Tuesday, April 18, 2006

Toll Brothers Gets Cheesy, Centex Mum on Sales Results of "12-hour" Sales

Apparently, Sacramento is not the only market in the country with a glut of housing inventory. The AP reports on record national inventory and marketing ploys by homebuilders.

Spring is typically the busiest time of the year for home sales. But with mortgage rates rising and sales slowing, sellers find they have to work harder to get a sale.

In February, there were 3.03 million previously owned homes for sale, a level not seen since 1991, when 1.91 million homes were up for sale, according to the National Association of Realtors.

"Business is tough. The inventory of available properties has increased," said Martin Bouma, an Ann Arbor real estate agent. "You are looking at (the number of) buyers going down, and inventory is going up."

Some incentives offered by sellers include a year's worth of free landscaping or lawn care, free snow removal for a year or a year's worth of alarm service. And, that's just from the owners of existing homes - builders sitting on a mound of inventory have also had to come up with new ways of wooing buyers...

While some homes can be taken off the market place by their owners, home builders cannot afford to hold on to empty homes. So, some have offered their own incentives, such as helping to pay mortgage closing costs or upgrading kitchen appliances...

Dallas-based Centex Corp., meanwhile, has kicked off a series of 12-hour sales in Seattle, Las Vegas, Houston and Denver, among other markets. In Sacramento, Calif., Centex lopped off $100,000 from some multimillion dollar homes.

Centex likens its sales to a retailer clearing unsold inventory off shelves. A spokesman for the firm, Neil Devory, said the 12-hour sales have "tremendously increased traffic," but he would not disclose exactly how many sales actually resulted from the promotions. "We had significant numbers of contracts and reservations," Devory said.

At the same time, Toll Brothers' push to get customers across the threshold is a little more subtle, but just as persistent. Kira McCarron, the Horsham, Pa.-based home builder's chief marketing officer, said the company relies on print, Internet and some television and radio advertising.

But, what's going on at the model homes is what's different. "A message is crafted for each location," said McCarron. "We pick a hypothetical family or a couple we envision this home will be designed for."

For example, a refrigerator magnet in a Toll Brothers home may have a message to a fictitious family member about a relative that has to be picked up at a train station, demonstrating that mass transit is nearby. Or, a school jersey hung in a bedroom of the model home serves as a reminder of a good school district.

In addition to personal notes and school jerseys, Toll Brothers' marketing involves staging Easter egg hunts, Halloween parades as well as charity events or PTA meetings - another reminder of a neighborhood's school system - within a development. "We want them to feel emotionally connected to a place," said McCarron.

But aside from special events and upgrades to kitchen appliances, the single factor determining whether a home attracts buyers likely will be its price. "You can have the biggest circus on the street, but it comes down to price and having the right price," said Bouma.

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