There may be lots of doom and gloom in the headlines about big production builders and the spill over from the subprime mortgage mess, but I believe the custom home sector is healthy. In fact, I believe it’s still in the midst of one of its greatest periods of creativity, quality, and productivity. Over the past summer, the other CUSTOM HOME editors and I spoke with dozens of custom builders from around the country. We all asked them the same question: “How’s business?” The overwhelming majority of those builders said they were doing just fine, thanks. Some had seen a slow down in the spec side of their businesses and others had beefed up their remodeling divisions, just in case. Except for those who were located in a few moribund markets, most of the builders we spoke with had jobs booked into next year.
What did make many of these custom builders nervous was the idea of big, hungry, luxury production builders coming into their market with the goal of taking market share away from small local builders. That’s a classic move big production builders make during downturns, and smart custom builders prepare for it.
So how do you protect yourself? Here’s a recap of a story we ran in 1998, titled “Taking on Toll.” It was a kind of survival guide for custom builders who found themselves competing with big luxury home builders. The lessons from that piece still apply, and they’re good ideas even if you aren’t facing a 500 pound gorilla.
- Make it personal. Your business is all about giving clients exactly the home they want. They don’t get to choose one of three dining room lighting fixtures; they can select any fixture they want. They can change their minds about selections and details, maybe even the floor plan, during construction. Where you offer flexibility and a wide range of choices, mass market builders offer regimentation and limited options. Make sure potential clients know this difference.
- Sell craftsmanship. You can’t compete with any big builder on price, but they can’t compete with you on craft and finishes. This is your main strength, and it should be at the heart of your marketing message. It will resonate with the slice of the market you are pursuing.
- Find a safe haven. If you find yourself going head-to-head with a big luxury builder, you might want to rethink your niche. Move to a higher price range to get of its way or move to a different part of town or to an upscale development that’s not available to them.
- Celebrate diversity. Your clients aren’t buying a cookie cutter version of every other house in the neighborhood. They’re getting a one-of-a-kind home, and you should heavily market that distinction.
