Solutions-Based Selling

Marketplace Homes

You might not think of real estate as an industry that can thrive during a recession, and it typically is not. That said, Marketplace Homes has accomplished what many other real estate and property management firms have not; it is thriving during this long recession.

Mike Kalis, Marketplace Homes’ CEO, has developed a plan that bridges the gap between homeowners and builders. His solution for an ailing market is working so well that Inc. 5000 has the company listed as the ninety-ninth fastest growing one in the U.S.

Mike Kalis graduated from Michigan State and started working for Pulte Homes, which was the largest builder in the U.S. at the time. In 2006, hearing potential clients say that they couldn’t buy until they had sold their current residence, led him to develop what was called “solutions-based selling.” It was a unique yet simple idea – help someone do whatever was necessary to sell their existing home, enabling them to buy their dream home, new.

Seeing an opportunity to expand this idea of selling, Mike purchased Marketplace Homes in 2007 for $25,000. It grew as a solutions-based company for people who were looking to purchase new construction homes. “The program that excelled was our guaranteed six year lease,” Mike explains. “We would agree to lease people’s properties for a guaranteed amount for up to six years, until they were able to sell their home for an amount that made sense to them – as long as they purchased through one of our builders. The builders would pay us a commission to help put that transaction together and this grew.”

Marketplace Homes has completed over $500 million in new construction sales since its inception, making it the largest broker of new construction homes in the US.

Unfortunately, in 2007, the recession hit Detroit. As this was a little sooner than it hit other US cities, the company had a head start in learning how to deal with it. “Sometimes opportunities are found in unique places and Detroit is a great example of that,” shares Mike. “Starting a real estate company when everything is down, and figuring out a way to solve people’s problems, sometimes is a little easier than trying to go to a place where it is great and there are no problems.”

The economic downturn magnified ordinary real estate problems and twenty percent of residential properties in the U.S. are still under water. If you have a mortgage on a property and are having difficulty selling it, but don’t want to foreclose, the situation doesn’t leave you with a lot of options. The guaranteed lease solution provided by Marketplace Homes helps people rent out their homes while they try to sell. The company will take care of cutting the grass, shovelling the snow and any other necessary property maintenance. The homeowner will not have to let go of the property due to foreclosure or play the part of the landlord.

“We invented this and dreamed it up,” says Mike. “There are a few people in different markets that have tried to copy what we are doing, but we are the original and only people doing this on a national basis.”

When asked why this has not been done before, Mike explains that real estate is one of those industries that have been a little slower to adopt new technology and new ideas. Most real estate companies make good money sticking to what has always been done; profits come from commissions, and everything else is seen as a loss.

Mike attributes the market slipping and falling as a catalyst for much-needed change. The property management aspect saves the owner a lot of money, but costs Marketplace Homes. However, this plan has also led to an influx of business from resulting referrals from builders and customers. “Either somebody hears about our program and they contact us and we send them to a partner builder that we work with, in the area that they are hoping to move – or, the other way around is when a client comes in interested in building a home, but is concerned about being able to sell it.”

To be sure, people looking to buy a new home can face a kind of catch-22. A new home can take six months or more to build and, if the homeowner sells their home before that, they need somewhere to live in the interim. If they don’t sell their home before the new home is finished, they may have to deal with double payments.

“What our company does is to say that they can purchase a new home now, put their home up for sale if they want, but they don’t have to. And they know that when it closes, they will be receiving rental income or turning it into a rental property until the market is a little bit better, and then we can turn around and sell it.”

Marketplace Homes guarantees to be able to sell or lease; some might see this as risky, but the company sees this as the way real estate should work. If the team tells someone that they can go and build a new home without worry because their old home will be taken care of, that is what will happen. They also guarantee the price. Other agents will come back a few months later and tell the client to lower the price on their home if it is not selling, but not Marketplace. “If we tell you that we can get $1,200 per month in rent, and it turns out that we can’t, then it should be up to us to make up the difference. For us, it’s more of a confidence statement.”

There are, of course, catches to this proposition. Firstly, the client has to be able to qualify for a home, while still having the old home that can be rented out. Not everybody is in that position. Secondly, the home must qualify for the program. Marketplace wants well maintained homes in good areas. Lastly, the client has to be interested in one of the homes being built by a builder working in conjunction with Marketplace (in an area and in a price range that is a fit for them, of course).

The company works with a number of custom builders. “We hire somewhere in the area of eighty-seven builders and some of the biggest. D.R. Horton is the biggest builder in the U.S. and we partner with them as well as Hovnanian Enterprises out of Chicago. We try to work with the largest builders in any given market so that we are really offering something unique and special to clients. We position it as something that helps [the builder] sell more homes.”

Another innovative idea that the company uses is the intelliTour. Qualified potential residents are able to walk onto a property without requiring an agent to be present, allowing tours to be undertaken at hours convenient to the buyer. This program is used on all new rental homes. The leasing agent gives information about the home over the phone and, if it’s something that the client likes, they can arrange for relevant documents to be sent electronically.

“The biggest advantage is that, if there was a demand on a home, we could do an open house every single day – twenty-four on the half hour, on a particular property, any time that fits. This allows clients to get in a little quicker and see it faster,” explains Mike.

The company has a team of over seventy people showing clients through homes in twenty states from one centralized location in Detroit. This intelliTour system has enabled it to grow quickly because there is no need for agents on the ground. Five or six years ago, this would not have been possible.

An unpleasant aspect of property management is the occasional need to evict a non-paying tenant. Marketplace Homes manages over two thousand properties across the U.S. and every state and municipality has its own rules with regards to how to evict. By integrating technology and bringing in all the paperwork at every property, Marketplace has automated every step that takes place from non-payment until eviction. The quicker one can remove a non-paying tenant and get the home sold or re-rented, the more profitable that home becomes for both the owner and Marketplace.

What may seem like a gamble to most real estate and property management companies is the secret to success for Marketplace Homes. Solutions-based selling works. Innovations are sure to continue to develop, and one of the fastest growing companies in the U.S. will keep growing.

For more information about Marketplace Homes, please visit http://marketplacehomes.com/

August 18, 2017, 11:37 PM EDT

A Model that Addresses Infrastructure Demand

The Labourers’ International Union of North America (LiUNA) is a National Union representing over 500 000 members – over 110 000 in Canada with an International Office in Hamilton, Ontario. It has Local Unions across the country and is the most common union of construction, healthcare, waste management, and show service workers in this country. In fact, LiUNA, established in 1903, is Canada’s largest Building Trades Union.