Make 70% of Problems Go Away at Zero Cost

High volume builders work really hard to turn over near-perfect homes on completion. This is a fact, and they often invest thousands of dollars and man-hours into systems to try to achieve this worthy goal.

But high volumes create their own challenges, and most homes have a few issues to resolve after the homeowner moves in.

Builders will try to clear off the items remaining as listed on possession or inspection forms, but it often takes months to co-ordinate the process. This time lag sets up frustrations in the homeowner’s mind.

But the builder is dealing with the fifty or so homes currently in construction, and the endless stream of new projects further complicates cleaning up the leftovers.

Whether by design or by default, high volume builders have learned that 60 to 70 percent of the “lists” or complaints will go away in time, simply because homeowners will eventually give up, or better yet, do the repairs themselves.

This odd phenomenon likely perpetuates the cycle, as over-worked service departments just cannot keep up with the stream of needs.

*more on next blog

When Service is an Issue

I received a call today on a service issue. The item was typical, windows gathering condensation on the glass and elsewhere in the cold months of winter. The issue was typical too…..after many calls, letters, and e-mails the client still could not convince either the builder or the warranty provider to do anything.

In fairness to the builder, I have seen several cases where the lifestyle of the family in the home loads up the interior air with many times the normal amount of vapor. I am not sure any current residential system will perform well if abnormal amounts of cooking, washing, and showering load the air with many times the normal water vapor. It has to condense somewhere, and it will always condense on cooler window glass. Always.

The problem with this case is that the homeowner had taken it far enough along the process to get the Warranty Program to act as conciliator. The homeowner paid a few hundred dollars to the Program to access this service, as did the Builder in this case.

The thing is, no-one anywhere in this scenario ever opened up a wall or removed a trim board to verify if the windows were installed and insulated correctly. They all just stood and pointed moisture meters around and made their pronouncements.

That, to me, is neither service nor warranty.

The Truth About Custom Builders

Compared to a tract builder, a true custom builder will cost you $20,000 more per house right out of the gate, minimum. Why, you ask?

Well, number one, he or she pays all their trades more (about 10 per cent more) than a tract builder. The reason for this is simple. True custom builders want the building experience to go well for the client and the trades. So he will pick the cream of the crop — the better framers, the better finishers, etc. Then he will develop an attitude of co-operation and excellence among them all, so that they behave like a team and take pride in the work they do.

Unlike the tract builder — who will beat and berate his “team” to produce high volume at the lowest cost — the true custom builder treats his team like a big family, develops loyalty, and generally fosters a healthy climate around the work he manages.

Clientele of a true custom builder can rely on being able to speak to the builder directly during and after the construction process. This is key, and if you are getting access to the top banana then you are getting time with someone who has the power to make decisions on the spot, who knows the most about the process and, of course, whose time is worth a lot of money.

So remember: if you are looking for a simple home-buying experience, buy “off the shelf” from the tract builder and keep the costs down by avoiding any changes to the plans. They are absolutely the best deal, and now you know why.

But if it’s going to be your legacy home — something you want to put your stamp on, and you can see the kids growing up and graduating from it — maybe you ought to explore custom a bit more. Fond memories start with a good building experience.

A Shout Out To Gerry

A couple of years ago I was attending a Homebuilders Association banquet as a builder. I had a couple of entries in the competition and was hoping for an award. It didn’t happen for me — I had to wait another year, finally bringing home the gold at the next banquet.

But Gerry did bring home the gold that night.

Let me tell you a little about him. Gerry and his partners are my direct competitors in our market here. Years ago we both worked for a tract builder. I was management, while he was a foundation contractor. We often locked horns on the job sites, but I grew to like him. Gerry worked hard at everything he tackled.

Gerry runs a company out of La Salle, Man. now. The company offices are right on the main street of the community. If you want to talk to their staff about a house, just walk into the office — their door is always open.

Anyway, I went over to congratulate Gerry on his win that night, and asked how business was going for him and his partners. Over the next half an hour, I got a pretty good picture of the culture of their business.

At the time, their main focus was La Salle. They did their own selling by just being approachable and present in the community. Gerry moved right into the middle of the subdivision where they were working, so his customers became his neighbors.

It reminded me of my experience for another builder, years ago in Stonewall. I too moved right into the middle of the subdivision, and my 15 clients per year became my new friends and neighbors. It’s the same now twenty years later.

So, Gerry falls into my description of a true custom builder. His values include building a long-term relationship with his clients, one that goes beyond the mandatory one year warranty period. And Gerry is making the personal sacrifices to make this happen.

My hat’s off to you Gerry, and all the guys at Paradigm Homes in La Salle. We may compete against each other, but I never mind competing against a worthy peer. Keep up the good work!

The Unfocused Builder

I once worked for a small builder who wanted to become a true custom builder. I ran his company for a few years, and used this principle of direct access to build the business up for him. There was, of course, a price to be paid personally: lots of off-hour phone calls, lots of weekend and evening meetings in people’s homes, lots of personal effort spent going “beyond the call of duty.” But guess what — it worked.

Sales went up over time, pretty much doubling every year. We were always a more expensive builder than the tract builder competition, but our clientele gravitated to us because of the personal touches that showed we cared.

But one day the company’s directors decided the systems were good enough, the market share was strong enough, and they were ready to be aggressive. Sadly, the company became neither a tract builder nor a custom builder, but rather just an over-priced and under-performing tract-behaving builder.

When The Price Isn't Right

I had an interesting conversation yesterday with a very frustrated sales agent.

It seems his builder’s pricing has become non-competitive in the market they are positioned in, and it’s tough for him to close any sales.

While I can sympathize with his point of view, it’s not always about price in this business.

Remember that reference site ontariocontractors.com I spoke about in a couple of previous blog posts? There is a calculator there that illustrates the difference between three types of builders: tract, custom and high end.

The term “tract builder” came out of the 50s, when the post-war baby boom was occuring and developers were buying up whole tracts of farmland on the outskirts of every major city in North America — literally manufacturing whole suburbs at a time.

These major builders are experts at low-cost, high-volume construction. They are a bit like Ikea, or Walmart. Systems replace people, and price point rules. They serve the mass market very well, and bring thousands of new homes to market every season. We absolutely need them; our economy relies on them greatly.

I worked for tract builders for years, and I have an appreciation for their organizational ability and their financial strength. But at the same time, it vexed me to see how inflexible they can be in dealing with trades, suppliers, and homeowners.

Basically, there is nowhere else where the phrase “you get what you pay for” applies so well. Tract builders put out reliable, well-planned standard plans. As long as this is what you are looking for, they are your best bet. But if you want to customize, or think you may want to be part of the process, you are going to be a lot lighter in the pocketbook and a lot more frustrated when it’s all done if you choose a tract builder for a custom home experience.

Tract builders make their profits on the extras. Believe me when I say what you save on the original price will be long gone and more before the roof is shingled. Average upgrade fees are between $20,000 and $50,000 (This number was given to me today from a tract builder’s sales rep being unusually candid.) That’s the average “plus” every buyer ends up paying over and above the list price. And that number is from a builder who produces over 200 homes each year.

My frustrated friend is in a tough position, though. His builder claims to be a custom builder, but behaves like a tract builder. Without the volume and the organization behind him though, he is priced as a custom builder with a tract builder’s attitude. The two do not make a good combination.

This is a rather funny video from the early 80's but is shows the process of the framing of your home nicely! Just FYI...

http://tinyurl.com/framingvideo

Enjoy!