The “powers that be” say the Great Recession is over; it officially ended in 2009. Yet, remodeling company owners are asking why people aren’t buying. They may be looking, but they’re not pulling the trigger. Don’t consumers know it’s safe to spend again? What follows are suggestions from several remodelers who are finding ways to get people off the dime — from donning a variety of helpful hats to offering financing to seminar selling.
Change HATS. CHANGE MINDS.
“People are stubborn about doing anything,” says Michael Davis, owner of TWIG Development & Renovation, in South Orange Village, N.J. “But when your main asset is still depreciating in value, it’s hard to argue you should invest more money into it.”
In trying to sway prospects, not only has Davis developed responses to this attitude by pointing out the positives — money is inexpensive to get, remodelers are available — but he has determined that he needed a new approach by offering a variety of relationship-based services options, what he calls “six strategic services.”
- General contracting: A traditional relationship in which the architectural plans and specifications have already been developed and are ready to build. Davis offers a fixed-priced contract for the project in which TWIG, or a subcontractors it hires, does project management, carpentry/mechanical staffing, and materials selections.
- Cost plus: Davis offers a preliminary budget and moves forward “with established unit costs, and a set fee is added to all direct construction costs on a percentage basis paid to the construction manager [see below]. We use open-book accounting to ensure cost transparency,” Davis says.
- Design/build: Davis collaborates with an architectural firm and puts the project on a fast-track option. TWIG provides the construction carpentry and materials and manages subcontractors for a fee based on percentage of costs.
- Construction management: Similar to a general contractor, but in this role, the client pays the subcontractors and purchases materials directly. Davis gets a fee, about 12%, based on the project’s final cost.
- Owner’s representative: Similar to the construction manager role, but less hands-on for Davis. Here, for a flat fee, he takes clients through the logistics of a project such as the processes of design, development, hiring subcontractors, making selections, and finding sources. “It allows the homeowner a one-point contact throughout each phase of the project,” Davis says. “And the owner maintains logistical control of the design and construction process.” The relationship can end here or Davis can move into a construction management role.
- Consultant: This role is similar to the owner’s representative role but Davis is paid an hourly fee for services such as design review, budget estimating, site condition analysis, product selection, contract negotiation and administration, historical compatibility, technology integration, and cost control, among other things.
Davis, who has offered these options for years, is currently marketing these services through direct mail to previous clients and to architecture firms to gain exposure. “People are savvy,” he says. “If they can find value, they’ll be more inclined to hire you.”
Offering long-term solutions is one thing, but “designing for eventualities” brings the remodeling process to a new level. Scott Mosby, owner of Mosby Building Arts, in St. Louis, says that master planning is part of his company’s three big services, which also include aging-in-place solutions and moisture management.
Mosby and his salespeople, who are knowledgeable about technology, construction, and design, begin by asking prospects questions about their wants and needs: How many people gather in the kitchen? What are holidays like? Do your parents visit? Do they have ambulatory issues? “Maybe [homeowners] dream about a deck they can’t afford now, or they’re thinking their mother is going to have to move in and they’ll need accessible space,” Mosby says. “Clients have a sense of what they want to have happen and when they want to have it happen.”
The salesperson returns to the home with a staff architect or someone certified in kitchen design, for example, to inspect the home, take photographs, and look at existing drawings. “We give estimates [based on] the various drawings and ask if we can move forward on future designs,” Mosby says.
The clients may have $60,000 for a kitchen and Mosby will come back with a $450,000 budget that’s staged for five projects. “We advocate for the house, its lifecycle, the nuts and bolts as well as safety and security for the people. We factor in family goals.”
Doing a master plan for projects in the future helps clients save on design and estimating fees since they only have to go through that process once. Mosby charges a fee that he says is “probably more than most design/build remodelers charge but is less than architects charge.” Even if Mosby Building Arts does the first stage and clients call three years later to do the next project, the estimate and selections merely have to be updated. “This future booking of business from a remodeler’s standpoint is a future franchise,” Mosby says. “All the design work is funded and paid for. And we have future unbooked business that is 90% prepared to build.”
Clients get a “higher degree of certainty” about their projects, Mosby says. They are less likely to second-guess the decisions halfway through the project, and change orders diminish because “clients have seen all the options. You can give them time to understand the project and they’re more confident.”