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Why People DON'T BUY New Homes

Overcome the buyer's fear in today's new home sales environment


One of the greatest joys we’ve experienced is selling homes to foreign-born buyers. Our country is blessed because we attract the very best people from all over the world. Foreign-born buyers remind us that every day we wake up in a country that is good, kind, generous, and where the rule of law, honesty, and mutual respect are all cultural imperatives. Foreign-born buyers tell us how happy they are to live here. If they are citizens, they proudly announce it during our initial encounter. It is a charming, heartwarming, and exceedingly pleasant experience.

Foreign Selling Etiquette

Most, but not all, foreign-born prospects come from a society where the first cultural norm before a purchase can be made is to become acquainted with the salesperson. This may seem a bit odd to us “brash Americans.” In many cultures, “the relationship precedes the purchase.” Your prospects will visit your community, tour the models, and then spend an hour or so just chatting with you. Then they will politely say, “Goodbye.” During these visits, etiquette requires that you provide cookies, tea, water, and coffee. Cookies are especially essential for some reason. (Our theory is that a person wouldn’t “break bread” with an enemy. Therefore, to eat cookies with another is to acknowledge each other as a “friend.”) Think of it as being just as if you’re entertaining guests in your own home. Negotiation is akin to an art form in most foreign cultures. We want as much as possible to make the foreign-born buyer feel “in their element.” Coffee, tea, water, and especially cookies conform to their cultural norms. The following weekend, they return, tour, and sit down with you for more “chatting.” This time, however, the buyer will ask a few buying questions. We always answer each question as carefully, truthfully, and thoroughly as possible. We treat and answer each question as if it were an intellectual exercise and not a sales situation. The foreign-born buyer already knows the answer to each question he or she is asking us. These questions are only intended to see how honest we are. This process may last several weekends or consecutive days, during the course of which their questions become increasingly focused on the purchase.

We always ask these buyers to bring in some of their own native pastries and other food at the next visit. The buyers are absolutely delighted at this request. Foreign-born buyers are thrilled to share their culture with us. They love Americans, and they want Americans to love them in return. They long to share the very best of their culture with us. They want to be “accepted” both as an American citizen and “an immigrant who expands the American culture.” Symbolically, foreign-born buyers want to “give back” to the society that has “given to them.” We’ve discovered that most foreign-born buyers have exactly the attitude that one of our buyers expressed to us a very long time ago. “We came to America for the opportunity of a better life for our children. Now we can’t leave America because we’ve fallen in love with Americans.” We truly love learning about, and especially tasting the cultures the foreign-born buyers share with us. But, sorry to admit it, we’re “dancing” with the foreign-born buyer just as much as they are “dancing” with us. In fact, you might think of this entire process as an elaborate and elegantly choreographed ballet. The foreign-born buyer is becoming friendly with us to “soften us up for the negotiation” and to probe for weaknesses. This is just fine with us, because we, “just being the stupid Americans,” are buying into this friendly relationship to suit our own purposes, which we’ll reveal shortly.

We Americans are mostly accustomed to walking into a store, finding a product, and paying the price marked on the product. This is wholly unknown to most foreign-born buyers. The foreign-born buyer grew up in a culture where the price of almost everything was negotiated. In a way, the negotiation implies that the seller will discount the price somewhat as a “courtesy” to the buyer. To most foreign-born buyers the refusal to negotiate a price on the part of a merchant was to imply that the merchant simply didn’t want to do business with that particular customer. As such, a refusal to negotiate is considered an insult to most foreign-born buyers. While we subscribe to the absolute truth of this statement, we would also like to add something to this. The foreign-born buyer, seeing this American cultural tendency to simply “pay the going price,” believes that they can greatly benefit by the proper employment of their bargaining skills in a culture that has none. We Americans are considered “easy marks”. We fully expect the foreign-born buyer to grind on the price and everything else they possibly can. When they do start to grind on the price, we’re very happy that we have already prepared for this by adjusting our prices upward on the price lists, as described in the chapter titled, “Price Lists & Pricing Strategy.” If you haven’t created a little “wiggle room” in your price lists, you will regret it when the foreign buyer comes along. Usually, the foreign-born buyer is the one who scopes out the best price on a certain model, as described in the above-cited chapter. Usually, that’s it. The problem is solved before it even existed. Your foreign-born buyer has “put one over” on the stupid American salesperson. Don’t you just love it when everybody wins?

