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Find the 2024 Buyer
We have had several years of sales price escalation and cost increases. In that time, it was easy to load up our homes or get careless in our design process. In our defense, we had a lot going on. Now with high interest rates, we need to find a way to lower sales prices without lowering profits. The market will slow for the holiday season. We have about eight weeks to retool our product to meet the budgets of our future clients.
Here are five steps to get prospects to become customers:
1. Elevation Comp Review. Review product lines cost code by cost code. Look for busts. It could be over-specified or the contract was written when the market was hot. Re-specify, re-estimate or re-bid and re-contract.
2. Level 1 Performance Review. Look for excessive engineering and overdesign. Make simple changes to lower cost and sales price. This does not involve significant changes to the plan. We typically do not need to rename the plan. We can market a lower price and not disrupt the market.
3. Elevation Review. Over the years, some elevations have become excessive. Can we simplify, reduce cost and have a new, lower opening price that still offers good curb appeal?
4. Level 2 Performance Review. This is more painful and could involve some significant changes to the plan or the assembly of the plan. Rename the plan to avoid upsetting previous buyers. This will produce the most cost and sales price reductions. This should be a fairly quick process.
5. New Product. Oh crap, the market is bad. Where did the buyers go? This is where we need to redevelop product. We need to lower square footage and get serious about Performance Engineering. We need very efficient designs. This new product should still offer good elevations, a kitchen and great room, and an owner's suite. We just need to be a lot more thoughtful and cost conscious.
The market is going into holiday mode already. We have about two months to retool and roll out to attract new buyers. Move quickly and target the new teaser price the first week of January.
If you enjoyed reading this article, check out these other blogs featuring tips for new home builders:
By Ed Hauck
Shinn Consulting
Ed Hauck spent 22 years with Rouse Chamberlin Homes in the Philadelphia area. He started out as the head of Purchasing and Estimating before becoming a partner. His responsibilities included purchasing, estimating, new product design and marketing, with a focus on direct construction cost control and the streamlining of processes and procedures within the organization. Ed designed and built two award-winning design centers. Under his leadership, Rouse Chamberlin Homes enjoyed industry-leading, low direct construction costs. He was active in the local HBA and president of the HBA of Bucks and Montgomery County. In 2011, Ed was voted “Builder of the Year” by his peers. Prior to Rouse Chamberlin Homes, he worked for a custom builder and Toll Brothers as a superintendent and project manager. As asenior consultant with Shinn Consulting, Ed is a regular speaker at management seminars and provides training, coaching and consulting to help builders around the country reduce direct construction cost, streamline operations, and guide the new product design towards efficiency and cost control.
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