With all the incentives going to first-time home buyers, it's no wonder that on the eve of incentives' expiration there's a feeding frenzy of prospects looking to cash in. After all, no home buyer should waste a good recession!
While I am very pleased with the effect these stimuli have had, I am concerned with the quality of homes being built to fulfill the demand for the first-time buyer. Get ready for the next phase of this rush: demand for quality along with affordability.
If you're making the switch in your product line toward affordability, here are ways to keep quality.
Determine Design Drivers: Every builder looking to value-engineer its homes needs to put the power of research on its side. This business may have been built on gut instincts, but it will end up with those who make data-driven product decisions. So get a team together and objectively survey prospects in your area.
Calculate the Value Equation: Value is equal to price divided by benefits offered. Take your proposed project and compare it against others in the market using this method. It will help you create the truest value of your project from your customers' perspective. Value is much more than just the lowest price.
Buy New Land: With land prices so much lower than two years ago, it's a great time to acquire a distressed property and place newly engineered affordable product on it. This will literally "blow the doors off" your value equation and result in lots of sold homes at nice profits.
Before you rush to join the herd of first-time home buyers, be sure you have a proper plan.
I dedicate this article to our friend and fellow housing consultant Steve Maltzman. While he tirelessly worked to improve the top and bottom lines of his clients, he kept quality as a key component of his practice. His contributions to NAHB's Builder 20 Clubs and his firm, SMA Consulting, influenced hundreds of home builders who have created positive communities for thousands of homeowners throughout North America. Rest in peace.
|Paul Cardis is CEO of Avid Ratings, a research and consulting firm specializing in customer satisfaction for the home building industry. You can reach him at email@example.com .|