When all else fails, sometimes simply showing residents the numbers will convince them to renew. At Equity Residential’s Pegasus Apartments in Los Angeles, leasing professional Rjay Spoon took customer service and
salesmanship to another level during renewal time.
While dealing with a resident who was both irked and skeptical about the rent hike, Spoon did some homework and shared with the resident the cost of comparable units in his neighborhood. The resident had been paying $1,779 and the renewal rate was set at $2,075. Through some savvy business work, Spoon brought those numbers to life.
‘Rent Hikes?’ Yikes!
Spoon faced a situation that is not unusual in many markets today. Residents who enjoyed concession packages about a year ago are faced with deciding whether to renew their lease during a time when owners in competitive markets have raised their rents closer to pre-recession levels.
“As I do with most renewal offers, I e-mailed [the resident] the renewal offer as well as printed out a hard copy and placed it in an envelope with my card and left it at his door,” Spoon said. “I followed that up with an e-mail, asking to confirm receipt, expressing how much we would love to have him stay with us another year and offered to help with any questions he might have. After not hearing back for a couple of days, Spoon called him. “The conversation was pleasant,” Spoon said. “He just asked me to resend it to him and to detail out the changes, which I did.” (See “Before and After” sidebar.)
Spoon said the “Renovation Concession” built into his original lease was a special that was offered last year to compensate residents for any inconvenience caused by an extensive construction project throughout the community.
The resident’s actual rent only rose by $90 (5 percent), Spoon said, and his parking fees were reduced by $25, but with the concession expiring, the resident focused on the overall rent hike.
Breaking the Silence
After not hearing back from the resident for a couple of days, Spoon sent another e-mail, asking if he had received the offer and if he had any questions. The resident then called back and set an appointment with Spoon.
“During the meeting, he was not at all happy about the increase and very bluntly told me that rent should not be that expensive and there’s no way it should go up that much,” Spoon said.
Spoon then reiterated the value of the deal and explained that the concession was expiring. The resident then interrupted, Spoon said, saying he didn’t want to hear about how the concession affected the new rent rate.
“Sensing that he didn’t want to hear my sales pitch any more, I offered to speak with [my supervisor] to see if we could do anything to help reduce the rate,” Spoon said. Upon researching the work order history on the apartment, an issue with damage to his kitchen cabinets was revealed. This gave Spoon and the property manager a plausible reason to slightly reduce the renewal offer. He then asked the resident if there were any outstanding maintenance issues or concerns he might have that he could take care of. He discovered that the resident wanted some touch-up paint for his cabinets.
Spoon then took it one step further and said, “I’ll be happy to take care of that for you. I can schedule a date for our team to take care of this. Just let me know what day works best for you.”
After all this, the resident stood and said, “You can do better than that,” and walked out. As the resident was leaving, Spoon told him that he’d get back to him with more information. The resident did not respond. So after the resident left, Spoon went online to research prices for comparable rents on 760 square foot apartment homes in that neighborhood and e-mailed the resident profiles of the competition. (See “The Competition.”)
Spoon also reminded the resident that he would incur the cost of moving and would have to pay a new security deposit up front while his current deposit was being processed.
To sweeten the offer a bit more, Spoon added, “I also remember you saying something about the cabinets needing to be replaced in your apartment. If you think they need to be replaced let us know and we’ll be happy to take care of it for you while you’re living here. I can schedule a date for this to happen. Just let me know.”
Finally, Spoon politely and confidently made his close: “We would love for you to stay and we encourage you to look around so that you are confident about the value you are getting with the new rent you’ll be paying,” he said. “I know it’s a pretty steep increase, but this is the current true cost of living in the financial district of downtown Los Angeles. Please let me know if you have any questions.”
Glad to Have You Back
More than an hour later, the resident responded by e-mail, “Sounds good. I just wanted to make sure that I’m receiving the best possible offer. Please send over the lease agreement based on our conversation yesterday. Thank you, have a great weekend.” Spoon was satisfied he did all he could to keep his resident.
“Sometimes you have frantic residents who are too busy to listen to explanations about things,” Spoon says. “They just don’t want to hear it, especially when they are mad at you, for whatever reason. But when I contacted the resident and shared the prices at the other communities, I could tell that his opinion of me and our company changed. It became more like, ‘Oh, he did that homework for me. They really do care about me.’”
Spoon, who has been a leasing agent for Equity Residential for about one year, shared this real-life example during one of Equity Residential’s quarterly sales meetings, much to the delight of Equity Residential’s Vice President, Property Management, Robert Grant.
“Our industry continues to evolve, the associates who are attracted to our business are typically highly educated, savvy and results driven,” Grant says. “Gone are the days when the best associates were those who could give a great tour and had a bubbly personality. Instead we are replacing that model with individuals who are truly masters at sales and delivering a high level of customer service.”
Grant says today’s residents are selecting their communities from a virtual realm where they can self-select the things that are most important to them. “By the time they arrive at the community, they are loaded with their questions and facts—and our associates have to be ready and nimble with managing the information that is readily available to the customer,” Grant says.
“Rjay is a shining example of an associate who gets it,” Grant continues. “His approach of using the same information that is available to the customer to build value in the renewal decision was flawless. The great thing about technology is that it can work to the benefit of both parties when you take the time to truly immerse yourself in your market—not only physically, but virtually.”
— NAA’s Paul Bergeron
Before and After
Here is the rent that one resident had to consider
during renewal at Los Angeles’ Pegasus Apartments:
Current Lease Lease Renewal
Rent $1,822 Rent $1,912
Concession -$228 Onsite Parking $160
Onsite Parking $185 CEP Fee $3
TOTAL $1,779 TOTAL $2,075
The Competition
Property Choice A
Dated appliances; Laundry Room
(no machine in unit); Busy next to
LA Live (which is your only real option for food/entertainment being on the outskirts of the main area); Dated carpet and linoleum; 90%
Student-Occupied; Pool closes;
Largest 1-bedroom unit is 650 sq ft (100 sq ft smaller than yours)
$1,851 w/parking
Property Choice B
Comparable Finishes; Location not
as good (Over Pershing Square);
No Pool; 773 sq ft
(12-month lease)
$1,921 w/parking
Property Choice C
Pool closes and gets no sun; Floor
plan has no walls or butterfly doors
to separate your bedroom; Busy area, next to LA Live; 828 sq ft
(12 month lease)
$2,170 w/parking