‘Blind’ Apartment Sales Popular in Provinces

The so-called ‘blind apartment sales strategy,’ a marketing process that construction companies are using to make home sales without unveiling sample homes in an attempt to overcome the local housing recession, is spreading like wildfire. Companies are making the number of applications zero and offering apartment units on a first-come-first-serve basis after a certain period of time. This year, more than 50 percent of apartments in the provinces were sold ‘blindly.’

“If we receive applications, it is clear that we will end up having a lot of unsold units. If we show sample homes right after the announcement of the application date, it will cost us more,” said one construction company. “The application system has long become a useless thing in the provinces.”

○ Blind Sales is Popular in Provinces

Earlier this year, only 10 people applied for the purchase of new units of one apartment in South Gyeongsang Province. It failed to attract buyers, reinforcing among local residents that apartments were largely unsold.

Construction companies are troubled not only by large numbers of unsold units but also by the money wasted from the announcement of the application process. It takes about 30 days to give public notice and receive applications, pick and announce winners, and make a contract according to the housing law. It cost companies some one billion won to run sample homes and advertise during the period.

An employee of one construction company said, “It could have been better if we had done it blindly.” Companies should follow the housing law but they can finish the application process quickly by discretely selling apartments on a first-come-first-serve basis with major advertising campaigns varying on market conditions.

The head of a sales team for another construction company said, “We can avoid the bad reputation for having unsold units, save costs, and focus advertisement with better timing (like the opening of a sample home).”

○ Buyers Welcome ‘Blind’ Sales

Early this year, one construction company, which built apartments in North Gyeongsang Province, also chose a blind sales strategy.

It advertised in a local newspaper with a low circulation rate and finished its application process discretely. But there was only one applicant. The company talked him out of making an application to make the number of total applications zero.

The company persuaded him to buy a unit later when the first-come-first-serve system was in place so that he could pick the unit he wanted. He accepted their suggestion and the company succeeded in making the application rate zero percent.

Buyers also welcome the blind sales strategy. If they follow the legal process, they get a unit randomly, but on a first-come-first-serve basis, they can pick the unit that they want.

○ A Useless Application System

In February, Mr. Seo, 40, a pediatrician, went to visit a sample house in Ulsan in vain, because the apartment was being sold ‘blindly.’

He protested to the company, saying, “How can you sell a product without showing it?” But it was useless because the current system does not mandate companies to show a sample home. In the case of blind sales, companies do not usually open the sample home and may use a few employees who sometimes show the sample house only to those who already know about it.

libra@donga.com