During a question and answer session at a recent industry conference, a home builder asked Moody’s Analytics chief economist Mark Zandi for his thoughts about the labor
Taking the Fear Out of Final Selections
Custom builders who take the time to understand what their clients want to achieve in the design of their home, who educate themselves on what materials and products are available, and who insist on getting those selections made on schedule and prior to construction are able to please clients while maintaining control of the building process.
There is probably no part of custom building that has more potential for tug-of-war between clients and builders than the selections process.
Customers are overwhelmed with the number of choices they have to make. They want materials or products that are hard to find or that need to be imported. They want something custom-made. They change their mind about a selection after construction begins. And any one of the above can create a dilemma for custom builders who want their clients to be happy with their choices but don't want their production schedules and budgets put out of whack to accommodate them.
But it is possible to achieve the former without sacrificing the latter. Custom builders who take the time to understand what their clients want to achieve in the design of their home, who educate themselves on what materials and products are available, and who insist on getting those selections made on schedule and prior to construction are able to please clients while maintaining control of the building process.
Builders learn what pleases clients, during purchasing as well as anything else, by spending time with them and taking the time to understand their tastes — their likes and dislikes as well as what lifestyle they are seeking to achieve in their home.
"Builders hate it," says Deborah Malone, president of Scottsdale, Ariz.-based JP Malone Construction and speaker for the class, "Streamlining the Custom Build Process — For You and Your Clients" at the 2005 Custom Builder Symposium. "They say, 'Oh God, I don't want to go meet the client,' because they have all these other things they think they should be doing instead. But what it does is it gives them the chance to pick your brain about what materials they could use and gets you to hear what their expectations are."
"Learn a lot about who they are and what they want," Malone adds. "Then you can more easily zero in on providing them materials that please them."
Judy Mozen, president of Handcrafted Homes Inc., a custom builder outside Atlanta, meets with her clients every week. She says it builds respect and a feeling of confidence.
"They don't feel like they have a disappearing builder," Mozen says, which is a complaint she has often heard from people about their builder.
"I spend a lot of time trust building and making them feel comfortable," says Emily Rosenthal, co-founder of Rosenthal Homes in Potomac, Md. "The particular way we do things is with the goal of making it their home, not ours. So we really involve our homeowners."
Rosenthal recommends that her clients compile a wish list for their home, and she reviews it with them.
"We divide that wish list into three categories," Rosenthal says. "The 'must haves'; the 'Gee, it would be nice, I'd like to have a couple of these, but I don't have to have all of them'; and the 'I can't imagine that I'm going to get any of these,' because we find that usually in that last list, somebody has stuck in something that's either really easy to do or not expensive."
Rosenthal had a client that she knew fairly well who always had his living room fireplace burning. But when he put his wish list together for his new home, a fireplace in the breakfast room and kitchen was in the "I can't imagine" category.
"I said, 'I'm surprised that you don't want this more,'" says Rosenthal. "He said, 'I want it, but I don't know if I can afford it.' I said, 'Do you have to have a masonry chimney?' He said, 'I have to have a wood-burning fireplace.' I said, 'I didn't ask you that.' He said, 'You mean there is such a thing as a wood-burning fireplace without a masonry chimney?'
"He thought, either you get a gas prefab, or you get a brick chimney," says Rosenthal. "I said, 'No. We just build a chimney out of siding. It looks like a fireplace. It burns like a fireplace.' The whole thing cost $2,300, and it absolutely made the space. If we hadn't specifically said, 'Give us your pipe dream,' it would have never happened."
Once builders have a good feel for what their clients want — their tastes, style and their budget — they can make suggestions based on expertise and knowledge.
Builders should make sure their expertise and knowledge is up-to-date. Attend conferences and industry shows, read books and trade publications, and take classes on design trends.
Rosenthal recently used the Builders Show to research the industry. "I'm trying to keep abreast of things that achieve what a homeowner is looking for either look-wise or function-wise or both, while staying closer to their budget."
"Our clients are pretty savvy buyers," says Beth Lindahl, an architect at Orren Pickell Designers and Builders in Lincolnshire, Ill. "They want the best that's out there. And they want the people they are working with to be educated on those products."
"Custom builders are always trying to be ahead of the trends," says Malone. "Once it's in production homes, it's no longer special. It's for the masses."
Getting the appropriate selections in front of clients so that they can choose the ones that are right for them is time consuming, but it does help them customize the home they really want — and cuts down on the number of change orders.
"We have a virtual lighting showroom available on our Web site," says Shlomov. "There are close to 150,000 products available for them to choose from. A vendor of ours has taken the initiative and made a whole showroom available to us."
"A lot of times I'll pop them in the car," says Mozen, "and we'll drive around and look at different roofs. They'll say, 'I like that one and that one.' Then I'll take them to a roofing supply place and I'll show them the ones they like, or I'll get my salesmen to go look at those roofs and tell me what they are. Then I'll take samples of the ones they like and in the different color ranges that they come in over to the job site. If I can get it narrowed down to one or two, I'll actually go buy a little bit of each one, put it on top of the framed house before it has a roof and say, 'Which one do you like?'
"A lot of times driving around with the client, pointing to the brick, pointing to the roof — that's another way to please them on the materials," says Mozen.
Taking choices out of a theoretical context and placing them in a real-life scenario can greatly aid clients in the decision-making process.
