Beyond 'Order-Taker:' Sales Evolves As A Local Business Driver

Happens every time. All it takes is for a booming new home sales cycle to signal it's going to head for a fall. Then, like that, the new homebuilding business' sales associates start hearing themselves referred to in the same ol' same ol' way.

"Order takers."

When times are great in the business, that's the label sales team members get. A consensus of opinion goes roughly as follows. Homes and neighborhoods sell themselves off deep interest lists, with more would-be buyers than available inventory, at ever-higher, more profitable prices. And when times get tough, that label – "order takers" – sticks. As a housing correction slides to its floor, the "order takers" stigma suggests sales associates bring neither the motivation nor the skills to sell into the teeth of a cyclical downturn.

We hear this repeatedly. Part-true or not, however, the label maligns people, their efforts, and their track-records of success at matching many new homeowners with their most costly consumer durable purchase of a lifetime. Further, the dismissive characterization of sales staffers reinforces a view among them that they have little to no say in their individual and team impacts on business results.

In other words, good things just happen because of market demand, while bad things happen because sales associates' performances are less than effective and they lack the drive to do much about that at all.

A truly vicious circle – and one that can undercut the morale, purpose, and engagement of new home sales teams even then they're knocking it out of the proverbial park.

A Wall Street Journal piece today by staffer Nicole Friedman captures the backdrop of this dynamic:

Builders ramped up activity during the pandemic-driven housing boom, but they struggled to keep up with demand because of labor shortages and supply-chain problems. As construction times slowed, builders amassed a large backlog of homes that were under construction but not yet completed.

Builders were aggressive to cut prices and offer incentives, especially mortgage-rate buydowns, to attract buyers by making purchases more affordable.

This year’s improved backdrop helped new single-family home sales rise 9.6% in March from the prior month, according to data from the Commerce Department.

“Because inventory is very tight and remained very tight, it’s very easy to move from a fear of buying at the top to a fear of missing out,” said Stephen Kim, a home-building analyst at Evercore ISI." – Nicole Friedman, Wall Street Journal

Spring 2023 efforts, initiatives, strategies, and tactics among homebuilding organization regional, divisional, and community-level teams may offer a ray of encouragement that firms are resolved to get out of that vicious circle.

The first reason for that is that they've worked. Asking price discounts, incentives, upgrades, closing cost reductions, lot premium giveaways, and the most popular tactic of all – the mortgage buy-down to bring monthly principal and interest payments within reach of more household budgets – have been a sales and lending team's widely employed standard toolbox for cause-and-effect order pace and backlog closings results for five months or more, since mortgage rates came down off their cyclical peak of well-over 7% in November 2022.

Beyond that recent spark of success however, a more strategic transformation in the actual role and accountability stream of sales team members has gained traction. In recent years, the role of a new home sales associate has evolved into that of a local real estate business strategist. These sales associates are now expected to use their knowledge of housing data, competitive research analysis, deep local community knowledge, and local economic trends to develop marketing and sales initiatives that drive results for the company.

Aaron Wagner, senior director of Organizational Development for New Home Star, unpacks this up-migration of the sales role – from agent to full-on real estate business portfolio strategist – as via a business-plan centered monthly and quarterly process that both sales team members and their homebuilder division executive brass clients carry through on rigorously.

He describes the business plan's raw materials ingredients as follows:

There’s initial information about the community that you’re in, and owning it like a store front," Wagner explains. "The first piece of it – we call an Asset 180 – it’s 180 questions about your community, area, distances to a 10th of a mile, where everything is located, etc. So, you’re the expert in the area. Monthly deliverables include competition studies. And then, once a quarter we do a SWAT Analysis for their community. Then we wrap all those things up with a business plan. Now, lots of builders across the country look at competition, and a few of them still do SWAT analyses. But the business plan isn’t something I’ve heard of anybody else’s sales associates doing"

That thorough business plan – using data, research, tools and templates that New Home Star provides as rich, automated, market and sub-market solutions – becomes a community sales leader's planning bedrock in preparation for a monthly meeting with division executives where each associate presents their own business plan for the community to the division president, head of marketing, and a number of other people that it might affect, Wagner adds.

In that monthly meeting, they review and preview goals and walk-through sales and marketing efforts that make them achievable," says New Home Star's Wagner. "They review the previous quarter traffic, sales, and all of the marketing things that the sales associates did themselves to own their marketing. They look forward and say, 'here’s the traffic I’m predicting; here’s the sales we’re predicting,' and then – with those evidence-supported quantitative outcomes, they can suggest, 'here are the one or two items – up to three – we need from the builder to make the goals happen. For example one might be, 'I’ve noticed 80% of my traffic needs a floor plan that has this one feature in it. Could we maybe consider adding this one floor plan, and if we do, then I could hit my sales goals.' Then, there’s a conversation based on the data that they can present to the division president and then they can make that adjustment. Sometimes, it’s raising prices; sometimes it’s lowering prices; sometimes it’s a new floor plan; sometimes it’s a feature."

The transformation of this role is driven by several factors. First, the increasing complexity of the real estate market requires sales associates to have a deep understanding of the market in which they operate. They must be able to analyze data and identify trends to develop effective marketing strategies that drive sales.

Second, the competition in the homebuilding industry has increased, and sales associates are expected to keep up with the latest trends and technologies to stay ahead of the competition. They must have a strong understanding of the local market and be able to leverage that knowledge to create marketing campaigns that are effective and innovative.

Third, homebuyers are becoming more informed and educated, and they expect more personalized and consultative services. Sales associates must be able to provide this level of service, which requires them to have a deep understanding of their customers' needs and preferences.

To succeed in this new role, sales associates must have strong analytical and strategic thinking skills. They must be able to collect and analyze data to identify trends and opportunities, and use this information to develop effective marketing and sales initiatives. They must also have excellent communication and interpersonal skills to build relationships with customers and effectively convey the value of their homes.

In this case, the sales person can say to the homebuilding division or regional brass, 'I’ve done the work; I’ve done the research. Here’s what we need to be successful, and I’ve done it for you, so you tell me ‘yes or no’ whether we can do it," says Wagner. "So, it allows them to own, and be heard by the division execs."

Overall, the transformation of new home sales associates into local real estate business strategists is a positive development for the industry. It allows homebuilding companies to stay competitive and to provide more personalized and effective services to their customers. By leveraging data, market knowledge, and strategic thinking, sales associates can create successful marketing and sales initiatives that drive results for their companies.

The real success of it, the secret success of it, is that because it puts the sales person in the driver’s seat, it allows them to do things that they might not normally do," New Home Star's Wagner says. They have to report on what they did to drive their own traffic. The strength of it is that the sales associates own it. It’s their thing. They can also be allowed to be heard."

That's a far cry from getting labeled as an "order taker."