Home Builders Offer More Home upgrades To Buyers
Home Builders' Priorities Change as Market Conditions Slip
By By John Caulfield
A new National Association of Home Builders suggests that since the housing market downturn has taken hold of the industry, builders are more likely, in their selling and marketing efforts, to turn to real estate brokers, to spruce up and improve their web sites and to develop customer referral programs. Price reductions, while still a factor (62 percent of those polled have either adjusted prices or planned to do so), were less important than these other actions.
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The highest portion of respondents -- 80 percent -- identified "free upgrades" as something they have either offered or planned to offer to counter declining sales, followed by allowing modifications to the homes being built, paying closing costs or points (which was also seen by respondents as being the most effective method of stemming a sales decline), and reducing prices.
When it comes to upgrades, the kitchen rules: Nearly three-fifths of those polled (and more than 70 percent of production builders) cited appliances as the product they were most likely to upgrade, followed by countertops (Hudson said that granite countertops gained the most market share of any product during the two years the surveys were compared), flooring, kitchen cabinets, and faucets/showerheads. On the flip side, upgrading exterior finishes such as brick or roofing is viewed as being far less effective for selling homes. (However, custom builders are generally two times more likely than production builders to offer free upgrades on exterior finishes, high-efficiency HVAC systems, and lighting.)
As they work on improving their selling techniques, builders have also refocused their attention, over the past two years, on improving their companies' operations, of which three quarters of the respondents were either somewhat or very likely to do. Other areas where builders want to upgrade their operations include reducing cycle time and improving the quality of their product.
Unsurprisingly, the survey also found a greater propensity among builders to want to renegotiate pricing with their suppliers. Builders are also looking around more for lower-cost suppliers and those that can bundle installation services along with what they sell.
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