In my last column I said we would look at the psychographic results of a comprehensive market study by BHI Inc., a consortium of 32 of the largest production home builders in America.
You might see yourself in this study and want to move up, out, or down. Or recognize your next prospects as being in one of three market segments and make a sale you may have missed.
These are the segments and their impact on residential sales across America.
New segment: These folks say they want a new home and will not consider a resale (19 percent).
Comment: You don’t meet these, because you are not marketing to them.
Indifferent segment: Will look at both new and resale (35 percent).
Comment: You may meet these, but if you don’t qualify them for new homes, you stand a good chance of not closing the sale, or them saying ‘we decided to wait."
Existing segment: Insists on buying an existing home, and only an existing home (46 percent).
Comment: This is your primary market.
Within these segments lie feelings, emotions, and needs far beyond a four-bedroom, three-bath home with a two-car garage, and all the other data you can add to your detail sheet.
By way of review, the study sample structure includes 984 completed surveys by shoppers who said they were committed to purchasing a home within the next 12 months, across 25 major markets. Shoppers were at least 25 years old, with a household income of $50,000 or more.
Sixty percent of this group were actively looking for a home and had:
- Met, spoken to or hired a Realtor
- Sought pre-approval for a home loan
- Visited a model home in a new homes community
- Attended a home buying seminar or had placed their home on the market.
Forty percent have taken the above actions, or have:
- Regularly looked at home listings online or in the paper
- Visited a Realtor and/or homebuilder website
- Calculated living costs as a result of a new home purchase
- Attended an open house
- Watched a TV show about local homes and real estate for sale
- Driven around the neighborhoods looking for homes for sale
Expectations and behaviors
Existing home segment (46 percent)
- Slightly younger
- More likely to be first buyer
- Planning for an increase in family size
- Drive around neighborhoods looking for homes
- Regularly look at home listings
- Most likely to use a Realtor
- Visit existing homes
- Sought pre-approval
- Bid on a home
Comment: Is it safe to assume that a large percentage of those who prefer an existing over a new home, really mean that they prefer an established neighborhood, and therefore settle for an existing home over new homes in "unestablished locations?" I think, in many cases, yes.
After all, with everything being equal, who would not prefer a new home?
This segment is large enough and important enough to probe for compromises they are willing to make to NOT buy a new home, perhaps. My guess: This is the location, location, location buyer.
New segment (19 percent)
- Slightly older
- More likely to be retired
- Own current residence
- Current residence is a new home
- Expect to pay more
- Spoke with builder
- Visit model homes
Comment: Is this segment willing to pay more and live "further out," meaning that location, location, location is important only as it applies to the fact that the buyer can purchase new construction? If so, then location, location, location, becomes more of a macro factor than the dominant one.
Indifferent segment (35 percent)
- Mostly likely to work full-time
- Slightly more educated
- Highest incomes
- Exhibit both new home and existing shopping behaviors
Comment: OK, then. Since one out of three shoppers will purchase a new home or an existing one, this group’s motivations must be clearly defined to determine what dominant buying factors affect their preference for either.
According to the study, those who prefer new homes are more spiritual and controlling, based on their slightly higher scores to these statements:
- Spending time with my family is my top priority
- I feel children have a right to be spoiled
- I attend religious services regularly
- I am a perfectionist
- I like control over people and resources
- I like to enjoy life and don’t worry about the future
- I enjoy taking risks
Resale buyers did not lead in any of the above statements. They enjoy taking risks the least, and don’t find control over people and resources as important as those in other two segments do. They do not agree that children have a right be spoiled.
Interestingly, the "indifferents" fell between the "new" and "existing" segments. They are as environmentally conscious as those who prefer new — and are willing to pay more for it.
New and existing buyers tied with each other, with indifferents one point behind, when it comes to considering themselves creative.
New buyers were most likely to agree with the statement that, "I am typically willing to pay more for high-quality items," followed by indifferents. Existing buyers were much less likely to agree.
Twice as many "new segment" as "existings" said they are first among their friends to try new products or services, with "indifferents" in the middle.
There are no differences among segments for general behaviors, such as:
Visited a Realtor and/or home builder website, calculated living cost, and watched a TV show on local homes and real estate for sale.
According to the BHI study, quality of construction, floor plans, maintenance costs, energy efficiency, and customization are slightly more important to those with a preference for new homes. Here are the most important or close to most important considerations for home purchase by segment.
New segment:
- Quality of construction
- Better floor plans
- Lower maintenance costs
- Energy efficiency
- Lower cost per square foot
- Ability to customize
- Architecture/overall design
Indifferent segment
- Quality of construction
- Safer neighborhood
- Larger yard or lot
Existing segment
- Safer neighborhood
- More living space
- Larger yard
- Architecture/overall design
Here’s the thing.
I keep coming back to where I have always been with one question.
If only 46 percent of home shoppers insist on a resale, isn’t it time agents become trained to qualify all prospects for new homes and how to find them?
Your comments?