If you haven’t done as we suggest, or if you’re stuck selling the lot with the correct price, then you’ve got to negotiate. We strongly suggest you buy the negotiating course titled, “The Secrets of Power Negotiating” by Roger Dawson. There is NO WAY we can improve on the teachings of these CDs. These CDs cost about $15.00. (Sorry, no negotiating on the price.) They are simply the best on the market.

Just listen to these CDs as you drive to and from work, and in a week, you’ll be anxious to engage in a negotiation with anyone. However, you want to avoid negotiating as much as possible with anyone. We always want to be selling “The Dream” and never “The Deal.” “The Dream” is difficult to put a price on. “The Deal” IS the price

Winning the Negotiation

RULE #26: People negotiate to get the best possible price on a home they have already decided to buy.

This is a fact so many salespeople fail to comprehend. Many salespeople think that if they don’t sufficiently lower the price as close as possible to where a negotiating prospect wants it to be, the prospect won’t buy. But ask yourself, “Why are the buyers negotiating with me in the first place?” Think about the above rule. Think about your foreign buyers. Think about all those visits they made. Think about all those hours spent in your office. Did they spend all that time and effort because they didn’t want your home? Doesn’t the above Rule #26 make more sense now?

We need to go into Rule #26 a bit deeper. When a buyer negotiates on a car, boat, big screen TV or almost every other consumer product, there is always the possibility that the buyer can leave and go to another dealership or store and purchase the identical product at a lower price. But since no 2 builders offer the identical floorplan, this “Threat of Buying Elsewhere,” does not exist in the new home sales field. Even if another builder offered the identical floorplan, their location would be different. There could be something about the other builder’s location, orientation, lot location, or something else that is more desirable in your community that is not as desirable, in the buyer’s mind, in the other community. This is why Rule 26 states: “People negotiate to get the best possible price on a home they have already decided to buy.” Now that doesn’t mean that the negotiating buyer won’t attempt to use the competition’s features, prices, amenities, location, and everything else they possibly can against you to create in your mind “Threat of Buying Elsewhere.” But ask yourself:

1.) “Why would the buyers bring up all the wonderful things about

the competition during our negotiation?”

2.) ”If the competition is offering all those great things, why doesn’t

the buyer just buy the competition’s home?”

The answer is the buyer is describing all the competition’s amenities to make you feel that you must lower your price to compensate for the amenities the competition has that your home doesn’t by implying the “Threat of Buying Elsewhere.” DON’T FALL FOR THIS PLOY.

There is another reason the foreign-born buyer is pushing you so hard during the negotiation. It is something we have discussed before, but it can seem to be completely “foreign” or non-existent in the foreign-born buyer: FEAR. Yup, the foreign-born buyer is feeling just as much fear surrounding their huge financial decision as any other buyer. The foreign-born buyer, or any buyer who negotiates hard, is attempting to assuage the fear they are feeling by emboldening their Adult with the logical rational for buying: They got a “great deal,” or at least, a better deal than any other buyer. Along with their Parent cautioning against “acting like extravagant American millionaires” by purchasing a new home, their Parent may also be saying “You shouldn’t buy unless you are sure you’re getting a GREAT DEAL.”

The tactic we employ when we’ve reached rock bottom on the negotiation is to terminate a negotiation by becoming “insulted.” The price is as low as our boss will take. Well, our boss will go a little bit lower, but we don’t tell this to the buyer. Instead, we balk at the next negotiation. We act “insulted,” even a little disgusted and hurt. Our attitude, but not our words, says, “I thought we were friends. How could you do this to me? I’m getting in trouble with my American boss, who isn’t used to negotiating. I can’t go any lower on the price.” Here’s exactly what we say:

(Your foreign-born buyer has just rejected your last offer and has now offered a lower price. You now have a long pause before speaking.)

SALESPERSON: “Our company builds a high quality home at a very good price. You have gotten a better price than any other buyer. Your last offer is not an offer. It’s an insult.”

