Home sales über alles
HOMEBUILDING by Jean Gruss | Editor/Lee-Collier
Company. Engle Homes
Key. Europeans and their strong currency could help buoy Southwest Florida's housing market.
Why wait for euro-carrying Germans to visit Southwest Florida? One homebuilder is selling Fort Myers and Naples homes directly to Germans in their own country.
Bruce Hershey II doesn't know how to speak a word of German, but he can count euros.
With the U.S. dollar's value low relative to the European currency, Hershey is reaching across the Atlantic Ocean to find buyers who may be enticed to purchase a second home in Southwest Florida at bargain prices.
But rather than wait for German tourists to show up at his sales center in Fort Myers, Hershey is traveling to Germany to drum up new business. He's the vice president of sales and marketing for Engle Homes, a division of Hollywood, Fla.-based Tousa Homes. When you consider the currency exchange, a home in Southwest Florida could cost 40% less than one in Germany, he says.
With the overall drop in new-home sales likely to drag out well into 2008, builders are looking for any edge they can find to land new business. Engle is the first homebuilder in the market in recent years to send sales representatives to Germany, according to the Lee Building Industry Association.
Hershey, who joined Engle in February, is the consummate salesman who's not afraid to try anything to boost sales. Despite overwhelming odds, he and his sales team successfully pulled off a promotion to sell 50 homes in five days in march by spending $150,000 on a two-week advertising blitz on the airwaves and in print. Discounts of as much as $127,000 per home helped, too.
But just because the euro currency is strong doesn't mean sales will come easily. As far away as the Germans might be, they too have heard about the incentives in Florida. "They knew what was happening," Hershey says. "They knew about the discounts."
A new avenue
Hershey was flipping through a German-language magazine that focuses on Florida recently when he came across an ad featuring Michael Schneider-Christians, a well-known German-speaking Realtor in Cape Coral. The ad featured real estate brokers such as Schneider-Christians, attorneys and mortgage bankers who held Florida home-buying seminars in cities all over Germany, as well as Zurich, Switzerland.
Interestingly, no homebuilders were on the panel of experts, dubbed the "Florida Sun Seminare in Deutschland." The organizers of the seminar agreed to let Engle sponsor the food and beverage tables and talk to prospective buyers during the seminar breaks. "They've never had a builder involved."
What's more, the sponsor cost was minimal: Just 600 euros, or about $820. By comparison, a full-page color ad in a daily newspaper in Germany can cost as much as $50,000. "Any time you do a venture like this it can get expensive," says Hershey.
So Hershey quickly developed materials in German, including DVDs, brochures and giveaways such as sunglass clips. An Engle vice president and his wife, who wife speaks German, accompanied Hershey on his first trip to Germany in June.
Ich liebe homebuyers
Southwest Florida has traditionally been a favorite vacation and retirement spot for Germans. There are now nonstop flights from Southwest Florida International Airport in Fort Myers to Dusseldorf and Munich on the German airline LTU.
So Hershey booked a trip on LTU to Dusseldorf, where he met up with Schneider-Christians and the other seminar presenters and boarded a train for Cologne. Hershey had a list of brokers to call and bought a German pre-paid cell phone.
In Cologne, about 30 prospective buyers attended the five-hour seminar. Hershey put up a banner and bags of brochures in the hallway where food and drinks were served. During breaks, Hershey chatted with interested buyers though he didn't make a sale.
The following day, Hershey had better luck at a seminar in Frankfurt. He suspects that's because it's more of a financial center and the prospects were white-collar professionals. In the more industrial city of Cologne, the crowd was more blue collar. Hershey worked with one couple in the lobby of a Frankfurt hotel until 3 a.m. to hammer out a deal on a Naples home.
The next morning, a groggy Hershey traveled to Zurich. Of the three cities he visited, Zurich was the least successful. The 20 people who attended the seminar there were investors and the Swiss are generally not as keen about investing overseas as their German neighbors.
The trip generated five home sales, which was profitable even after deducting trip expenses totaling $6,500, Hershey says. "Some builders are spending up to $25,000 for one sale today," he says. Hershey considers the exploratory trip a success and learned valuable lessons about selling to Germans. He expects to sell 50 homes a year there on return trips starting in November.
Among the lessons he learned, Hershey found that it's helpful to join a group of professionals such as Realtors, attorneys and lenders who can speak the language and have earned buyers' trust. "It doesn't make sense to do it on your own," Hershey says.
What's more, Germans are particularly interested in the construction methods and are eager to bore into intricate details. "Germans are very technical people," Hershey says.
There are some obstacles to overcome, however. For example, Germans are unaccustomed to buying homes in subdivisions because they're rare in that country. They must learn, for example, that there are homeowners' association fees that pay to maintain gates, clubhouses, pools and tennis courts.
And then there's the news of the real estate downturn, which Germans have read about. Still, the discounts are likely to attract buyers, most of whom are purchasing a second-home for their own use. Hershey estimates just 10% of the prospective buyers are investors.
Unlike the British, which have been buying homes in droves around Orlando, there is the language barrier. But Hershey is confident he can overcome that, too: "I'm going to learn German," he says.