How to Compete With Foreclosures

A fact of life for new home sales professionals in 2009 is that 40 percent of home sales in many markets are not builder sales nor homeowner resales, but homes that are lost to short sales, or foreclosures. The first reaction of many new-home sales professionals is to become defensive when discussing or comparing their new homes to lender-owned housing.

But for the true new-home sales professional, that scenario is often one of the best ways to show value in the new home you're offering. So let's begin with the key differences between a new home and a short sale:

1. Builders value customer satisfaction. Builders value your satisfaction and are the decision makers. If they provide erroneous or misleading information, their reputations are ruined and their company will surely fail. In the case of foreclosures, you often deal with a daisy chain of a general real-estate agent, who passes long information to the lender's representative, who passes long the information to the special assets manager, who passes the information along to the loan committee. As no one has ownership in the process or knows what the final agreement will look like, there is ample opportunity for bad or misleading information to be provided throughout the process.
2. Builders value home buyers' time. New-home sales offices are filled with customers who spent months working with on a short sale, thinking they had a deal only to learn their offer had been rejected by the lender. Sixty percent of top general Realtors in a recent survey responded by saying they would no longer work with short sales because they had no assurance they could get a deal executed. Not only is it time consuming, but it postpones the buyer's becoming a homeowner.
3. Builders value quality. Remind them, "We wouldn't provide a comprehensive warranty if we didn't believe in our quality."
4. Frustrated homeowners often leave "surprises." The experience of losing a home to foreclosure is not pleasant. Angry homeowners often leave surprises to get back at the lender, but the new homeowner is the one who must deal with the problems.

There is a story I like to tell about short sales: "It's like deciding how to travel from Atlanta to Los Angles. Some folks will work really hard to get the lowest price on a non-stop airline. We call them new home buyers. Others will hear about a deal at the bus station that promises the lowest price to Los Angles but offers no guarantee on how many stops, when you might arrive or how much you will pay in other fees by the time you get there. I don't know about you, but I'm taking the plane."