| Builders Encouraged Not to Discount |
| Written by Jonathan Smoke | |
| 02.18.2008 | |
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Discuss this article on the forums. (0 posts) The educational sessions at the 2008 Builder Show repeated several themes. At the top of the list of the themes I heard were general angst with media and their portrayal of housing, green building, and market survival techniques. I took heart that every survival discussion and many more sessions emphasized the importance of doing research and understanding your local market. That’s where we come in.  But another element of survival was the continued suggestion to avoid discounting, for which there’s no easy solution. After all, discounting is a classic example of a “prisoner’s dilemma”—a situation where a single player has incentive to maximize his or her situation by taking actions that if pursued by all players will result in the worst collective situation for all involved.John Rymer and Leslie Peters delivered one of the most practical and thought-provoking sessions at the Builder Show on Saturday. Their topic was “Negotiating Skills for Sales People in a Soft Real Estate Market.” Rymer and Peters set the stage that the sales process and a general lack of training makes it even more likely that builders will continue to experience significant discounting. This is because most managers are not trained in negotiation, so customers who often have more at stake than the sales professional will end up getting the sales professional to take their side. The end result of this lack of skills and training is a situation where the few serious deals that reach final conclusions result in the lowest possible prices. That’s yet another reason why new home prices crashed far more quickly than existing homes. Maybe if builders had better processes and negotiating skills in place, discounts would not have been as severe in 2007. Here are the seven steps Rymer gave to builders to handle what he called “unrealistic offers” or requests for massive discounts: 1. Set expectations Rymer is a well regarded consultant and experienced sales leader in the industry, and I have known John for many years. If you need help getting your negotiations and sales process under control, you can get more information on his training programs at www.NewHomeKnowledge.com. 
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