Incentives can sustain sales through all market conditions
Whatever direction the property market turns, developers need to sell off-plan property. When the market is roaring, off-plan property sales are easier to make and complete. When the market slows, you’ll need to be more innovative with sales strategies. One way to maintain sales price and volume of off-plan property sales is to offer incentives.
Here, I look at what you must consider when developing a property sales incentive strategy, as well as six incentives that encourage property investors and home buyers to invest in an off-plan property.
Off-plan property incentives – the rules of the game
Incentive schemes should do a number of jobs or they cease to be incentives and instead become no more than sales gimmicks. Here are the five incentives rules that all good incentive strategies follow:
1. Make sure your incentive relates to the off-plan property for sale
The first rule of incentives is common sense. Always ensure the incentive offered is in line with the property you’re selling (in this case, off-plan property).
We’ve all seen restaurant deals that offer a free bottle of wine for the couple dining together and ordering two steak dinners. I doubt these would have the same impact if the offer were a free screwdriver. The wine relates to the meal. It’s an offer that makes sense and they might chose to spend more on another drink as a result, helping you cross sell and creating an opportunity for you to upsell.
A free iPad with every off-plan purchase might be a nice-to-have for some, but a free fitted wardrobe to the master bedroom or a kitchen appliance is both pertinent and useful to all property buyers.
Take time when thinking about the incentives you offer, and reflect on the buyer, too. Imagine the off-plan property investor talking to their partner, and what they might say. “If we invest in this off-plan property, we get two years’ guaranteed rent,” for example.
2. Pitch the incentive to all interested parties
The incentive needs to appeal to all parties who will have an interest in a deal to buy off-plan property. Commonly, this will be a married couple (they may also be business partners or good friends). If you pitch the incentive and one is excited but the other is not, it’s not an incentive to buy.
Remember that incentives don’t have to be giveaways. They could be extra services or products at a discounted price. Cheap holidays with an obligation to attend a property seminar used to be a great strategy to incentivise people to take the first step to buying property abroad. (Notice, too, that this such an incentive also meets the needs of rule number 1 above – a holiday in the area being considered for the purchase of a vacation home.)
“We’ll decorate in the colours of your choice and discount the work by 50%,” is an incentive that allows one partner the creative license to stamp their mark on the new build investment property, while saving the second partner a whole heap of time and effort doing the work.
3. Make the incentive suitable to the buying stage
You can have a range of incentives, but if they are offered at the wrong time they simply won’t work. For example, offering free white goods when an investor is at the first stage of discovery of the property investment opportunity will be a wasted incentive. This type of incentive is better positioned to encourage a close of a deal and held back for the negotiation process.
At the early stage, it’s much more relevant for the property investor to be offered a free consultation and exploration of investment goals and needs (in the manner in which property consultants at Castlereach reach out to investors). Save the ‘buy now and get this free’ incentive for later stages of the buyer’s journey.
4. KISS – Keep it simple, stupid!
Don’t get too smart with your incentives or make them too complicated. Investors in off-plan property want simplicity and certainty. Property consultants need to be able to articulate your offer in a couple of sentences. One sentence is even better. Think about the ease of which the best incentive schemes are described and understood: “Buy two, get third free”; “Buy now, pay later”; “Everything must go”.
Try to be innovative, rewarding your customers with something different to what your completion has on offer. And keep the offer short and sweet: “Buy this week and get free white goods on completion.”
5. Dissolve the off-plan investor’s concerns with a knockout incentive
Every property investor has concerns. If they didn’t worry about the risk of property investment they wouldn’t be in business or successful. Consider offering a knockout investment that makes those concerns go away − rental or price guarantees, for example. Whatever the knockout incentive you offer, make sure that you can keep your end of the bargain.
Incentives offer some extra value to mitigate risk and encourage a purchase (or moving to the next stage of the buyer’s journey). Whatever incentives you offer, make sure they support the sale of your off-plan property.
Six incentives to encourage off-plan property investment
Our investor clients have told us that the following six incentives that would help them in making a positive decision when considering an investment in off-plan property:
1. Financing assistance
It could be in the form of relaxed deposit requirements, extra staged payments, or recommendation of suitable mortgage brokers.
2. Discounted or free furniture packs or white goods
As a time-limited offer, encouraging investors to make a quick decision. Items that might usually accompany a residential property, either standard provided free of charge or upgraded at a discount.
3. Offer incentives on the purchase price for late completion
If late completion is your fault, give a concession from the agreed purchase price without it costing you too much financially. It shows confidence on your part as the developer and helps to build trust and alleviate the risk factor.
4. Offer to pay for an associated service
You might offer to pay the first year or two of ground rent or service charges, for example. It helps the investor with their cash flow during the most difficult period of ownership.
5. Price or rental guarantees
Structured correctly, this is a highly emotive incentive. An investor who knows rental income is guaranteed for the first year or two has a big chunk of risk removed from the equation. It makes the investor’s buying decision a whole lot easier.
6. Offer a bulk buy incentive for two or more properties
We have investors who buy two and more properties in a development because they like the scheme and their numbers stack. Offering an incentive to a single investor might encourage higher volume investors to move on a deal more quickly or commit to take more volume off your hands so you can complete faster.
Who creates the best incentives?
The best ideas for incentives always comes from your investors and the property consultants who work with them. Speak with them and ask what makes a buying decision easier to make. Get information on the incentives that competitors offer, and at what level according to the value of the property. Follow these simple tips and your incentives will start to add up, make sense and appeal to investors which will pay you dividends in the long run.
Our property consultants are in constant contact with our property investors, nurturing and keeping abreast of their situations. We know what investment returns they are looking for and what buttons to press to prompt a decision. Our track record of UK off-plan property sales made off-market speaks for itself.
To connect with us and get the ball rolling, call my team direct on +44 207 923 5680.
Live with passion and fun,
Brett