According to the National Association of Realtors (NAR), 5,250,000 existing homes were sold in 2015. There are currently about 2 million active real estate licensees in the United States, 1.3 million of whom are represented by NAR. The NAR is a powerful association involved in political advocacy in behalf of real estate professionals as well as 75 million property owners in the USA.
One such real-estate firm is Pentagon Realty, a real-estate firm with over 250 real estate professionals. Pentagon specialises in luxury condominiums, however, with the economy being so unstable and job security taking a hit, potential homebuyers’ affordability as well as appetite for risk have reduced drastically. As a result, Pentagon had been facing stagnating growth since the past year and a half.
Robert Morgan is a Certified Real Estate Brokerage Manager with Pentagon Realty. As a part of a companywide initiative to establish Pentagon as a profitable leader in the real-estate industry, Robert approached Gainbuzz to explore options to help broaden their customer base and also to make their existing offerings and brand more appealing to their target customers.
Robert wanted to explore the preferences of budget customers in terms of location, amount to be spent, must-have amenities, layout, age group, and facilities. One of the most important takeaways from our first in-depth consultation with Robert was the need to focus on spending capability and location preference – and see if there was a profitable market outside of the luxury condos and high-rise market. During the second meeting between Robert and his Gainbuzz account manager, they were able to identify the following immediate goals:
Explore the affordable housing niche and determine if it would be profitable to steer pentagon towards the niche.
Broaden their customer base beyond the luxury condo and high rise buyers
Reinvigorate Pentagon sales and marketing process
Most of the challenges faced by Pentagon were a result of ups and downs in the market and economy. Reduced buying power coupled with changes in property value as well as regulatory changes resulted in Pentagon’s current stance to stay agile and maneuver towards other profitable real-estate niches. Preliminary market research revealed the following issues:
The majority of Pentagon’s target market was having trouble qualifying for loans. Although the interest rates on loans had stabilised, rising property prices meant that people were still finding it difficult to qualify for mortgage financing, especially those who were under the growing population of self-employed freelancers.
Low property appraisals
Although newer property prices continued to climb, the resale value of houses dropped – which meant that those seeking older but more affordable homes would face problems when they tried to sell the property again. This posed a unique problem for realtors like Robert looking to sell these older properties and break into the resale market.
Regulatory and zoning changes also meant that realtors as well as buyers were at the mercy of local property appraisers to help determine the property value through research and observation. Robert and his team at pentagon were not familiar with he zoning by-laws as they pertain to older residential properties. This gap in knowledge also prevented them from making a well-prepared transition into the resale market.
Solutions & Outcome
Through market research on local properties and on-ground surveys, the Gainbuzz team was able to prepare an extensive report for Robert and his Pentagon team. A study was done to evaluate particulars like cost of amenities, connectivity, location, infrastructure among other things between several residential neighbourhoods with older properties. The resulting report brought to light a few key solutions for Pentagon’s marketing and sales problems:
According to research, 51% of buyers for resale properties found the listing through the internet and only 34% found their listings through real estate agents. In order to rectify this situation and leverage technology to their favour, Gainbuzz helped Pentagon set up listings on various local real-estate boards as well as to ramp up their own web presence and activate a search engine marketing (SEM) campaign.
Appeal to individual aesthetic
Budget customers have different needs, families may require larger living space, an older couple may prefer an accessible gardening area. Professionals may want sizeable entertaining space. Robert and the Pentagon team released customised marketing campaigns appealing to different demographics via mailers to local postal addresses as well as strategically placed transit ads.
Property appraisal research
Since the main challenge with entering a new niche was that Robert and his team were unfamiliar with the local property laws and appraisal points, the Gainbuzz team conducted detailed market research and produced a report outlining the pertinent details and recent regulations relevant to local home reselling.
Integrated Campaign plan
Pentagon Realty was provided a detailed plan outlining target population spending capability, preferences for amenities, recommended promotional activities and ways to attract new buyers. An end-to-end plan in such a specific niche was a challenge, however paying attention to current and future resale market trends as well as local regulations paid off in the form of increased local interest when Robert and the pentagon team stepped into the market with a well-prepared, informative approach, that helped establish them as the market leaders in the local home resale niche.
‘We were skeptical at first about entering into affordable housing because any poor decision was a huge financial risk, not to mention the gamble we were taking with our reputation as a luxury condo brokerage. Going in, I had the conviction that if we were going to do something different, we had to have a powerful plan. The first thing Gainbuzz did for us was to dispel our fears with their well-defined market research plan. Their research reports were thorough and recommendations effective. Now, we are sitting here two months later wondering why we were so apprehensive about stepping into the resale market in the first place. Collaborating with Gainbuzz has helped us stay agile in a difficult market – a feat none of our other competitors were able to achieve. Really thankful that I sought help from Gainbuzz and for all the good work they have done in marketing Pentagon Realty and breathing new life back into our sales process’
Robert Morgan, Certified Real Estate Brokerage Manager, Pentagon Realty