Rent Increases & Concessions Part Three
FACTORS THAT SUPPORT VALUE—AND THEREFORE, A HIGHER RENTAL RATE
It’s important to lease not only from a position of value but also from a position of competitive advantage; and these advantages are the factors that support higher rental rate you’re requesting from the resident or prospective resident. As compared to your competitors, the advantages that you have to offer will boil down to one or a combination of five fundamental factors:
- Your Rental Rate
Salesmanship (which also includes, to a large degree, the advertising and promotion that got them to the community in the first place), really takes hold when the prospective resident comes into contact with the Leasing Professional. In the case of a renewal, salesmanship includes all that you do to continually reinforce the resident’s decision to make their home with you. It goes without saying that a Leasing Professional must possess great sales skills; but when we talk about using salesmanship as a competitive advantage, it means pulling out all the stops. Persuasive skills, the ability to overcome objections, and product knowledge are all givens in the successful leasing process; but to obtain a position of competitive advantage, you need to take those basics at least one step beyond: the ability to persuade the resident based on solid confidence in your rental rate and a full command of the value that your community represents; the ability to not just overcome objections, but to turn negative perceptions into fully positive ones whenever possible; and knowledge of not only your immediate product, but of the entire competitive marketplace (competing communities, the offerings and options of the surrounding neighborhood, and all) in which you perform.
Even when you’re leasing and renewing at higher rents, your Rental Rate can be one of your competitive advantages. How? Not by being the lowest, but by being the absolute best as compared to all of the wonderful things you can demonstrate that the resident or prospective resident will receive in return. Remember, it’s not about the rental rate … it’s about value. The community down the block may be offering a two-bedroom at $50 less per month; but because you’re offering so much more than just an apartment, there are plenty of other factors that can far out-value that $50 difference—and more! While there are a few people who really will make their rental or renewal decision based solely on the rental rate, remember that rental rate is hardly ever the main reason that people lease, and it’s seldom even the secondary reason, so consider that it’s usually in third place at best. Of course, we know from experience that residents and prospective residents will often say that the rental rate is a primary concern, but that’s because we’re all conditioned as consumers to try for the lowest possible price. From the buyer’s perspective, posing a price objection is the best way to get a price cut if it’s possible. So, from your perspective as a Leasing Professional—stand firmly on your value and don’t make it possible.
The simple fact is that many people get a little nervous about just the idea of buying something at the lowest price because we all know the time-proven adage: you get what you pay for. Buyers are often inherently suspicious of comparatively low prices because they send a negative message about the quality and value of the product and service on offer. In the practice of value-based leasing, you’ll find that more residents and prospective residents will be willing to make a leasing or renewal decision that’s based on a higher priced value if the lower rental rate implicates a sacrifice in service or quality or prestige or any of the other factors that really are more important to them than the rental rate. The key is to convince them of the level of value that supports that higher rate.
Offering the lowest rental rate is certainly one way for a community to compete; but it’s not the smartest. The most successful Leasing Professionals understand two important things: 1) there are almost always at least two factors that are more important to the resident and prospective resident than rate; and 2) one of those things is almost always quality.
The good news is that leasing competitively based on quality is easy … virtually every community has quality. The bad news is that too few Leasing Professionals understand the real meaning of the word, and consequently, have a tough time making quality-based leasing work for them to its best advantage. But actually, that’s good news in disguise, because if you can be one of the few Leasing Pros who really understands the meaning and use of quality in the leasing process, you’ll put yourself right on the competitive edge.
When asked, most Leasing Professionals will tell you that quality means being the best or of the highest intrinsic value. In truth, quality does not mean either of those things. Quality means conformance to standards and expectations—and in this case, those of the resident or prospective resident. Quality doesn’t mean having the best stuff—it means having the right stuff. Offering quality means offering the correct stuff to meet the resident’s and prospective resident’s requirements, expectations, and needs and not necessarily the best stuff available; so the word quality and the word best are not necessarily synonymous. Which would you rather take a nap on: a couch that’s really well-constructed and nicely padded … or one made of solid gold? See what I mean?
Quality has not so much to do with how fancy or pricey or prestigious something is; but rather how well it satisfies a requirement or expectation. Quality isn’t that the countertops are poured concrete or granite or even Formica; but rather that they’re sharp-looking and easy to keep clean and impervious to stains. Quality isn’t whether the bathroom has ultra-modern, sculptural fixtures or standard stock; but rather that it’s roomy enough to bathe the kids or just that it’s in a great location within the floor plan and feels like a fantastic place to have a nice, long tub soak. Quality isn’t whether there are sliding glass or French doors leading to the patio; but rather that they open onto the perfect spot to have Sunday morning coffee while you watch and listen to the birds. Click here to read the reviews of hardwood floor refinishing new york company!
The next two factors on our list are service and delivery, and I’m going to talk about them together because in our industry, the two go very much hand in hand because service is a huge part of what we deliver as our final product. The importance of superior service, especially when it comes to securing a renewal at higher rent, could fill a book all by itself. You can be certain that when renewal time rolls around, the question of service is one of—if not the—primary question in the resident’s mind. Ideally, they have to actually stop and ask themselves the question of “how well have I been served here?” … because in the less-than-ideal scenario, their mind bypassed that question altogether and jumped straight to the maintenance issue that was never adequately resolved or the time that their rent payment wasn’t properly posted and it took three phone calls to resolve the problem. And that’s to say nothing of the issue(s) that they might even be quietly living with because you neglected to check in regularly to ask if there was something that needed your attention—because even those “livable” issues are cast in a new light when renewal time comes, and especially when renewal is at a higher rate.
Delivering on excellent service is a requirement throughout the life cycle of the lease in order to successfully renew. Demonstrating the high value of your community’s service is a little tougher in the initial leasing process because the prospective resident has yet to experience life in your community and has no real frame of reference on which to depend. Resident testimonials can be invaluable here, not only because they’re real evidence, but also because they’re provided by the prospective resident’s peers—other people just like them who have made the decision to make your community their home.
While a prospective resident may be suspicious of your motives in claiming to offer outstanding service, they’ll believe it more readily when they don’t have to take your word for it, alone. Testimonials can be very effectively presented in the initial leasing demonstration whether they’re shown in the form of an album of resident letters, videos, or framed on a wall in a common area. A serious commitment to service can also be demonstrated by making the service shop a stop on your tour. A well-organized shop, friendly and professional service technicians, and evidence of an efficient service system speak for themselves in ways that taglines and catchphrases about commitment simply cannot. Promise excellent service, demonstrate it, and deliver it, and you’ll have done more to support your value-based leasing and renewal efforts than perhaps any other single thing you’ll ever do.
Join us next week for Part Four of RENT INCREASES & CONCESSIONS
Read More Now The Leasing Professionals Guide to Eliminating Concessions, Raising Rents and Selling Rent Increases Every Time