You may have seen companies or individuals cite data suggesting customers are desperate to buy a new home entirely online, but that’s not the case. The most incorrectly used source appears to be from a Redfin report which states that “63% of homebuyers in 2020 made an invisible demand bid, breaking the previous record.” While the title certainly provides powerful ammunition for those trying to sell “online shopping” tools and systems to homebuilders using fear, uncertainty and doubt, the truth is far more complex.
According to the report, 20% of home buyers made a demand offer in 2015 and 2016 before rising to 32% in November 2019. Then, as inventory levels fell to record lows and the home market among buyers has become more competitive, rates jumped to 63% in 2020. This shows that bidding at sight has become a bidding strategy used by more buyers, not necessarily a shift in preference.
Another important thing to note about Redfin’s search methodology is that they don’t take into account how many of these invisible offers had a contingency that allowed the buyer to view the home in person before buying. In a Redfin article, a buyer who made a blind offer is quoted as saying: “Importantly, we didn’t buy the house entirely blind, we still included a contingency inspection and attended the inspection in person. In my opinion, if possible, you should definitely see a home in person before you fully commit to buying it.”
What Buyers Want
Someone buying a new home wants something from the builders, but it’s not a “payment” feature. They want greater transparency and access that allows them to shop at a deeper level than is possible today – real-time data on availability, options, pricing, and better capacity at everything visualize. They expect on-demand access to models and inventory homes, as well as immediate support from highly trained members of your company’s team. They want to remove, as much as possible, the fear of losing or making a mistake by allowing them to purchase your product in a more meaningful way. They may communicate to you that they want buying a home to be more similar to how they buy at Amazon or Tesla, but they don’t mean the button they press to make the purchase complete.
A buyer goes through three main phases when buying new construction: research, purchase and purchase. Builders have become too preoccupied with buying and continually let customers down during the buying phase. In the research phase, the consumer gathers information about companies, locations, and the potential scope of the market in order to rule out as many manufacturers as possible. They want to reduce the consideration set. Too many managers and consultants today mistakenly confuse this activity with purchasing behavior.
As a client moves from the research phase to the buying phase, floor plans and specific homes become a new obsession for them. They don’t think of it in an abstract sense, but in a personal sense. Photo galleries and overview summaries are helpful in the research phase, but in the buying phase they fall flat. Your prospect wants to know the details of what is in each photo. What is the finish? Is it included or an upgrade? Can a substitution be made for a part they are not in love with? Interactive floor plans are helpful for some, but without better visuals and pricing information, they don’t enable the kind of online shopping experience that prepares someone to hit the “buy online” button. line” at the end of his journey. The usual comparison has been with the experience of buying a new car online, but the actual buying experience offered by car brands is far superior to even a homebuilder above the average. Can you imagine a car dealership not telling you what the “luxury tech” package costs? The frustration would be palpable if tomorrow Honda’s website changed everything about its “build and price” tool to say, “These are the base prices for our cars, but there are too many options to represent them well on our site. web, so you’re going to have to come and visit the dealership to better understand the variety of selections that can be made.
Customers want to experience shopping and buying in a hybrid approach of their choice. Don’t make them choose between an in-person or virtual approach to any part of your customer journey. Instead, design systems that allow the consumer to switch between the two at any time without skipping a beat or asking them to do extra work. You don’t want to create siled ways of doing business with you that are “online” or “offline”. You must be able to meet the customer wherever they are and wherever they want to be, and they must be allowed to change their minds without causing internal confusion.
What Buyers Don’t Want
All of the “online shopping” success stories told today require the customer to pay up to $1,000 to secure a home. When buyer risk is so low in a highly competitive market with low inventory, what would you expect? Isn’t the low barrier to entry in a tight market proof that we still need to entice most buyers to use these systems? Isn’t that strange in a narrative world where customers have fallen in love with the idea of buying a house online?
Buyers today don’t want to digitally sign a 10-page bill of sale on a home when they’ve only been able to select the floor plan and elevation. They don’t want to transfer $10,000 via ACH directly from their checking account based on a static rendering. They’ll put $500 on a credit card when availability is low because they feel they have to, but not because we’ve made the shopping experience as good as they want it to be. If the booming market is all that’s fueling the “online shopping” frenzy, will all your investment and time building it pay off when the next downturn hits? Probably not. How the transaction ultimately happens is infinitely less important than creating an amazing shopping experience that can easily switch between the physical and digital worlds.
What builders should focus on in 2022
If how the transaction happens is less important than improving your customers’ ability to shop online and offline, don’t let the transaction part steal your attention for the next year. On-demand access to sellers, models, inventory houses, designers, and even construction crews will continue to become standard in our industry. This hybrid, on-demand experience will take us further toward what I call the “Uberization” of new home sales, and I predict that connecting sales professionals to consumers where and when they demand it will be widespread in by mid-2023.
Hours of operation and model locations will be revamped, along with staffing models and job descriptions. The line between online and onsite sales teams will continue to blur, with a small segment of online salespeople supporting customers through the purchase contract. New home sellers will start to look more like general real estate teams in terms of specialties (farmers and team leaders vs. support staff), and they will have the ability to turn their availability on or off after hours. normal office in the same way that Uber drivers operate today. Homebuilder systems will be able to route leads to the seller that is best suited to them, closest, or with the highest close rate.
Base prices and option prices must become more accessible than they are today. A visit to a builder’s website will show each selectable option along with a retail price, allowing for a better and more complete shopping experience. Smart builders will see this insight as an opportunity to collect first-party customer data as they shop and research, further informing consumers about where consumers identify the highest value in their homes. Curating fewer home designs and options – the ones your customers really want – will allow for more in-depth content creation and visualization tools to improve the shopping experience and give your teams a chance to keep things updated accurately in real time.
Someone recently asked me when buying online would become a necessity for success. My response was not in the foreseeable future. However, improving your shopping experience in terms of depth, transparency, flexibility and visualization will become a necessity as soon as we come down from these historical levels of demand.