A developer is taking his marketing approach to an unprecedented level with the offering of a $55,000 Tesla electric car to the buyers of his townhouses.
Sean Hodgins, president of New Westminster based Century Group, came up with the idea to help sell the remaining 10 townhouses at his Viridian project in South Surrey. The promotion begins Sept. 12 and ends Oct. 31 at midnight. The Tesla Model 3 mid-size sedan retails for around $55,000, he says. His company has entered into a deal with Tesla to supply the cars for the promotion, as well as to install charging stations at the 10 townhouses.
Because the townhouses have already been pre-wired for charging stations and electric cars are gaining in mainstream popularity, Mr. Hodgins says the offer makes sense. He says the gambit is not motivated by the slowing housing market, although he’s aware that that is how it appears.
“They might say that, and that would be fair comment, because I think some people want to look at it in some ominous way, but we’re really proud to do it," he says. "If it helps us sell one of our townhomes, and it helps people transition from their very expensively run gasoline car, and it helps Tesla promote their brand as well, then that’s a cool thing.
“But the market will tell us over the next few weeks here if it speaks to people.”
The Real Estate Board of Greater Vancouver said last week that sales of detached homes, condos and townhouses totaled 2,231 in August, up 15.7 per cent compared with the same month in 2018, but 9.2 per cent beneath the 10-year average for August.
Century Group launched the Viridian project in the fall of 2017 and has sold 47 units over the last couple of years. The terraced townhouses overlook the Nicomekl River in upscale Rosemary Heights, and construction finishes at the end of the month. Century has been increasing the townhomes’ prices since they launched, and Mr. Hodgins says the market is picking up as downsizers finally sell their houses. But the last few units are often the most difficult to move, he adds.
“We want to be finishing the project,” he says, “and pricing is strong on the market right now. It still might be a bit of a buyer’s market … but it’s leveled off.”
Prices for the townhouses range from $1.1 million to $1.4 million, and square footage from around 1,800 sq. ft. to 2,300 sq. ft.
Mr. Hodgins, whose father started the company in 1957, says he has never done anything like this before, and he can’t think of another developer who’s done it.
Other marketers have offered car-share memberships or iPads. But it’s more common for marketers and developers to offer incentives to realtors to bring in the buyers.
Since the market slowed, realtor Ian Watt says he’s received many e-mails offering lucrative bonus commissions to bring in buyers on particular projects. He criticizes the approach.
“If it’s priced correctly, it will sell,” says Mr. Watt. “You don’t need to bribe the realtor into duping your client into overpaying. It’s a sign of the times. Either the place is overpriced, or the market is slow, or both. In a hot market, you don’t have to do that.”
The bonus commissions typically range from 4.5 to 6 per cent and are limited-time offers.
In February, marketers for The Paramount condo project in Richmond offered realtor commissions of 4.5 per cent and up to $100,000 to help sell a unit. “This is the God of Fortune event you don’t want to miss!” said the offer.
In May, a marketer was offering a commission of $101,280 to sell a three-bedroom, $1.688-million townhouse on 7305 Granville Street. In July, an agent who helped sell a three-bedroom unit at the Etoile in Burnaby stood to earn up to $100,000 in commissions.
At Richmond development The Oak in June, OMG – the marketing arm of Park Georgia Realty – boasted that the 16 townhouses were being sold at “only” $1.35-million, in June. At the time, OMG was offering a promotion of $100,000 to realtors who could sell a three-bedroom unit and $50,000 for anyone who could sell a two-bedroom unit, on top of the flat two-per-cent commission.
OMG marketing coordinator Kevin Kam, who sent the emails out to certain realtors, says the campaign didn’t work. Only three of the 16 townhouses have sold.
“It didn’t work out as expected. Not to get into details, but the project we are selling wasn’t attractive in terms of the price point we were offering it at. I think it was just bad timing because the market was down at the time, and we were trying something new.”
Since June, sales have picked up, says Mr. Kam. But the bonus incentives have worked elsewhere, so it is something he says they would do again, because it gives more exposure to the project and incentivizes realtors.
“There are examples of bonuses working in Richmond, where they offered $100,000 to any realtor who sold their townhouses. It just didn’t work with this one.
“I think developers just had their financials set for a certain market two or three years ago and when they released the product it was bad timing when the new taxes came in and the [mortgage] stress test, and it screwed everyone over because they projected a certain number and released it at that number. It was bad timing.”
He says such offers can also work out for the buyer if the realtor splits the bonus, but that’s up to the realtor.
“We tell the realtor they can split the bonus with the buyer. For example, a $100,000 bonus can take $50,000 off the price, and the $50,000 can go to the realtor. But it really depends on how the realtor wants to sell it to their client.”
Legally, the realtor must inform the buyer about any commissions that they will be earning as part of the deal, says Mr. Watt.
Mr. Hodgins says he’d rather incentivize the buyer to adopt a new lifestyle mindset.
“I don’t want to sound too dramatic, but they are exiting their single-family house, they have the two-car garage, the two cars, and this is just a transformative moment. They are changing their lifestyle, they are looking at the idea of an electric car as part of this, and we are wrapping it all up for them. We are trying to appeal to that kind of buyer who wants that.
“It is an experiment for sure, and it will be very interesting to see what the response is over the next few weeks.”
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