The Mexican Stand-Off Between Land Developers & Builders

I’ve been speaking with a lot of builders and developers over the past 8 weeks and they’ve all been very valuable conversations.

One thing that stood out time and time again was the lack of collaboration occurring and the under-utilised opportunities to lock in more sales for both parties.

Both parties rely heavily on the others product in order to effectively sell their own. However, it appears that instead of the land developer and builder actively (and cohesively) working together to attract their ideal clients, they’re in the middle of what almost feels like a Mexican stand-off – a confrontation in which no strategy exists that allows either of them to achieve victory.

Which seems absolutely crazy to me.

Big and small players from both sides will tell you enquiries and sales are down.

So there surely there has to be a better way for everyone to work together towards a common goal to change this, especially given how competitive the house and land space is.  

A goal where the main objective is to sell more land and more builds –  but do it more effectively and efficiently – and with transparency.

Builders are fortunate in a sense, they can at least sell off the reputation of their brand, their reviews from happy customers, their previous builds and their displays.

A Land developer’s not as fortunate. You’re essentially selling a pile of expensive dirt. And dirt is just dirt when there ain’t much else around it. You’re selling the promise of a lifestyle that doesn’t yet exist. It’s a hard sell. How do you convince someone that your Estate and block of land is better than the one down the road?

Because one thing we’re all aware of is if you don’t sell the land in your current estates, you can’t develop the next one, effectively bringing your entire operation to a grinding halt.

And if land developers aren’t developing land for builders to build on… well you get the picture.

One of my questions when speaking with builders is usually ‘Are the land developers doing anything to help you promote that land estate as an attractive option for a property buyer?’

And the common answer is usually ‘not a whole lot’. There are the infrequent grand gestures, like the current HIT105 Live For Free! House & Land promo with Villa World, however, this is pretty much the equivalent of the husband buying his wife super expensive and overpriced flowers once a year on Valentines Day.

They do it because they have to and they’ll get in trouble if they don’t.

But they’re not stupid. Deep down they know if they made smaller gestures more frequently they’d likely be better received and they wouldn’t have to rely on that one expensive gesture to get them through the next 12 months.

Sound familiar?  

And if you fail to benefit from the infrequent grand gestures, it appears that it comes down to existing ‘relationship’ with the sales team or offers of referral fees for a successful purchase.

But neither of those can be solely relied upon as people change jobs, alliances dissolve and budgets and incentives tighten and change.

I personally think we can do better to help each other out and collaborate for a common goal. And it’s not to say the odd big promotion can’t work, or that referral fees and relationships are dead – they definitely all have their place – I just think we can do more!

Given current market conditions, lending restrictions and competition, it’s a tough enough ‘sell’ for a builder to get their own product across the finish line. Add on what’s another confusing process for the consumer – land choice – and you can see how it becomes an overwhelming exercise for everyone involved.

But how can we fix this?

How do you bring both sides together and work as one? All for the common goal of selling out estates faster and building more homes?

For land developer especially, how do you ensure the best builders want a piece of that action (without you having to pay a Kings ransom), rather than them favouring another estate that’s just down the road?

To me the answer is logical, but it might be because I’m not sitting so close to it.

This may seem crazy… but we had the idea that it would be easier for a land developer to sell their estates if they invested more time, effort and resources into helping the builders sell their product. If builders aren’t seeing clients and they’re not building homes then they have no need for your land. 

Sell the dream – which is the home itself, tangible and visual – and then sell the perfect location.

The strategy we came up with is a simple one.

If the mountain will not come to Mohammed, Mohammed will go to the mountain

As a land developer, you’re either relying on a buyer to actively seek out your estate and only be interested in building there (which less face it, is pretty rare given the options available in the current market) or you’re relying on builders to point them in your direction.

But as a land developer what if you didn’t have to rely on other forces coming together?

What if you could make the process of choosing land and a builder easier by giving buyers choices, but only choices you were happy for them to make.  

Sounds pretty good right, but how do you actually do it?

It’s surprisingly easy…

And it’s called Collaboration.

