“Finally, you can really feel the heat!” Selling villas on the slopes of an active volcano – PART 2

(Sorry, folks, but it is time to train the sales departments

of residential projects how to respect their real client, the end user)

* this article was first posted on the 9th of March 2009

PART 2

I could not understand… the simplest possible strategy

All these memories remain strong, actually they are part of the valuable knowledge and experience (that I consider) I have collected so far in this life. In 2007 and 2008 they were crossing my mind almost every day, living here in Romania and working in Real Estate business, especially in the residential market.

I fought with many of my ex agents, because I didn’t allow to them to present an apartment before they would see it, take the papers of it, check the area, identify advantages and  disadvantages and understand why it was good for the client.

I could not understand how is it possible to hear that exist thousands of clients who can buy apartments in residential projects, just by watching the area of the project, checking the prices, choosing the details and paying. When it is time to buy an apartment, I had the impression that Romanians are like Greeks and they negotiate, ask endless questions and search for the optimum solution.

Instead, I was watching the strategy of the majority of the other agencies, who had exclusivities, trying to sell like this: “Client comes, agent shows, client asks prices, agent mentions prices, client asks for better price, agent refuses but offers other minor advantages and mainly financing by bank, client provides all feedback that the agent wants, client signs reservation or preagreement, agent is happy with the deal”

The ideal method of selling: Waiting the client to come and sign

Apparently this method of selling was successful for a period of time. You just needed to have a project, almost anywhere. The developer was paying the advertisement and you were waiting the clients at your office. You had the leaflets and promotional material etc, you had trained your people too (yeah, sure…) and you just had to be friendly, announcing the prices and showing the available choices, usually without any flexibility. You also did not need to have any connections or good name as person in the society, just sufficient advertising budget. The project was selling by itself, probably together with the brand name of your agency. You just had to welcome the clients… find some time for all of them and close the contract…

Do you know anything better for a sales person? As no one had experience of selling residential projects (there was no market just couple of years ago), the initial success spoiled the people very fast and after a moment this was considered as the rule. I still remember agents making fun of me, when I was trying to train them so as to understand the client’s needs, to choose what he really needs and to try for a better price…

All this worked very well, as long as the majority of the clients were investors…

Easy come…

More or less, the same story was happening to all the domains of the market… Soon we started watching the new army of rich people, the ones coming from Real Estate agencies. In some “big” companies, only almost half of the employees found themselves with lots of money and at all of a sudden they were able to buy a 30.000 – 60.000 euro car, endless new clothes, anything else (branded) that could promote their status, the most expensive vacation packages etc.   Many also invested in expensive properties (who said that who earns easy money is always able to know how to invest it?), others created their own companies and for sure almost all dramatically fought so as to show to the people around that their status was higher than the past. They became the example for the other employees, who started chasing the easy money too.

But especially in the residential market, there was a small issue, which no one paid attention to. The money kept flowing, but mainly coming from investors. The technique of sitting and waiting the clients was ok, as long as this category of clients existed. Very few people really tried to sell to end users, to the long term clients of this market. Even less people tried to study these people, to understand their needs. While the profits were huge and easy, who had time to lose trying to serve properly a simple couple who wanted to buy an apartment with “only” 150.000 euro?

Unfortunately not even 5% of the sales people did not focus on the majority of the clients, the ones who can invest up to 100.000 – 170.000 euro (80 – 90% of the market). It seems that after they said to their clients 1.000.000 times that average Romanians want and need apartments of 200.000 – 400.000 euro, in the end they believed it themselves too!

Easy go…

The market froze since long time ago. But in the beginning people still had money to lose, from what they earned the previous period. Months were passing by and the sales were lower and lower, but the official announcements to the media were always super: 80% of apartments sold, this %, that %… (when the banks came and asked to see the advance payments of all these presales, you can not imagine what happened and how 80% became 10 – 25% in plenty of cases).

It was very difficult for a normal Romanian to find a normal apartment in a new project, inside the city, so as to buy it. In the same time, the developers kept raising the prices, having the approval of their agents too. The investors disappeared for many different reasons and at least God sent to us the World crisis, so as all the irresponsible ones who promised huge profits to their clients to be covered. “If it would not be the crisis, we would have sold here in Titan with 1.800 euro / sq.m.” (which is 2.100 at least, if you include all the hidden costs). In the same time, the new measures of BNR blocked a part of the clients too, as they are very strict.

Now, just 6 or 12 or 18 months after Real Estate agents were the big spenders (depends on which category each of them was), more or less half of the agencies are closed. You call and the number is wrong… “Big” companies lay off lots of people and most of the expensive cars are either sold or replaced. There are thousands of people with 0  income for the last months, while their fixed costs were very high, due to the new way of life they had adopted. Unfortunately even the properties can not be sold anymore, as most of them were purchased with other criteria and a different market…

Not easy to change…

Even if the situation is this and it will become worse in the near future, it is very difficult for the majority of Real Estate agents to change. To forget the fat commissions without sweat, the life without worries, without thoughts and decisions, without the necessity to go back to the basics and start from the main rule: Client is the king.

Although the developers are disappointed and they stop collaborations with agencies or fire almost everyone who can be fired, still the “sellers” continue to approach the problem through their “old glasses”… It is very difficult for them to squeeze their mind for thoughts, ideas and solutions which work in reality. The majority of them still did not realize that even without the crisis, they would not be able to sell these expensive apartments to people who simply have 1.500 – 3.000 euro / month as couple. And a couple with this financial capacity should definitely not be oriented to apartments with price over 100.000 – 200.000 euro.

Unfortunately we keep watching around us people who look like a pedestrian in the middle of a big boulevard with cars driving like crazy around him. He looks at them and does not know what to do, which direction to take, so he just looks and waits.

Action is required, NOW!

I would expect the unions of the Real Estate agencies to become more active nowadays. To ask the agencies for the structural problems they have, to organize trainings (as now the time is plenty for most of the people), maybe even to search for solutions which would allow to smaller agencies to reduce their costs. Silence…

Action is required, NOW! We need to:

• Stop considering all clients as “the ones who are desperate to buy” and the agents as “the ones who will relieve them from their problem”.

• Start training almost all the sales teams from the very beginning. Immediately, if possible, because the more time is lost, the bigger the problem will be.

• Find some time to invest in training sales people especially in how to handle the real problems that can happen during a meeting with a client who is potentially interested in a property.

• Redirect the attention of the agents from easy money to the client’s needs.

• Reorganize the sales strategies. Until now they were based on the developer’s convenience and on the agent’s simplified way of work.

• Re-invent almost all advertising campaigns. The simple way of placing some adds on specific media and waiting the clients to respond, can be considered officially dead.

• Include internet in every marketing strategy. Especially in Romania, where internet is the part of life for millions of people.

This new world, the crisis and all the other factors that have created all we live today, give us many trouble, but also a major opportunity: To enter again in the healthy path of progress with the client in the centre of our attention. The ones, who will continue to consider him as not their main priority, will face serious survival problems…