My daughter recommended that I impress you with a “glamour shot”

My daughter recommended that I
impress you with a “glamour shot”
I prefer this one …
Your Value Proposition
On Steroids!
Six years ago (March 2008),
I met Ted Cater
(then EarthCraft/ now Panasonic),
at an EarthCraft Training Class
I thought he
was nuts!!
We all face a common challenge …
All of our Homebuyers want someone to “hook them
up” with a deal on a nice new house
Tommy’s new braces
Sally’s piano lessons
Susie’s college saving account
Mom and Dad’s 401k’s
And so on, and so on
Lower Price
= Lower Down Payment
= Lower Monthly Payment
= Lower Cost of Living in Your Home
= A Reasonable Risk to Take
Why isn’t the financial side of homeownership
looked at the same way?
To motivate buyers to purchase
High Performance Homes, an ideal value
proposition must …
(1) Be Holistic - (not just price or energy savings)
(2) Be Relative – (all buyers must be able to relate it to their lives)
(3) Invoke Emotion – (buyers need to embrace it
so strongly that they can’t stop talking about it)
Martha Wampler Behm did an awesome job writing on this subject
in the Feb 12, 2014 edition of “Shelton Insights”
And it needs to be offered in a
simple-to-understand package
that grabs your buyers’ attention
Instantly
To keep it simple … I use a term we’ve all heard
before …
TCO
(Total Cost of Ownership)
and guess what …
Ted looked at me like
I was nuts !
We met with Crescent Homes (here in
Charleston) in Nov. 2009… and identified two
opportunities …
(1) appraisals were coming in low
(2) they had a price competition issue
(new construction & resales )
In Jan. 2010, we ran a special program with Crescent,
and saw a 300% increase in sales with
a promotion leading up to the Super Bowl
(2010 Super Bowl Special - 14 homes sold at full price in 13
days)
As a preferred lender, we managed a
99% capture rate
We learned three fundamental lessons working
with Crescent …
#1 - If you fight the battle based solely on price
and base your marketing on a long list
of technical features and upgrades,
You will miss opportunities
#2 - If you fight the battle based on
TCO (Total Cost of Ownership)™,
You will sell more homes
#3 – And, if you close the deal using a
TLI (Total Life Impact)™ approach,
You will build an army of raving fans
Imagine an opportunity to engage your
Prospective Buyers with your Value Proposition
Immediately!
So how does it
work?
A case study …
Resale Competition (HERS 130) $300,000.00
Code Built Competition (HERS 100)
$312,000.00 (Resale + 4%)
Your Homes (HERS 55) $321,000.00 (Resale + 7% / Code Built + 3%)
Conventional financing
10% down / 3.75% / 30 yrs
Taxes & Insurance
$333.33 / month
PMI
.57% - Standard Monthly
Buyers Credit
715 Median Score
Step #1 –
We explore your value proposition
Based on “Price”
Typical Resale Property - $300,000 Price, HERS 130
$300,000
$30,000
$1,712
Listed Price - Resale
HERS 130
Down Payment - Resale
HERS 130
Monthly Payment - Resale
HERS 130
Your Built New Construction - $321,000 Price, HERS 55
$321,000
$32,100
$1,809
Listed Price - Your Built
New Construction
HERS 55
Down Payment - Your Built
New Construction
HERS 55
Monthly Payment - Your Built
New Construction
HERS 55
Your house has a
$2,100 larger
down payment
$1,712
$1.50
0
$2,25
0
$1,809
Monthly Payment
Resale - HERS 130
$1,50
0
$2,25
0
Monthly Payment
Your Build HERS
55
And cost $97 more
each month
Step #2 –
We enhance your value proposition using TCO,
by monetizing the impact of Energy Performance
Typical Resale Property - $300,000 Price, HERS 130 – Baseline Utility Bills
$300/mo
$300,000
$2,012
$243,568
Listed Price - Resale
HERS 130
Monthly Payment + Energy
Resale HERS 130
(Month #1)
Total Cost of Ownership
Sum of Payments +Utility
Bills
Resale - HERS 130
Your Built New Construction - $321,000 Price, HERS 55
$321,000
$1,935
$227,841
Listed Price - Your Built
New Construction
HERS 55
Monthly Payment + Energy
Your Built New Construction
HERS 55
(Month #1)
Total Cost of Ownership
Sum of Payments + Utility
Bills
Your Built - HERS 55
Assuming a 4.9% annual utility cost inflation
$243,568
$15,726.75
in “Net Savings”
6.46% Reduction in TCO
$180,00
0
$260,000
$227,841
Total Cost of Ownership
Monthly Pmts & Utility Bills
HERS 130 - (Yrs 1-10)
$180,00
0
$260,000
Total Cost of Ownership
Monthly Pmts & Utility Bills
HERS 55 - (Yrs 1-10)
To reach the same TCO,
Resale HERS 130 Price =
$280,620.00
(In other words, your buyers would need to
compare your $321,000 home to one priced
$40,000 less)
Assuming a 4.9% annual utility cost inflation
Step #3 –
We turbo-charge your value proposition using TCO,
by incorporating Financial Optimization
(my software looks at 100,000+ unique scenarios)
Typical Resale Property - $300,000 Price, HERS 130 – Baseline Utility Bills
$300/mo
$300,000
$2,012
$243,568
Listed Price - Resale
HERS 130
Monthly Payment + Energy
Resale HERS 130
(Month #1)
Total Cost of Ownership
Sum of Payments + Utility
Bills
Resale - HERS 130