At the moment land developers and builders are fighting to attract the same customer, as though you’re competing against each other. But you’re not competitors. A home buyer doesn’t have to choose between the two of you, because they need you both.

So why don’t you pool your resources?

Not only will it reduce your costs when acquiring a customer (the same customer!), you’re sending a congruent and sequential message that encourages them to take the next step (with either one of you).   

So now we recognise the benefits of working collaboratively, how do you pull that off?

Again not rocket science. Target your ideal customers with a great offer that makes it a no-brainer…something that’s so good they almost feel silly saying no to it.

So lets for a second imagine that instead of the land developers and individual builders each having their own separate marketing agendas (all trying to pull the same customer in different directions), they actually collaborate to achieve the common goal of selling more land and building more homes in a specific area(s).

This actually isn’t too dissimilar to the ‘old’ strategy employed by land developers with display villages… (although I have a few issues with these villages which you might have caught in my last article).

It’s common knowledge that visitor numbers are dropping at most display villages… a quick visit on the weekend will confirm this. I’d imagine what they cost to staff is only dwarfed by what the builders pay in advertising to get people to them.

Display homes are a great way to seal the deal and get the buyer emotionally invested in your product, but they shouldn’t be relied upon solely to promote and sell your product.

But enough with the obvious right?

There are far more effective marketing methods out there that can help both the land developers and builders achieve their sales goals.

So what’s my big idea?

Putting myself in a builders shoes, I’d generally have plenty of choice to position different land estate options for a client I’m talking with, so what would sway me to suggest the client building at a particular location? It’s likely going to be an existing relationship or maybe the promise of referral fees.

But, a more powerful way to keep me close would be if the land developer actually generated the lead for me and made it easy for me to recommend their development through incentives for the buyer.

I’d feel indebted to them for passing on the lead and the ‘law of reciprocity’ would kick in. Basically you do something for me I feel the need to return the favour.

So this strategy isn’t new… however, it is usually executed pretty poorly by people who half-ass it and expect miracles.

Firstly… get the attention of an audience made up of your ideal clients. And I don’t mean for a few seconds, I mean for 1-2 hours.

Run a big event or seminar, put on by the land developer, to attract these potential buyers.

Educate them! Talk to them about the process of building a new home. Provide a community service and promote the community you’re building. Tell them what they need to look for when choosing where they want to live, the difference between a good and bad estate.  

If you were running an event to attract first home buyers, you would provide them with information to guide them through the process, position your estate(s) as one of the favourable developments, recommend builders who specialise in building for first home buyers and provide incentives for them to take action.

The land developer would cover the costs to run the event, invite a handful of builders to sponsors or be involved and charge them a fee to help off-set your own costs. This would be invitation only, so it’s now an exclusive opportunity for the land developers trusted builders to get access to the developers potential clients and keep them within the circle.

So the land developer actively generates the leads from the event

Positions a handful of partners as ‘recommended builders’

The home buyer is incentivised (possibly with a discount) to build with one of the recommended builders in one of the developers locations. Packaging the incentive together means if one gets the deal so will the other.

🌟 The developer sells his land

🌟 The builder sells a home

🌟 The homeowner gets their home without having to do all the running around

It’s a WIN, WIN, WIN for all involved! 👌🏻

It’s hard to imagine this reframe not getting the attention of just about every builder out there wanting to be part of it and feeling valued by the land developer and not just ‘another builder’ who can sell their land.

And why shouldn’t it be this way?

It’s how all deals should be done.

So as a land developer how can you get a win, win, win strategy like this kicked off and producing results?

Firstly, work out the exact client you’re trying to attract (first, second, third time buyers)

Secondly, find the builders who are also trying to attract that client (ensuring their products are in the right price range for the client you’re trying to attract)

Thirdly, join forces and collaborate to increase your sales and improve the service you offer your clients – we recommend events as they have a big impact and you can create urgency with incentives and limited offers.

Lastly, just think outside the box – start to think of how you can work with other people in your industry instead of against them. And if you need help implementing this idea or a similar one you’ve thought of, feel free to reach out if I can add value.

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