Marketing NSP Properties

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U.S. Department of Housing and Urban Development

Marketing NSP Properties

March 15, 2011

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Moderators and Q and A Format

• Moderators

– David Noguera, HUD – John Laswick, HUD – Hunter Kurtz, HUD

– Lawrence Williamson, ICF – Courtney Smith, ICF

• How to ask questions

– Change status in Live Meeting from green to purple

– Press *1 to ask a question through Premiere Conference

• Provide Name and Organization

• If question already answered, press *2 to remove from queue

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Agenda

• Webinar focus:

– Marketing, sales & leasing of NSP properties

• Participants will learn:

– Typical barriers to marketing

– Market Research-How data about market supply

& demand ties into effective marketing strategies – Preparing the Marketing Plan

– Implementing the Marketing Plan

– Wrap-up & Questions

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Barriers to Success

• NSP requirements are unfamiliar to buyers and may require more time than open market sales

– Application, income eligibility, counseling, etc.

• Difficult to identify eligible homebuyers

– Those who want to buy and qualify for first mortgages

• Negative perceptions of target neighborhoods

• Challenges of buyers with a wide range of incomes

– NSP assistance needed, may vary in amounts and terms

• Challenges of structuring recapture/resale provisions

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Overcoming Barriers

• Design program and marketing plan so that clients have a clear and smooth path to home purchases

• Increase demand through good market research, effective marketing, and providing help in obtaining first mortgage financing

• Use market research to identify “micro-areas” (in target area) with stronger demand by owner-occupants (vs. investors)

– Overcome physical condition & crime perceptions

• Design financial assistance and provide disclosures so that

applicants clearly understand terms of NSP financing

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Market Research

• NSP acquisitions require supply-side research

– Inventory, vacancy rates, absorption, market rents and sales prices, features, competitive advantages

• Understanding market demand (more difficult)

– Select target areas that are feasible for sales – Set prices in line with the market

– Understand who is buying and what they want – Consider: Demographics, purchasing power,

employment base, migration, commuting patterns

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Market Research (cont)

• Its best to use a professional for market analysis

• Market analysis answers to three basic questions:

– Is there a buyer for my units

– How quickly & at what price will the units be absorbed – How might units be developed and marketed to be

more competitive

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Market Research (cont)

• Data Sources

– Recent home sales data

• Reveals prices, addresses, dates of sales & size

• Online sites like www.zillow.com or MLS

• Real Estate professional & recent buyers

– Preferences, message & program design – Tax assessor data can indicate owner

occupancy

– For broader trends, use sources like Policy Map,

Claritas, and other proprietary databases

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Preparing the Marketing Plan

• Identify the target market

• Create a compelling message that describes your

competitive advantages, including Affirmative Marketing Plan

• Determine when and how often to release the message

• Define the delivery mechanism (mode) for the message

• Track the effectiveness of each mode

• Track the effectiveness of message

• Identify resources needed to implement the plan; staff,

budget etc.

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Preparing the Marketing Plan (cont)

• Compelling Messages – “Why buy this unit?”

– Quality of homes, neighborhood features, pricing, subsidies, energy efficient, etc.

• Deliver message in a clear simple manner

• Message should be consistent in all modes and translated into other languages if needed

• Deliver message frequently over the project period &

time the message with product availability

• Marketing modes – how best to get the message

across. See next slide for example/ideas

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Preparing the Marketing Plan (cont)

Modes of Marketing

• Website & Links • Print Ad

• Utility Bills

• Bus Signs • Events & Showings

• Realtors • P. S. Announcements

• Press Releases (free) • Community News Paper

• Talk Radio • City News Paper

• Social Networks (Facebook)

• Billboards • Online-(www.owners.com)

• Grocery Stores • Multiply listing

• Face to Face • Door Hanger/Flyers

– Employers • Direct Email

– Broker breakfast

– Churches • Cross marketing

– Mall/Schools/Tradeshows • Referral Programs

• Yard signs • Use Fair Hsg info & Logo

• Signs w/ take-a-ways

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Preparing the Marketing Plan (cont)

