Marketing Advice from Experienced Affordable Housing Developers

Regional Marketing Efforts in the Bay Area

In larger housing markets that encompass both urban and suburban communities, pooling resources for marketing can be highly effective if the partners’ target homebuyer markets are similar and they can align their marketing strategies or sales messages.

Hello Housing in San Francisco – which develops affordable housing for underserved communities – is participating in such a collaborative effort called the Regional Marketing Consortium. The consortium, with about 10 organizations and jurisdictions, is dedicated to marketing renovated homes made possible by federal Neighborhood Stabilization Program (NSP) funding. Participating Bay-area jurisdictions designed for-sale and rental programs to address home foreclosure and abandonment, and then awarded NSP funds to affordable housing developers for implementation.

With leadership from Enterprise Community Partners, the Local Initiatives Support Corporation (LISC) and several of the larger jurisdictions, developers began meeting on a quarterly basis to share information and ideas about effective and efficient ways to use funds. At first, these peer-to-peer meetings focused on how to access real estate owned (REO) inventory for NSP-funded redevelopment, but conversations eventually turned to marketing and sales strategies for newly developed homes. Even though the homes are located in different towns and jurisdictions, and the marketing and sales obstacles are somewhat varied, partners found enough common ground to create a shared framework for marketing that would help them reach more buyers and save each agency time and money.

Hello Housing Homes and Buyers

Hello Housing is using NSP funds to develop about 60 single-family homes in Alameda County, ranging in price from $250,000 to $400,000, which is considered affordable in the high-cost San Francisco-Bay Area.

At first, Hello Housing sought to cluster development on specific blocks to have the highest stabilizing effect, but the available supply of REO properties did not accommodate that approach. REO sellers in this area are assuming that the market will come back at some point, so the properties they make available are generally those in the worst shape, making rehabilitation impractical. Hello Housing therefore had to be more opportunistic with the supply available. Homes are spread across the organization’s entire geographic focus area, including nine cities as well as unincorporated areas in Alameda County. To date, Hello Housing has completed 35 NSP homes, 28 of which have sold to qualified homebuyers, and two are part of Hello Housing’s rental program for families at risk of homelessness. Five more homes are under construction and the rest will be completed within the next 18 months.

The average purchase price of Hello Housing’s NSP homes is $241,540, and most have two or three bedrooms and one bath. Buyers must be at or below 120 percent of the area median income. No specific credit score is required, although all buyers are carefully screened by Hello Housing’s homebuyer counseling partners: HomeBricks and Tri-Valley HOC.

Hello Housing Pricing Strategy

At first, Hello Housing based its pricing of homes for sale on the proposed as-renovated appraisal value identified when it took ownership of the home. However, basing the listing price on the proposed value was unsuccessful – the NSP homes spent too long on the market and Hello Housing had to make some painful price reductions. Staff then decided to set prices below the appraised value to see if buyers would bid up. This approach was successful, and has since been an effective strategy for getting the desired price for each home. Generally, Hello Housing shaves between 2.5 and 7.5 percent off of the desired price to determine the listing price, depending on the property and the neighborhood. This strategy has helped Hello Housing reduce the days-on-market for its NSP homes from about 90 days to an average of 17 days.

To set the desired price, Hello Housing reviews comparable sales in surrounding neighborhoods with the help of local real estate agents, plus considers construction costs, appraisals and permanent subsidy amounts. Hello Housing has had the most success in developing NSP homes in lower-cost areas; some of the higher-cost cities were not feasible locations from a subsidy perspective. The optimal price to attract target buyers in the designated neighborhoods is around $275,000.

The Regional Marketing Team

Partners – including developers and representatives of government, real estate and housing agencies – met intensively while developing the regional marketing effort. The partnership formed a working group to brainstorm marketing strategies and hired a consultant – Liz Miranda of Branding Strategies – to help the group form and implement its approach. Ms. Miranda helped to design a marketing strategy, project name, logo, taglines, materials, templates and a website design and launch plan. She also helped implement a survey to develop a target homebuyer profile for the regional partnership, identify effective ways to communicate with them, and gain perspective on the market place. Several partners – including HomeBricks, The Unity Council and BAHBA – distributed the survey to their clients to gather this input. Four iPod shuffles were given away to incentivize participation in the survey.

Survey Results.  Survey results revealed that prospective buyers were typically between 26 and 45 years old and mostly first-time home buyers. It also determined the average annual income and specific preferences such as number of bedrooms and bathrooms desired. The three purchasing factors that buyers identified as most important were affordable price, the home’s condition and its layout/size. The survey also found that the target market’s most common source of information was the Internet, followed by word of mouth, signage and affordable housing agencies. The three largest obstacles identified by prospective buyers were saving for a down payment, affordability and gaining lender approval. These findings helped the partners design marketing strategies and messages.

