Real estate marketing firms in Vancouver are turning to creative strategies and tech to help them survive a weak presale environment amid industry layoffs, delayed commissions and buyer hesitation.
Marketers aren’t just trying to do more with less using AI, social media and predictive analytics. Some are diversifying their businesses, and experimenting with tactics such as flash sales, and rental and buy-back guarantees.
Other incentives include covering closing costs or strata fees, adjusting deposit structures and offering mortgage buydowns to snag a lower interest rate. Personalized emails and text messages are also proving effective at targeting and nurturing prospects.
“We are having to innovate,” said Cam Good, owner of Vancouver-based KEY Marketing.
“At times like this when you’re challenged, you’ve got to rethink everything. We have decided to go where the market is, rather than try to beat our head against the wall.”
For example, KEY is helping SkyLiving in Surrey get over the financing finish line. The project by Allure Ventures Inc. was recently revised from 449 condos to a mix of 207 market rentals and 215 condos.
To boost presales, the developer is offering “unprecedented” rental and buy-back guarantees, Good said. For buyers who desire cash flow, the developer will lease the unit from them, find a tenant and guarantee rental income of 20 per cent of the purchase price over 24 months.
For buyers concerned about declining value, the developer will instead agree to buy back the unit upon completion at the full original purchase price. In either case, the developer will eat any shortfall.
“That developer is willing to take some risk from the buyer upon themselves just to push that project over the line and get it built,” Good said.
In May, KEY organized a flash sale for another Surrey project, selling 63 homes at a 25-per-cent discount in one day for Belvedere by Square Nine Developments Inc.
“What we’re being careful about, is just making sure the deal is real for buyers, because there’s a lot of developers that want to offer a fake deal,” Good said.
Legit bulk sales create “a very safe-feeling buying environment that buyers love,” he said. It can also raise capital for developers to acquire new development sites at bargain prices.
“When it’s a buyers’ market for buyers, it’s also a buyers’ market for developers,” he said.
Hot on the heels of provincial densification mandates, KEY is also expanding into the multiplex sector, helping small-scale builders pre-sell units, complete projects faster and see their capital returned sooner and freed up for new construction.
“The compounding effect for builders is profound,” Good said.
Tech transforming real estate marketing
It’s unclear whether such strategies will be enough to stanch the bleeding in Vancouver’s presale market.
Adding to marketers’ woes is the prevailing commission structure, which often sees them paid 50 per cent of the commission “on firm” and 50 per cent when the buyer takes possession. The commissions can be between 1.5 and two per cent, but it often takes years to receive the second half.
This is forcing marketers to survive on these “back ends” from work done several years ago, and use this revenue toward overhead costs and expenses, Good said.
Fortunately, technology may be able to significantly cut costs and help marketers optimize their human and financial capital.
“AI-driven tools and techniques, specifically as it relates to data and segmentation of audiences, is really something that stands out and can become very useful,” said Alyssa Virani, vice-president of marketing and strategy with Vancouver-based Virani Real Estate Advisors.
The firm, which also has offices in Seattle, London and Beijing, uses predictive analytics to home in on potential buyers based on their age, demographics and stage in the purchasing process. The company has in-house technology enabling it to collect data that is “super relevant to the outcomes,” she said.
“Collecting data and inputting data is one thing, but actually interpreting it and making sure it’s actually useful to us is another thing,” she said.
Virani said that while AI can help accelerate content creation, it’s not perfect and can lack authenticity.
“It’s not 100-per-cent there yet, so it definitely needs a human touch still,” she said.
Other marketers are more bullish on AI.
Marketing budgets are typically around five per cent of any project, but AI can bring this down to one per cent or less, said Sam Mehrbod, CEO of Roomvu Technologies Inc., which has offices in Vancouver and San Francisco.
“We use AI to create really authentic, hyper-local, hyper-personalized content that feels like it was just done by you,” he said.
Citing recent layoffs at Rennie & Associates Realty Ltd. and other industry players, Mehrbod said that “what you used to do in a month, you can do it in a day in terms of marketing a project.”
He said as AI is increasingly incorporated into search results and social media, SEO and websites may become less effective than Instagram, LinkedIn and YouTube. Facebook, with its popularity among older adults, is another bonanza.
“I think SEO is done. We’re kind of over it now. You want to appear in people’s phones as much as you can,” he said.
Sunny Hahm, principal of Tandem Real Estate Strategy, said his team is also embracing AI as they shift their focus from volume to precision and become “a lot more surgical” in their approach.
“We’re using [AI] to enhance targeting, content generation, lead-scoring and even predictive sales modeling,” he said.
Vancouver-based Tandem is also mining its own internal database.
“We’re trying our best to re-target our own database with very tailored and personalized email campaigns, as well as individual SMS text campaigns, so that we can be nurturing those prospects a lot more intently and more persistently,” he said.
Ultimately, to respond to buyers’ lack of urgency or certainty, Tandem aims to really understand buyer motivation, timelines and financial sensitivities. The goal is to “drill down” on what matters most to buyers, whom he said are now primarily end users rather than investors.
“It’s really grounded in the rationale aspect, and then following through with emotional storytelling,” Hahm said.
Buyer psychology can surprise
Even with compelling and laser-focused marketing, it’s unclear whether the prevailing buyers’ market will actually translate into more sales.
KEY’s Good said this is partly due to a feeling of safety in numbers.
“It’s sort of counterintuitive. The buyers like to feel safe in a crowd. They like to line up, they like to see other people buying,” he said.
“But in a buyers’ market like we’re in, generally they’re alone. They walk into a sales centre by themselves. It feels creepy, and they don’t buy. They shop around, they get overwhelmed with options and they just don’t buy.”
It’s a “shame” because there are good deals to be had, he said.
Some marketers see the bear market as an opportunity to rejig themselves until the market rebounds.
“Any economic slowness or any pivotal paradigm shift in the market, where the market has been resetting itself, opens up many doors for opportunities to be innovative and to be more creative, because we have to,” said Tandem’s Hahm.
“The conventional way of doing presale launches is sort of out the window right now,” he said.