"Going to other homes," says Malone, "what that allows us to do is see products and materials in operation with ceiling heights. Cabinetry that's 42 inches — what does that mean when you have 12-foot ceilings? Everything is done in abstract in custom home building. Design centers don't have human scale or perspective."
Ed Nikles, president of Ed Nikles Custom Builder Inc. in Milford, Pa., will sometimes bring in an interior decorator to work with his higher-end clients but says builders must be cautious.
"If somebody goes that route," Nikles adds, "then you need to really sit down with this person and make him or her understand your process and why you need to stay within budget. It's easy for an interior decorator to lead people to things that cost a lot more money."
Orren Pickell's team also regularly taps interior designers.
"We have half a dozen interior designers that we work with regularly who understand our process and our allowances and standards," says Lindahl. "And so they are definitely part of the Orren Pickell team in the sense that they help keep the client on budget and on track as well."
Perhaps the simplest way to simplify the selections process is to pare down the choices.
"We have a product selection showroom in our office," says Nikles. "And we have on display the products that we recommend to our homeowners, and that's what they get to select from. We don't send them out all over the place."
"We keep the selections limited with enough to satisfy their wants and needs," Nikles says. "It's like going into a restaurant. You have a one-page menu. You may have 12 or 15 choices on there, and you're going to pick one. Then you go into a restaurant with a menu that's four pages long, and you spend twice as long trying to read through it, and you have a much harder time deciding what you want."
He says most customers are fine with his setting limits on the selections they have available to them.
"By that point in time," Nikles says, "most people have gotten comfortable with our system and have put their confidence in us that the products we're recommending are those that they're going to have a good experience with and have the best usage.
"The key to making product selections enjoyable, not only for the homeowner but for us, is to have control over the process," adds Nikles. "Once you let the customer go out into the marketplace and they're on their own picking products, then you're at the mercy of whoever salesman is trying to sell them something at their store, and that's when budget goes out the window."
The reality is that even when clients have unlimited selection choices, they rarely have unlimited budgets, so some negotiating will have to take place.
"I tell people that there are going to be a few things that you just really want," says Rosenthal, "and they'll be really expensive, and that's fine, but you want to limit those things that you can't afford."
"If we find something that's going to break the budget," Mozen says, "we sit down and I say, 'Okay, let's do a little value negotiation.'
The balancing act is in making changes without compromising the house's look and feel.
"We were going to build a big new terrace on the back of the house," says Mozen of a project. "But we decided to blow the budget on the kitchen and the master bath, which are the two big rooms where the budget is usually blown. We decided to do some really nice things in there."
Mozen and the client had decided to downgrade some specs of the terrace.
"It doesn't have to be this big," Mozen said. "And we don't have to curve it on the end and make it cost a lot more because it's a curve. What you usually can do is present to the client options of other ways that you can cut back to make it more palatable to spend more on those other items."
"Now, you need to be thinking about this early," Mozen cautions, "because if you've committed to everything else and you're at the end of the road telling them that they've blown the budget, they're trapped."
Budgets need to be monitored constantly to avoid these unpleasant surprises. "We have a database that we have constructed within our IT staff here," says Lindahl, "which coordinates and compiles all of the selections, and correspondingly converts all that information over to our purchasing and estimating department.
"We try to be real proactive," adds Lindahl, "in the sense that we can give people a better sense of their costs if we know more up front."
Communicating costs sometimes means scheduled updates. "We give our clients bills and print ups every two weeks," says Mozen. "So they see exactly what's been spent on their house compared to what's been bid. If you get your ducks in a row early enough, you can go back and forth where it doesn't end up hurting the clients' final budget."
"I'm disgusted with builders out there that allow clients to run their jobs," says Malone. "When you don't make them make their selections on time, you let them have control. It doesn't make any sense. You have a whole lot more experience building homes than they do. They end up hating the building process, and you've helped them hate it.
"All selections are made prior to construction of the custom home," Malone adds, "right down to the door stops. So there are no surprises in the end because you knew what was going in there."
Malone understands that many builders attempt to do this with their clients.
"We have systems in place," she says, "but we give them slack. We don't make them do it.
"We do all one-of-a-kind custom homes, so some of the items we design don't even exist," adds Malone. "I'm not ordering from Kohler; I'm ordering from a local coppersmith. So you want to talk about lead times?"
"We tell them up front that if they're going to make any changes after the final plans are done, it's going to be a lot more expensive than doing it during the design process," says Nikles. "That's why we try to get as many of, not necessarily the colors, but at least the products selected during the design phase."
"On virtually every project, changes are going to be made," says Kevin O' Sullivan, purchasing agent at Orren Pickell. "So we have established milestones that we set in that we want to go ahead and confirm each selection to make sure those selections are made prior to those milestones.
"But when the client goes beyond those milestones," adds O'Sullivan, "and for whatever reason we go ahead and impact the schedule because of that late selection, we let them know at that time any cost as well as timing impact. We want to give them whatever they want, so we're willing to change the schedule when needed to give them the finished product they want — but you want to make them aware of the impact."
*Statistics from Harvard's Joint Center for Housing Studies working paper, "Residential Supply Chain in Transition: Summary of Findings from Survey of Dealers," Harvard University: Building Products Distribution Study, February 2004.