Tract Teachers

Remodelers and new-home builders both build homes; they just go about it in different ways. While tract builders embrace evenflow or slotting production methods, remodelers schedule around the time a client leaves for work. While builders offer a controlled options list, remodelers offer clients virtually limitless product choices. And while builders demand volume price cuts from subs, remodelers hope for efficiencies by running a tight jobsite, paying quickly … and because their fathers played cards together, back in the day.

Depending on the size of the company and its clientele, remodelers can be anything from a distant relative of new-home builders to another species altogether. But in today's marketplace — where buyers shop neighborhood as much as they do home type —differences count. Remodelers must be perceived as the equal (or better) choice to deliver a perfect “new” home, because they are competing with the lure of a brand-new home — and the well-run building companies that put them up.

To even the playing field, remodelers should look at the things new-home builders do well. Here are four areas where they have something to teach:

New-home builders often have slick systems that impress clients, who first witness a well-oiled sales and marketing machine when model shopping and assume the rest of the home-buying process will be as smoothly orchestrated.

Mark Gradison, president of Gradison Building Corp., a new-home builder in Indianapolis, moved into remodeling eight years ago and realized early that good organizational skills were important to clients.“Remodelers are notorious for not having good systems. It's given us a leg up on the competition that we can show we are organized,” he says. His company does about $10 million in business, with remodels making up 30% of his work.

Gradison is particularly satisfied with his project scheduling, which he says keeps both subs and clients happy on the 30-plus jobs he has running at any given time. “We use Microsoft Project, which offers a summary schedule to vendors on both our new homes and remodels, so vendors can follow along. They see a four-week picture with the schedule for the next four weeks … then they can just follow the bouncing ball.” Gradison uses the same system to keep homeowners informed, sharing it with them on a regular basis.

Simonini Builders in Charlotte, N.C., also uses Microsoft Project to keep subs on track and to inform clients about job status, but, says Bob Pugh, renovation manager, another tool will do the job as well. “First, implement a schedule,” he says. “I've always done a simple Gantt chart — a schedule that tracks every major item involved in the project that's turned into a timeline.”

But the best systems in the world won't work if the trades don't understand your business. Lancaster, Pa.–based Keystone Custom Homes organized a trade partner council to communicate its plans. Every month, the group meets and goes over issues such as impending jobs or how Keystone can improve customer service or its home plans. “We facilitate this meeting, but we encourage one of the trades to lead it,” company president Jeff Rutt says. “It's a way to hear about their concerns in an organized format.”

Though Keystone is sizable, closing 333 homes in 2005, the partner concept system can be used by any remodeler, even if it's just as a goodwill vehicle. “The trade partner council philosophy is that we are partners with our trades. This is not a dictatorship. We want to be servant-leaders,” Rutt says.

New-home builders often boast interactive showrooms and sophisticated model-home parks — selling tools that most remodelers simply can't afford.

Gradison uses a “living office” concept as a model home. The company's headquarters is outfitted with a “dining room,” a “hearth room,” and a “kitchen” where customers can look at a limited number of products. A selections coordinator uses a Web-enabled plasma screen, catalogs, former project photos, and the displayed products to help clients make their selections.

Gradison also believes that remodelers should copy the new-home builder practice of giving buyers a home price, almost to the penny, in advance of construction. He does not like allowances, saying that it's stressful for the customer and tough on production schedules. “We call out the full scope and prices on the front side without allowances. … We give the customer the bad news up front, not some pie-in-the-sky number,” he says. “It's a more professional way to do it, churns out a better project, and customers are happy to have [the selections] finished.”

Although Gradison doesn't exactly follow the new-home tradition of offering customers option packages, he says that he has put together pre-selected looks based on design styles that are strong in his market. “The overall look has been set up, and if [time-strapped clients] like the style, we can build from that; it really cuts design time in half and is easy for us to spec.” About 20% of Gradison's clients use the “pre-select” system.

Neal Hendy, president of Neal's Design Remodel in greater Cincinnati, was able to afford a showroom by partnering with Woodmode Cabinets as its distributor. The company is happy to have a new-home–style sales tool. “We needed a way to separate from other parts of the industry,” he says of his company's decision to open a showroom with cabinetry as well as surfaces, fixtures, and other home products.

The partnership has worked well for the $5 million company. In 2006, Neal's will move from its 1,500-square-foot facility to a new 5,500-square-foot showroom.

Neal admits that most remodelers can't have showrooms, but he points out that project photographs can be a gold mine for remodelers. “You can use photos to show your workmanship, and so, when they point something out, you'll know what you're bidding on,” he says.