(Now just sit there, stare at your buyers, or look down. Realize at this moment that you are dealing with incredibly skilled negotiators. If you think it’s going to be just that easy to close this negotiation, you’ve got another thing coming. And what’s coming is this:)

FOREIGN-BORN BUYER: “Well, I’m sorry it turned out like this. I really like you, and I really liked this home. In this market, you should be happy to take my offer. I’m paying all cash. I can close escrow in 2 weeks. I’m the best buyer you can find.”

SALESPERSON: “I know you’re a good buyer. But our company can sell this home at that price to anyone. But we won’t, because we’re not just selling ONE home. We’ve got 50 more to sell. If we sell this home to you at this price, we’ll be devaluing every other home we’ve got left to build and sell. We would be hurting our future profits, and we would be hurting every other buyer who already paid THOUSANDS more than the price we’ve just offered you.

  • It’s bad for our business,
  • it’s bad for our other buyers, and
  • it’s an insult to me for you to offer a price that low.”

The foreign-born buyers are now thinking, “What a stupid, idealistic American you are to have misinterpreted our probing and friendly initial opening of negotiations as a genuine attempt at pure friendship. Don’t you Americans understand that just as 2 boxers shake hands before a bout, this was all preparatory to the negotiation? The inexperience of this American at negotiation has caused our relationship-building to backfire, and now the American feels personally involved and personally offended. Didn’t this American see the movie, The Godfather, and realize, ‘It’s nothing personal. It’s just business’?”

As for you, the salesperson, you’re done. You’ve shot your wad. Now it’s your turn to be the “Master Negotiator.” You just sit there, and don’t say another word. By this, we mean, YOU DON’T SAY ANOTHER WORD. Remember, you’re “hurt.” You’re “insulted.” IF THE BUYER SAYS ANYTHING OR ASKS YOU A QUESTION, YOU JUST SIT THERE AND DO NOT RESPOND. THIS WILL BE VERY UNCOMFORTABLE, BUT YOU MUST DO EXACTLY AS WE SAY. The buyer will now say, “Goodbye,” TO WHICH YOU DO NOT RESPOND! THE BUYER WILL NOW LEAVE. This is all part of their negotiation. Let us be perfectly clear:

Your reaction in getting “insulted” and terminating the negotiation was EXACTLY the sign these foreign-born buyers wanted to see in you. This tells the foreign-born buyers that they got the very best price possible on the home. At the same time, they’re disturbed at this American tendency to become personally involved in the negotiation.

Within an hour, the foreign-born buyers return. They’re “all smiles,” as they bring in a huge coffee cake, possibly an expensive bottle of wine, or if they’re Korean, a $300 bottle of whiskey or Dom Perignon champagne. They’re “Oh so sorry for the misunderstanding.” They never meant to insult you. They “love you.” They’ll take the deal, if you can just take, say, $300 off the price. (The amount of reduction in the price will always exactly equal the price of the gifts (bribes) they just brought you.)

The reason the buyers are so happy is because you made them happy. By your refusal to budge on the price and your personal insult at their last offer, they now know they’ve gotten the best rock-bottom price they could possibly get. After all, they really wanted the home. They just had to be sure they were getting the very best possible price.

You agree to this small drop in price. The deal is done. Your “insult” is placated by the expensive gifts.

Now for the best part. We truly enjoyed getting to know these buyers. We also enjoyed the food they brought us. We fully expected the negotiation that was to come. Once the negotiation started, we knew exactly how low we would go on the price. From the moment the price negotiations started until the final last little price drop, it was all an elaborate act. We just let the foreign-born buyers beat us up for a week or 10 days. This way, they think they have applied their negotiation skills and gotten a better deal than every other buyer.

RULE #27: When selling to a person who wants to negotiate, ALWAYS give in on SOMETHING.

The above rule is essential because:

RULE #28: When buyers want to negotiate, the buyers want to think they got a better deal than every other buyer.

Let’s tally up the score:

  1. You sold a home.
  2. You got some great food.
  3. You learned about a foreign culture.
  4. You made some new friends.
  5. You got some great gifts.

Don’t you just love dealing with foreign-born buyers?

Copyright © 2011 Steven M. Weston