Evaluating and Refining the Marketing Plan

Common Problems and Solutions

These are some common problems that have been revealed in the evaluation of affordable housing marketing programs, with possible solutions:

  1. The marketing net has been cast too widely.  Hundreds of people respond to marketing efforts, but none of them are qualified for a mortgage.  This is a problem for several reasons: each inquiry takes valuable staff time to process and may tax your phone or website systems as well; word will get out that your program is not worth calling about because no one can qualify; you’ve spent time and money on marketing strategies that are not delivering eligible and qualified buyers. Possible solutions:
    1. Target your marketing strategies to focus on groups of people who are more likely to qualify for a mortgage, such as employees of a business earning your income range, people in homebuyer education classes who are near-ready, referrals by other real estate agents or lenders who are in a position to know that the customers could qualify for a more affordable home, or if they had down payment assistance.
    2. Change your marketing messages to focus on the near-ready homeseeker.  For example: “Have you been prequalified for a mortgage but can’t find a new home at the right price?” or “Is the only thing standing between you and homeownership a down payment?” These kinds of questions will catch the attention of people who fit that description.  Also be sure to include some basic information about eligibility and qualification requirements.
    3. Create your own loan product with more relaxed underwriting.  It is very difficult to secure loan capital in the post-foreclosure era, but it used to be fairly common for nonprofits to operate their own lending programs for first or second mortgages, or organize loan consortia in which lenders share risk for a pool of loans that are made with relaxed underwriting, or put up a loan guarantee to mitigate the risk of lenders willing to make such loans.  This is likely a long-term strategy , and is probably only realistic for the most sophisticated and experienced affordable housing developers.
  1. The neighborhood’s reputation is a deal-breaker. Ideally, this is something you would understand before you acquire property for rehab or development.  Even when you are in the business of stabilizing or revitalizing a neighborhood, you need to have a realistic strategy about building from a position of strength, and intentionally setting out to build a more positive neighborhood image.  Possible solutions:
    1. Within any neighborhood or census tract, there are usually micro-markets or sub-neighborhoods of varying strength.  You probably will not have success starting with a homeownership strategy in the worst part of a distressed neighborhood.  Alternatively, you can concentrate homeownership development in the strongest micro-markets and the edges between those and the next strongest areas to begin a wave of stability.  The most distressed sub-neighborhoods may need community organizing, crime prevention and quality rental strategies before they can attract an owner-occupant buyer.
    2. If you already have homes on very distressed blocks, consider changing to a rental or lease purchase strategy, while implementing other revitalization strategies to strengthen the area’s safety and physical conditions.
    3. Develop an image-building campaign for the neighborhood to run parallel to other revitalization efforts.  Identify the core strengths of the neighborhood and begin organizing activities, news stories and other marketing materials to reinforce the identity of the neighborhood with those strengths. 
  2. The property is not as attractive as others on the market at a similar price. Some affordable housing developers make the mistake of building to what they think is a reasonable standard for safe, decent, but basic shelter – instead of setting their standard vis a vis the competition.  In a weak market, you may be surprised at the amenities and prices of competing properties.  Buying a home is not just a financial decision, it is an emotional one.  Buyers want to be “wowed” at the home they are buying, and they will have looked at many other homes before they decide on one – an average of twelve.  Possible solutions:
    1. Use the Analysis of Competition/Property Assessment worksheet from Chapter 7 to assess several competing properties to determine the most important changes you need to make in the home to give it a competitive edge.
    2. Ask your real estate agent for her/his advice – they probably know where your property falls short.  They might also hold an open house for other real estate agents to seek their opinions on the highest priority changes to be made to make the house more saleable.
    3. Go back to your funders (those originally invested in the project as well as others with a stake in the project’s success) with your research on the problem and propose to them the additional funding you will need, the specific improvements you’ll make, and why you believe the additional work will make a difference.
    4. If the conditions of the block are a problem, craft a strategy for working with neighbors on cleanups, beautification projects and minor repairs to help your home attract a strong buyer who will be a good neighbor.
    5. Lower the price – but consider carefully the impact that may have on surrounding housing values.
    6. Offer a sales bonus (on top of the commission) to whichever real estate agent brings the buyer to the property.  This bonus may catch the attention of more real estate agents, and make up for the size of the commission on an affordable home with the real or perceived additional work in handholding a buyer of modest means through a purchase using a government program. Discuss this option with your real estate agent to determine its appropriateness.

Click here for a worksheet to help you think through this step.

Chapter 11 will assist you in creating a budget for your marketing and sales plan.