Gary Zajicek is my guest blogger. With 35 years experience in the industry from carpenter to VP of Construction and Customer Relations, he has achieved the National Housing Quality Award Gold, AVID Best in Customer Experience Award, Energy Value Housing Award, PB Builder of the Year and many others and as someone who understands how to leverage Quality Management I have always valued his insights.
I recently had an opportunity to sit down with a builder who has a national presence, to talk about their sales operation. The builder is in a growth mode and looking to add to their sales volume.
This builder stated that they build their speculative inventory by using the direction of the real estate community to determine what to build when and where. How many builders do you know who build their speculative inventory with this strategy? That answer is simple, just look around at what is being built. The majority of the speculative homes being built today are the result of the builder learning from the realtor what is selling. Great strategy?
Not so fast! The real estate community is a great resource to learn about what is trending. The problem with building to the trend is that every other builder is building to the same market and price point. This is your competition and there are a lot of them, all building to the same price point. How do you stand out from the rest?
There is a solution if you dare to do your research. Every market offers this opportunity. The opportunity exists by finding the gaps in the product price points. The market may be great for that 3 bed and two bath, priced at $249,000 and every builder is building this product. What’s better is the market at $235,00 to $240,000 for a 3 bed, 2 bath at the same SF. No one is building in that price point because it does not show up on the realtor’s radar.
Your realtor has all of the data you need. Ask for all of the new and used home sales from the past six months. Create a matrix with SF on the vertical axis and the Sold $ on the horizontal axis. Plot the sales by SF and Sales $. Identify the average sales price of all of the homes sold. You will see the prices points that are selling. Draw a horizontal line indicating the average price and average SF. More importantly, you will see the gaps (price points) between the homes that sold. Create a product that fits in those gaps! That’s a great strategy!
Gary Zajicek is President of Construction & Operations Consulting Services and Partner with Interior Trim Renovations. He is a Judge on the National Housing Quality Award and winner of The Apex Award for Leadership. He can be contacted at gzajicek@interiortrimren.com or (608) 206-9491