Your Built New Construction - $321,000 Price, HERS 55, Financial Optimization
$321,000
$1,829
$223,833
Listed Price - Your Built
New Construction
HERS 55
Total Cost of Ownership
Monthly Pmts + Utility Bills
Financially Optimized
HERS 55 - (Month #1)
Total Cost of Ownership
Sum of Payments + Utility
Bills
Financially Optimized
Assuming a 4.9% annual utility cost inflation
$243,568
$19,734.36
in “Net Savings”
8.1% Reduction in TCO
$180,000
$260,000
$223,833
Total Cost of Ownership
Monthly Pmts & Utility Bills
HERS 130 - (Yrs 1-10)
$180,000
$260,000
Total Cost of Ownership
Monthly Pmts & Utility Bills
Financially Optimized
HERS 55 - (Yrs 1-10)
Assuming a 4.9% annual utility cost inflation
To reach the same TCO,
Resale HERS 130 Price =
$275,693.38
(In other words, your buyers would need to
compare your $321,000 home to one priced
$46,000 less)
Step #4 –
We transform the buying decision by integrating the
financial side of the deal with your buyers’ lives,
using TLI (Total Life Impact)™
Typical Resale Property - $300,000 Price, HERS 130 – 30 Yr Deal
$2,012
Monthly Payment + Energy
Resale HERS 130
(Month #1)
$509,177
Total Cost of Ownership
Monthly Payments +Utility
Bills
Resale - HERS 130
$240,568
Estimated Equity Build-up
Assuming 1% Annual
Appreciation
Resale - HERS 130 (Years 1
Your Built New Construction - $321,000 Price, HERS 55, - 25 Yr Deal
$1,935
$495,143
Monthly Payment + Energy
Your Built New Construction
HERS 55
(Month #1)
Total Cost of Ownership
Monthly Pmts + Utility Bills
Financially Optimized
HERS 55 - (Years 1-20)
Assuming a 4.9% annual utility cost inflation
$308,023
Estimated Equity Build-up
Assuming 1% Annual
Appreciation
Resale - HERS 130 (Years 1
$240,568
Lower Monthly Payments,
$14,034
in “Net TCO Savings”
$200,000
$325,000
$308,023
Estimated Equity Build-Up
Assuming 1% Annual
Appreciation
HERS 130 - (Yrs 1-20)
$200,000
Estimated Equity Build-Up
Assuming 1% Annual
Appreciation
HERS 55 - (Yrs 1-20)
Assuming a 4.9% annual utility cost inflation
$325,000
Plus, $67,455 in
Additional Equity …
A Total Gain of $81,489
for the Prospective Buyer
Step #4(a) - I want Solar PV –
In this specific case, we illustrate the combination of
TCO, Financial Optimization, 2.8 kW Solar PV &
an Electric Car
(and if your buyer is using 96.5% FHA or 90% Conforming Conventional
financing, and if Solar cost is 5% of value (or less) – no appraisal increase
needed)
Our assumptions …
Computing Distance
Average Fuel Mileage
Current Car Payment
Fuel Cost/mo
1500 miles / month
20 MPG – Current Car
$250 / mo
$3.00 / gallon / $225
Solar PV (2.8kW)
$10,000 (included in 1st mortgage
loan)
Energy Production
Offset Electric Car Only
Solar PV Tax Credit
Electric Car Tax Credit
$3,000
$7,500
$2,237
Resale
$300,000 Price,
HERS 130,
Conventional Auto
Your Built
New Construction
$331,000 Price,
HERS 55,
Financial
Optimization,
Solar PV +
Electric Auto
TCO + Conventional Auto
Monthly Payments +Utility
Bills
Resale - HERS 130
$278,320
TCO + Conventional Auto
Sum of Monthly Pmts + Utility Bills
Resale - HERS 130
(Years 1-10)
$2,026
$238,609
TCO + Solar PV / Elec Auto
Monthly Payments + Utility
Bills
Your Built - HERS 55
TCO + Solar PV / Elec Auto
Sum of Monthly Pmts + Utility Bills
Your Built - HERS 55
(Yrs 1-10)
Assuming a 4.9% annual utility cost inflation
$39,711
$278,320
in “Net Savings”, plus
$10,500
Federal Tax Credits
14.27% Reduction in TLI
$238,609
$180,000
$260,000
TCO + Conventional Auto
Monthly Pmts & Utility Bills
HERS 130 - (Yrs 1-10)
$260,000
TCO + Solar PV / Elec Auto
Monthly Pmts & Utility Bills
Financially Optimized
HERS 55 - (Yrs 1-10)
Assuming a 4.9% annual utility cost inflation
$180,000
To reach the same TLI,
Resale HERS 130 Price =
$257,195.67
(In other words, your buyers would need to
compare your $331,000 home to one priced
$73,800 less)
Remember when I said that there were three
components to an ideal value proposition …
We need to
Invoke Emotion
Martha Wampler Behm did an awesome job wring on this same subject
in the Feb 12, 2014 edition of “Shelton Insights”
How about your buyers that needs to save money
for college (529 plan) but also needs your new home
for their growing family?
Ten Years - $48,608 , Fifteen Years - $102,025
(assumes net annual return of 5.00%)
How about your buyers that want to buy your new home,
but also need to build or catch up on a 401k plan?
Ten Years - $69,368, Fifteen Years - $147,739
(assumes net annual return of 5.00%, 50% employer match)
And how about your buyers that want to plan for retirement
and have their home paid off as quickly as possible?
$0.00 Mortgage in 18 yrs, 11 months
So, how do you put the High Performance Lending®
system to work for you?
Today, in the S.E. USA – as a Mortgage Lender
offered exclusively thru Synovus Mortgage
Early 2015, nationally – as a Lender or Consulting
Member of your Marketing / Sales / Financing Team
through TeeCeeO Consulting
Contact Information:
Kerry Langley
(direct) 770.365.7769
[email protected]
www.teeceeo.com