ANOTHER idea from Jet Blue to help Sell New Homes TODAY

In January, I started blogging about Hyundai’s “job-loss insurance program.”

I thought it was a real tool to get prospects off the fence. And commented builders should try it.

Now Jet Blue has rolled out a similar tool. If passengers lose their jobs before the trip, they get a refund of the fare.

Smart!

Take the fear out of buying and get more sales.

Builders should do the same. Recently, John Burns’ webinar pointed out that the biggest impediment to buying was fear about employment, the economy, etc. So, we should work to minimize that fear, rather than roll out more of the same old tools.

Toll Bros. recently got very aggressive about an old idea, mortgage buydowns. I compliment them for trying something, but let’s look at the results.

They offered a permanent, 30-year buydown to 3.99%. They estimate that they made 70 gross sales in the three-week period of the “deal.” The deal period is over so they sure won’t get more, and we have yet to learn what cancellations would apply. And, even if that velocity continued, they would only accomplish 1213 sales for the year.

$20,000 to $25,000 is the per-unit cost of the buydown.

And it didn’t work very well.

I just have a suspicion that the job-loss “insurance” cost in our business wouldn’t be $25,000 per sale.

Hyundai eliminates some reasons to buy. And, SURPRISE, more people buy Hyundais.

Jet Blue, is dealing with smaller prices, but they are risking 100% of their revenue per passenger. If they refund a fare, and are unable to resell the seat, it’s all lost.

Hyundai at least closes the sale and has a performing car loan for a year. If the buyer loses his job, Hyundai takes back the car…and can resell it at SOME price.

Jet Blue doesn’t get the passenger part way to the destination. They either get the seat revenue or not. But they are being creative to remove one more barrier to discretionary travel. Good for them.

We COULD have a program like Hyundai that gives buyers some protection if they lose their jobs within a year of closing. It’s not even fear of the value dropping in the short term that is holding people back. They knew of that issue before they visited the sales offices. By their own actions, they are telling us that they have reconciled the possible VALUE EROSION problem.

So, if they don’t buy, what was UNresolved?

The biggest issue holding people back, as John Burns shows, is not interest rates. So, if it was not the #1 problem, we solved something that was less important. Why not solve the most important issue?

If our kids were having trouble at a lemonade stand, we would look at the reasons people were not buying, they suggest solving THEIR issue. A bigger sign, or a lower price, or more sugar would not solve warm drinks on a hot day. Ice would!

How about the same thinking about the big kids’ world of housing??!!

Many years ago I saw a great quote from a sales manager at (then) US Home: “People don’t go to the butcher shop just to look at the pork chops.”

It has stuck with me since then.

People coming in are on a mission! We need to help them improve their current housing situation. We need to solve their problem. When we do so, we solve ours.

They are worried about losing their jobs. Free granite countertops won’t solve that!

Job loss insurance might. And just having that tool would empower our sales teams with confidence.

If we had more confidence, we could sell more homes.

If we had more tools, we could sell more homes.

If we had more tools, we would also have more confidence…and we’d sell even more homes.

I believe this is something for builder associations to tackle. Get a price for several thousand policies each year for the next 2-3 years. Bid the prices down. Give the tools to the members.

But some builder associations are getting involved in more signage programs, arguing with the press and thinking of more websites. (And competing with some of their dwindling membership.)

Here’s my question.

HOW IS THAT WORKING FOR US?

Maybe, they should try and help their members solve the buyers’ reluctance. Simply sending more traffic is incomplete at best and ineffective at worst. (Toll reported a 34% increase in traffic, because of their buydown. People came. They just didn’t respond very well.)

I suspect there is one creative national builder who won’t wait for someone else to solve the problems. I suspect that right now, they are thinking about a Kick Butt job protection plan to stimulate home sales.

I bet I know which builder it will be.

I bet you do, too!

HARD

I welcome your feedback.