Many remodelers pride themselves on their quality work, and tracking quality ensures that it will remain consistent. Bill Edmunds, vice president of consumer relations and quality control for Brown Family Communities in Tempe, Ariz., points to the company's “hotline tracker” as a particularly useful tool.

“If there's a problem with a house, it gets put in a tracking system [handled through one employee] and all senior management gets involved,” he says. “The response is immediate, and it says to the buyer ‘You're not just a dollar and a number.'” In addition to fixing the problem, the company keeps track of the information and watches trends to further control quality.

The company, which builds about 1,000 homes a year, also tracks quality from framing inspection through close. “Our technicians look at whether the house meets codes, municipal requirements, and manufacturer recommendations for installation,” Edmunds says. The company keeps each home's 35-page checklist on an Excel spreadsheet so it can be easily shared with subs and trades. If there is a problem at any stage, “everything stops until it's fixed,” Edmunds says.

Keystone addresses quality by pushing trades to get it right the first time. “Our program [encourages] trades to spend more focus on self-inspection and less on return trips,” Rutt says.

At every Keystone house, trades fill out a survey where they rate themselves on criteria such as whether they arrived on time or kept a clean site. The supervisor then rates the trades as well. Keystone puts the scores on the trade partner section of its Web site, where a continuously updated rating of the five best and the five worst subs runs. “It's amazing how important this is to them. When we're looking to increase or decrease work to someone, we look to this [tool]. It has improved on-time completion and quality,” Rutt says.

Stephen Hann, president of Stafford, Texas–based Hann Builders, doesn't do punch lists, he does “celebration walks.” The new-home builder is proud of his five-step plan for perfect closeouts, which includes walks at pre-foundation, pre-electrical, pre-trim, and pre-carpet.

Last, is the celebration walk. “I meet [the client] at the curb and enjoy the outside, working around from front elevation to back,” Hann says. “Then, I take them through the home and talk about its benefits and how to operate everything, like HVAC, sprinkler, and security systems. It's about orientation, not punch list,” he says. “Quality control is our responsibility, and we take that on. They can [ask for things to be fixed] but we don't go in with the idea that they are going to make a list of what's wrong — that's asking them to nitpick,” he explains.

Hann advises remodelers to tour clients through secondary rooms first to get them out of the way before hitting the kitchen, which is where an exhaustive amount of time is spent.

Drees Homes aims for a smooth close by refusing to release homes until they are near perfect, says Marvin Miller, corporate production manager for the Fort Mitchell, Ky.–based home builder.

As the “builder” (supervisor) is near completion on a home, the company sends in a quality inspector, who walks the job with an eight-page quality control checklist. After he's assessed the 100-plus items on the list, and say 10 or 15 still need attention, he gives the list to the builder who has one week to fix the problems.

Once fixes are made, the home is introduced to the buyer. “It's a demonstration more than an inspection,” Miller says. “We show them features, things they need to know, like the location of shutoff valves.”

If along the way, the client notices something, it's put on another list, which the builder will address. “A week or so after the client moves in, we call them and ask if anything was overlooked,” Miller says. “If so, it goes on a tag list to the builder and a copy of it is given to his supervisor, so there are checks and balances.”

Miller thinks that remodelers should be careful not to push the final phase of a project — because there will be more mistakes — giving the client a bad impression of the workmanship. “Make sure you do a thorough list and don't rush the customer to say it's done,” he advises. “The goal should be: 100% complete.” —Cati O'Keefe is a free-lance writer based in Cincinnati.

Describing new-home builders' marketing savvy, Neal Hendy, president of Neal's Design Remodel, says, “Builders have it down. But remodelers don't need marketing dollars to compete, they just need a marketing commitment.”

Hendy, who operates in the greater Cincinnati area, advises remodelers to partner with suppliers — who may have deeper advertising pockets — to get marketing mileage. For example, he says, if you work with a Corian supplier, co-op with them on an advertising campaign or work out a marketing strategy that hits the customers you both want to reach.

Hendy also advises underscoring what it is that remodelers do best. “Remodelers have surpassed builders on customer service. All of us do it well or we'd be out of business,” he says. That's good news for remodelers going after referral business.

“We're tapping them on the shoulder often,” Hendy says of his former clients. For example, when a local magazine did a special issue on the best medical practices in the area, Hendy noticed that he had done work for a significant number of them. “We sent out 40 letters congratulating [the doctors and nurses] for making the list,” he says.

“We're all too busy putting out fires, and we forget about [marketing] because it's Saturday night and we need a life,” Hendy says. “But you must take advantage of all situations. Does it take up time? Yes. Would I be where I am today if I didn't do it? No.”