I've recently watched several developments either stall, or implode completely. This is not because of the economy, nor is it because people aren't buying. Rather, it's because the developers "knew too much" - or so they thought. In order to sell a partially completed project, a new development, or a completed project with the balance of inventory, developers need to wake up and get into the Connected Market Space where 85% of buyers are searching or "hiding out".
How can properties that are so beautiful - situated on a magnificent oceanfront, in the perfect untouched mountain valley or in one of the world's many vibrant and lively cities - be doomed to fail? Over the next five days, I'm going to outline the five most common mistakes that I see many developers continuing to make in their efforts to market their project.
Mistake #1 - "Knowing it All." Good developers do one thing better than anyone else: Focus on their project. They build it for the people who will want to live there more than anything else. They build the project and they understand their buyers will be passionate about living there. They find out what people want, and they build to suit. In short, they focus on the job they are supposed to do.
Great developers focus on their own job, and hire experts who can find the people that want to buy. This is exactly what they should do. Great developers hire experts and follow their advice.
Poor developers, many of whom have seen their projects fail, or are on the brink of doing so, "Knew it All." They knew the property. They knew project. Most detrimentally, though, they knew how to market the project. They bought their marketing from anyone who agreed with them about their "vision" to attract the buyers - rather than letting experts find buyers. In a seller's market, these hit-and-miss marketing strategies were ineffective, but (most of the time) went unnoticed. Today, sellers need to find expert marketers that know how to invest their dollars in finding high Quantity, Qualified, and Quality buyers.
Here's an example of what "Knowing it All" can really do for a developer:
I recently spoke to one "developer" who began his career as the owner of a long-standing, successful family hotel business, and to that effect I should say that he was in fact a relatively successful hotelier. However, as I heard him tell me his story, I realized that his problem wasn't his expertise in the hotel industry, his problem was his "expertise" in five other industries that he had no previous experience in.
After running his once-successful hotel business into the ground (before even having a fully-funded project) the market crashed, and our hotelier became a developer. This hotelier-cum-developer then, in an effort to replace the cash flows he previously enjoyed in the hotel business, thought it would be a wise idea to start a travel club. This (at least in his eyes) instantly turned him into a travel "guru." Our former-hotelier/"emerging" developer and travel "guru" added another fade of expertise, but no experience, to his struggling development.
Next, he (and his wife) became "expert marketers." Assuming they "knew" the precise way to attract and market to buyers, the hotelier, developer, travel guru bestowed himself with yet another prestigious title: on-line and off-line marketing expert. Finally, when all else failed, the hotelier/ developer/ travel "guru"/ marketing expert and sales agency, decided to try his hand at becoming a financial products broker, launching a bond offering to fund the project. Five careers in a period of two years - careers it takes many brilliant people a life time to perfect.
Today, the project is still just dirt on a piece prime oceanfront property, in perhaps what is still one of the best real estate markets in the world. This piece of land has remained just that for going on five years now.
In any business, the smartest people surround themselves with smarter people - through the ages, this is the recipe for success. In real estate today, it is the recipe for survival as well.