• Other considerations in marketing properties

– Pre-qualifying Homebuyers for NSP & 1

^st

Mortgage

• Who does this & are guidelines streamlined

• What happen to those that are not ready – Sales Agreement, Disclosures & Terms

• Repayment, Resale/Recapture, NSP Commitment Letter

– Housing Counseling & Income Certifications

• “Guide to NSP income Certification”

hudnsphelp.info

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Preparing the Marketing Plan (cont)

• Marketing budget includes costs for:

– Marketing and design professionals

– Printing: flyers, brochures, door hangers, cards & signs – Website setup and maintenance

– Paid advertising: radio, TV, magazines, billboards etc – Re-branding video footage

– In house staff or sales agent (Commission: flat or percentage)

– Average between 7-10% of homes sales (6% broker

4% campaign)

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Affirmative Marketing

• Use fair housing logo on all marketing materials and in seller’s office

• http://www.hud.gov/library/bookshelf11/hudgraphics/fheologo.cfm

• Fair housing statement on marketing materials:

“It is the policy of the [insert name of agency] to provide services without regard to race, color, religion, national origin, ancestry, age, sex, familial status, physical handicap or disability.”

• Section 109 Compliant

http://www.hud.gov/offices/fheo/library/part109.pdf

• Plan must include outreach to those LEAST likely to apply

• Applies to NSP grantee that plan to redevelop 5+ units

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Affirmative Marketing (cont)

• Provide owners with guidance published by HUD – Require activities appropriate to project

• Require owner to report marketing activities and save ALL applications

• Onsite, interview frontline staff to determine their awareness, consistency of approach, and attitude

• Watch for patterns

– interview rejected applicants and occupants

• If needed require Grantee review of all future applications

and reporting on demographic mix for a specified time

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Implementing the Marketing Plan

• Engaging the Needed Personnel

– Professional marketing assistance

– Create messages; design Web pages and marketing pieces (NSP eligible if specific to selling NSP homes)

• Home sales personnel

– Market the property, conduct open houses, show homes, pre- qualify buyer for NSP and first mortgages, prepare for

closings, track leads

– Some NSP developers have this capability internally; others hire real estate brokers

• Other Sources: SCORE, Work-Study, Temp., Consultants or

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Implementing the Marketing Plan (cont)

Traditional Method

NSP1/NSP2

Developer - 1 R.E. Agent

R.E. Agent Sub Recipient - 1

Centralized Method

CENTRALIZED Point of Contact

NSP-1

Developer -1

Sub R.-1

NSP-3

Developer 3

Sub R. -2

Developer 4

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Implementing the Marketing Plan (cont)

• Advantages to Centralized Marketing:

– Shared Human and Financial Resources

– Pre-screened buyer leads referrals & sharing – Maximize property exposure

– Common Branding & Image – Improved tracking

– Shared Marketing templates

– Equalizer for small & large developers

– Leads transfer from NSP1, 2 to 3…to developers

– TEAM=Together Everyone Achieves More!

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Implementing the Marketing Plan (cont)

• Tracking marketing and sales/rental data is crucial

– Can guide fine-tuning of plan to improve performance – Key benchmark: number of homes sold or units rented

per month vs. original schedule – critical for meeting NSP deadlines

– “Steps along the way” can show strengths and

weaknesses of current efforts and possible needs to revise program:

• Monthly numbers of inquiries, showings, intakes,

applications, pre-qualifications, income certifications,

and sales contracts executed

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Implementing the Marketing Plan (cont)

• Marketing Example (Florida City’s 2010 figures)

– 537 TOTAL 100%

– 300 WORKSHOP 56%

– 78 APPLICATIONS 15%

– 27 ELIGIBLE 5%

– 12 HOMES SOLD 2%

• 1 homebuyer closed for every 45 contacts

• Marketing should generate several quality leads

• New climate requires new approaches

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