New rules for custom builders

I do not promise any great belly-splitting laughs or even chuckles. I will leave the comedy to the originator of New Rules because Bill Maher does it best. However, now that the recovery is official and documented, I believe now is a good time to write New Rules for Being a Builder in the recovery of 2013.

 

NEW RULE: Prospects do not get treated like clients. They will get treated with all due respect ... as prospects! We do not have to give away the farm to earn our next job. The market peaked in 2005, the bubble burst in 2006, and the market was in the tank from 2007 through 2011; we survived the 7-year drought; we are still in business. We do not give away our expertise without some level of financial commitment to us and our companies. We have limited most prospects to two face-to-face meetings before we ask for a non-refundable deposit for budget or design services to be rendered.

 

I survived by cutting costs and adding remodeling to my bag of tricks. I am not sure which of the two was more unpleasant. I still go on remodel/addition sales calls but only if the budget is not less than $200,000.

 

NEW RULE: We turn some prospects away. We elect to pass on work for folks who telegraph from day one that they are capable of mean, disrespectful, discourteous behavior. Life is too short to waste good breath on bad people. Enough said.

 

NEW RULE: Profit is no longer a dirty word. We use the word in our sales meetings and we watch closely to the reaction we get. We are interviewing prospects as much as they are interviewing us.

 

NEW RULE: Trust is a two way street. The trust we aim to establish as professionals is only equitable when it is a two-way street. While we must establish and maintain their trust, they need to trust us and they need to convince us we can trust them.

 

NEW RULE: Budgeting of prospects’ jobs ain’t free. Creating budgets for a prospect’s custom job costs money – their money, not ours. We have the confidence and the right to be paid for budget work. This means if we do not ask prospects to pay for our work, we jeopardize our success. We ask for a fee for budget ... and design work ... up front. If they have no skin in the game, there is no game.

 

NEW RULE: Building on speculation is possible again. There is a definite pent-up demand for new homes and there are buyers who only want a new home. Three old rules of real estate are still the three best rules for building spec homes: Location, location, location. Some things never change. My first spec home in seven years was recently built and sold in a town that was clearly an “A” town. When I found a decrepit old house for sale in a town that was well-suited for a teardown, I bought it for about half of what other builders in town were paying for teardowns – not because it was a short sale but because it was on a “C” street in the “A” town. Although my banker refused to finance it, I found a way to build it anyway, and when it was completed I got six written offers for a home that we priced at double that of the existing street, because the old rule still is in full force and effect.

 

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