Strategies for closing the sale

As any custom builder can attest to, getting potential clients from the initial consultation phase to contract signing is one of biggest challenges in the profession. It takes patience, skill, and a knack for establishing trust and building friendships in order to turn prospects into customers. We reached out to several successful custom builders to learn their tricks and techniques for converting prospects and avoiding conflicts during the project.

Custom Builder: What is your primary obstacle when it comes to converting a potential customer into a client?

Bryan Hutchinson: The number-one challenge I face in converting prospects to clients is the process of diffusing a defensive mindset. Prospects initially approach the process of building with their guard up, which is natural. It’s easy to get taken advantage of and they know it. They have to be led past that defensive posture to a point of clear decision making. Leadership is about influence, nothing more and nothing less. So transitioning them from being sold a house to being led to build a home is the greatest challenge.

Stephen McKay: Our custom homes are priced very competitively, but there are occasions where we are priced higher than the perceived competition due to the products, materials, and craftsmanship we demand in our homes. We make it a priority to educate the customer on the value of our features and craftsmanship to ensure proper expectations are set from the get-go.

George Davis: Buyers are always trying to time the market. They want to get in at the bottom. This is very tough to time perfectly because you don’t know what the bottom is until you start heading back up from it. We state that to the client and then back it up with hard facts showing the improvements in the market, whether they are general economic data or sales numbers. We pick something recent that they may have heard referenced on the news.  

BUILDERS

George Davis, president
ProBuilt Homes Mentor, Ohio

Michael Fratantoni, president
Desert Sky Development Scottsdale, Ariz.

Bryan Hutchinson, chief relationship developer
Victor Myers Custom Homes & Real Estate Bartonville,Texas

Stephen McKay, vice president
Cranbrook Custom Homes Shelby Township, Mich.

Bradley Sullivan, general manager
Sullivan Building & Design Group Quakertown, Pa.

Bradley Sullivan: Our primary challenge is getting face-to-face meetings with potential clients. We avoid just sending someone a proposal because it only allows them to compare numbers, and we are never the lowest bidder.

CB: What is your go-to approach for converting prospects into clients? What do you say or do that gets them to commit?

Hutchinson: I say “no.” It’s a simple word that changes minds and perspectives instantaneously. Prospects become clients because they trust our product, our company, our team, and me. More times than not, I have seen the transformation from prospect to client through the honest and transparent use of the word “no.” 

Salespeople promise to do any and everything, and they feel as if saying no will turn away prospects. I’ve closed about $20 million in homes and property in the past five years, and I attribute that to saying yes when I mean yes, no when I mean no, and helping my clients understand what each answer is based on.

McKay: I put myself in the shoes of the client. The minute you truly listen to a client and view their prospective purchase from their standpoint, they sense that you understand their needs and it helps build trust, confidence, and a bond with the client. Once the client realizes that I “get it,” they feel compelled to have me build their home.

Davis: Oftentimes, we find that buyers don’t want to contract until they sell their existing home. To counteract this we offer a contingent contract. This stops them from continuing to shop and potentially signing with another builder. We collect a deposit and get them through our selections process. We also obtain all the necessary permits and approvals. The upside to them is that we are shovel-ready once they get a contract on their home. It minimizes the time they have to spend in temporary housing.

Psychologically, they are committed. They are more likely to accept a lower price on their existing home. This works to our advantage. The deposit is refundable, but any hard costs such as permit fees, site plans, etc., would be deducted should they cancel. The risk for us is that we are locking in the house price. But we hedge that by obtaining pricing locks from trades and suppliers.

Sullivan: We try to convert clients into friends first. We feel they need to be very comfortable with our personality and integrity, as well as our reputation, so they have confidence that our working relationship can be successful. We feel the quality of work that we do mostly speaks for itself and we are proud of that. We are committed to selling ourselves first and working through the numbers after they agree to work with us on the project. We make them understand that we ultimately have their best interests in mind and help them understand where their money is being spent.

Michael Fratantoni: I usually point out the fact that our clients are accustomed to having things done their way and the right way. Quality construction is important to our clients. Designing and building a home that fits their lifestyle is worth the wait and without any surprises they’ll find with bank-owned properties, which are rampant in our market. We put them in contact with previous clients that were in the exact situation and decided to build with us. Once they tour a past client’s home and see how happy they are, they tend to want to build new with us instead of buying an existing home.

CB: When it comes to negotiating price and budgets for the project, how do you avoid and resolve conflicts?

Hutchinson: When it comes to price and budget, I simply work from a transparent position. I know what my margins have to be, I know how to say “no,” and I know how to explain why. I look for conflict as an indicator that we are giving the client the most value for their budget. Good customers understand this and realize that the conflict we experience is natural and beneficial to all involved.

McKay: So much of the building process goes back to proper expectation setting from the moment a client walks in the door. We always have their budget in mind and guide them as to what products, materials, and features they should or should not consider to avoid issues before they transpire.

Fratantoni: I am always happy to share with our clients the true actual cost and specs of any particular item. If there is a conflict, it usually gets resolved when our clients become part of our team and see the cost involved in the budget and other bids and specs for that item. It allows them to decide which direction to go once they know the information. We allow the client to be involved to any degree they want to from the start. This avoids any surprises in the budget and conflicts from arising.

CB: Can you recommend must-read books or resources that have helped you in these areas?

Hutchinson: The best sales books are not about sales; they’re about leadership. “21 Irrefutable Laws of Leadership” by John Maxwell is among the best.

Sullivan: David Morey and Scott Miller’s “The Underdog Advantage” has been an insightful tool for us, as it helps to show how we must always strive to be better. If you assume you are always second best, then there is always more you can do to improve.