for FHA type financing. By pushing this process early we missed the backlog later associated with projects trying to do the same thing. Having FHA as a financing option allowed us to offer buyers a low down payment and low monthly payment option as part of our menu of financing solutions.
We then took a hard look at our overall pricing strategy and decided to have a pricing strategy that allowed us to be the most competitive offering in the marketplace without repricing the entire project. On a monthly basis we would decide which 4 homes we wanted to sell that month, and we would price those 4 homes slightly under the competition in the marketplace. These 4 homes would then not only stand out as a value in the market area, but stood out on the price sheet on our project as being a great value. This strategy worked and buyers signed up at a rate of 3.70 sales per month on average. This sales pace was far beyond anything our competition was doing. In retrospect, selling this product for the price we did at the time we did contributed greatly to the bottom line, versus a plan in which we had waited and needed to sell those same homes today at greatly reduced values.
This pricing strategy paired with our marketing efforts built around our “Rewards” program worked very well. Our “Rewards” program is a quarterly program that provides a change in offerings and concession on a quarterly basis. We Started with a buy one get one free campaign were we offered a free Honda Element with the purchase of every Element Townhome. Then we did interest rate buy downs with rates going as low as 1.875%. Our final campaign created urgency around the first time buyer tax credit extension (i.e., “once in a lifetime opportunity!”). Each time we launch a new campaign with a new message, we attract new buyers with different motivations, wants, and needs.
Continuing to drive traffic to the site, providing the best value in our market area, and doing both early in this declining market, we were able to capture revenue that would have likely been lost otherwise. By targeting specific home sites and keeping sales momentum moving in a forward direction, we were able to move product in a market where our competition could not. We sold an average of 3.70 units per month, and our messaging continues to be one of success. We sold out of this project in April 2010.
