"People aren't stupid." That was what my wife said to me during a recent discussion about competition between a Walmart supermarket and the Whole Foods store across the street near our Connecticut home. Most of my wife's friends, careful shoppers all, had stopped at the Walmart for its perceived deep discounts on foodstuffs and found that, almost across the board, Walmart was more expensive than Whole Foods. The assumption on my wife's and her friends' part was that Walmart thought they could slip a fast one by those used to paying premium prices for their groceries at Whole Foods. But people aren't stupid.
It reminded me of a discussion I had recently with the sales manager at a well-respected golf community in South Carolina. My customers told me after they visited the community that they felt "steered" away from resale homes and toward
My customers felt "steered" away from re-sale properties and toward the developer's new homes and raw dirt.
new properties and spec homes being sold by the developer. In most communities, comparable resale properties are slightly to significantly less expensive, yet the developer's sales agents are extra-incentivized to sell the developer's properties instead. (I am not publishing the name of the golf community here because the practice is more common than one might think. And in all other respects, it is a community I recommend.)
The sales agents in this community are paid a commission on re-sale properties that is way less than what they earn for selling developer properties, and substantially less than the standard 3% buyer side rate that agents who work for agencies outside the gates earn. When I suggested that his sales agents were being "punished" if they sold re-sales to customers who were better suited to such homes than to new ones or a developer lot, the sales manager suggested he saw no punishment in the commission gap.
"They do earn a commission [on the re-sales]," he reiterated.
Sales agents in this and other golf communities with similar practices understand what is going on and can always go work elsewhere. But not all customers are quick to understand there is a reason why an agent may be pushing raw land or brand new homes. That is because it pays for them to do so. Customers shopping for a golf community home should have their radars up.