Marketing Message and Strategies

In any collaborative marketing strategy, the partners must first identify what they are able to do collectively and what they need to do independently. Members of the consortium identified the services offered by all of them and the buyer requirements that were consistent among them. They identified common program components and formed a foundation for the joint marketing strategy. Each group supplemented the regional marketing effort with some strategies of their own. Joint marketing features included a logo and graphics, baseline messaging and templates for marketing materials. The collaborative developed a website that markets homes for sale or “coming soon” and features each partner and its programs.

The tagline for joint marketing of the NSP-funded homes was much debated by the program partners, but they finally settled on: “Where stimulus funds make Bay Area homeownership achievable.” Although stimulus is sometimes considered a “bad” word in politics, the results of the homebuyer survey suggested that the target market considers it to be a useful benefit. Partners avoided using the word “affordable,” which historically signals government housing, and instead uses “achievable,” which is more acceptable. Partners wanted to send a message that NSP is a friendly and accessible program that helps people who typically are not eligible for government assistance.

As part of the marketing, partners promote the specific financial benefits passed on to buyers with the support of NSP funding, revealing how much the developer paid for the home and the cost of the improvements. This allows buyers to see the value added by the renovation, which is typically between $50,000 and $80,000 and described in marketing materials as a “benefit passed on to you.” 

Website 

Although it was clear that niche marketing strategies were needed to reach certain markets, it was just as important to provide a single website to make searching for homes easy for regional buyers. The shared website – www.HomeHub.org – is where all partners provide information on homes for sale and describe their NSP-funded activities. The website includes profiles of each partner and each community where renovated homes are located. A robust search function allows potential buyers to search for homes by developer, location, price, features, size and more. The website describes buyer requirements and lists benefits such as down payment assistance. Lenders that are willing to participate in NSP transactions are listed and each developer provides information on local financing options. Listing homes that are “coming soon” allows potential buyers who are not ready to move forward immediately to see the possibilities and have time to get through the qualification process.

Partners use traditional marketing tactics such as yard signs, posters and mailers, which include the joint website address. In addition, real estate agents, developers and housing counseling agencies promote the website in their classes and marketing materials and on their own websites. The website has been so successful that partners are considering expanding its purpose beyond NSP home sales to educate potential buyers about other below-market housing opportunities available through local jurisdictions.

Evaluation

The partners have access to analytical reports on website traffic, days-on-market for all listed properties and market pricing fluctuations. This information helps them determine which houses and neighborhoods are most appealing and helps them to gauge effectiveness of website marketing.

Lessons Learned by the Regional Collaboration:

  • Clearly define shared goals. Regional partnerships are a great way to collaborate, but participants must first determine the feasibility and benefits of such a partnership. Take the time to develop a common framework and goals. Starting up a marketing collaborative can be challenging, but sharing materials and expenses can be highly impact- and cost-effective, especially if the effort involves a website. Increasingly, the Internet is the first point of information for many prospective homebuyers, and building a collaborative website helps partners gain a broader audience. Plus, website development and maintenance is expensive, and working together makes it financially feasible for nonprofit developers.
  • Hire help if needed. For most nonprofits, marketing is a luxury that they don’t have time or money to develop. Effective marketing is necessary to sell homes, however. The cost of hiring a marketing consultant is a worthwhile investment if it makes your home sales and program marketing more effective. If hiring a consultant is out of the question, find a committed partner, real estate professional or agency volunteer to provide marketing assistance.
  • Include a strategy phase. Many groups mistakenly skip strategy sessions, design an ineffective logo and try to implement random marketing ideas, which is not effective. Strategize first, implement ideas later. Through an upfront focus on strategy, the Bay Area collaborative crafted a tagline that resonated with its target buyers and created a cohesive plan in which various efforts reinforced one another.
  • Create a simple and credible message. Focus on the fact that the program is accessible and credible and drive traffic to the website (if applicable). Use diverse images that are cheerful and simple, and include government agency logos, if permitted, to add legitimacy to the program. Also, avoid acronyms in marketing: it is best to use plain English and clear language.
  • Engage partners in your marketing strategies. Inform real estate agents, lenders and government partners about your marketing strategy and encourage them to leverage the tools available, especially a shared website, to add even more impact to your efforts.
  • Acknowledge the partnership’s limitations. Partners in the Bay Area realized during the planning stage that they could not guarantee good customer service as a group. For example, they could not guarantee a call back by participating developers or counseling agencies within a certain time frame. It is important to acknowledge such limitations and avoid over promising in joint messaging.
  • Find funding. Marketing can be expensive, so joining forces to seek funding and cover costs can be extremely effective. The Bay Area collaborative’s total marketing budget of about $100,000 was funded by Enterprise Community Partners and Alameda County, including the marketing materials, meetings, signs, and website development and maintenance. Justify the marketing investment by describing the benefits, such as decreased days-on-market for home sales.
  • Collaborative marketing strategies benefit home buyers as well as partners. Potential home buyers can find it confusing to hear different marketing messages from several developers about the same program in the same region. Creating a shared marketing strategy and message makes the program much more consumer-friendly.

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