“To my real estate agent, Chernobyl is a fixer-upper.”
Yakov Smirnoff
Income represents just a few lines on our financial feasibility but unless you can sell your product and generate the income you won’t have a project nor any profit. Selling a new house and land development is quite different from selling existing real estate. Most likely you will want (need) to sell sections or house and land packages in advance of completing construction to secure funding. With these pre-sales you are expecting people to buy before they can touch. That can both help or hinder sales. On one hand people are not sure on the details and may be hesitant whilst on the other you may sell them into a vision they simply can’t wait to buy into. The alternative is when you speculatively develop houses or sections with the intention of selling them once you have completed construction. This can put your product in an attractive position to sell (as you will be brand new compared to existing homes), but exposes you to significantly more timing and funding risk.
You have to determine who will be doing the selling. This will most likely be a real estate agent. With the help of your agent you need to arm yourself with a sales strategy to penetrate the market. Plan to be successful rather than just list and hope. Your real estate agent may have success in a certain type of sales strategy or have experience in tailoring custom strategies for different market circumstances. The sales strategy will be influenced by the target market you identified, the product you designed and how you are to maximise project profitability. For your project there may be many strategic options to choose from, each with positives and negatives. Alternatively, your product may lend itself to a sole particular selling strategy. The sales strategy is your plan to sell down your development to purchasers by addressing three fundamental questions:
- What are you going to sell?
- When are you going to sell?
- How are you going to sell?
Once you have sold your product, you have now inherited a group of purchasers. They need to be managed (loved) throughout the development period, on settlement and post settlement.
In the next part of this series, let’s look at selling your house and development in more detail……
Andrew Crosby
+64 21 982 444
andrew@xpectproperty.com
