Custom Home Marketing

MikeTheBuilder

Hi Guys:

I have been reading the posts regarding marketing for Builders. I am a high end custom home builder ($1,000,000 and up). I was interested in hearing from other high end custom builders on how they obtain their clients. Many of the postings I read are good ideas, but not applicable to the custom market. Below are some of the things I do to obtain buyers.

I have been building high end custom homes for 20 years. Each year it gets a little easier to attract high end buyers. I like to say I'm a gorilla marketer. I look for things other Builder just don' t do and then I do them. Job site web cameras, weekly status reports, massage therapist for the Clients at the trim stage, change of address cards for the client with a picture of there new home on it, taking them out to dinner with my family as we build their dream home. I try never to miss a Parade of Homes. If the timing is right, I provide incentives to pre sale buyers so they let me enter their home in the show. If the home is in a good location I can get 2,000 people through their home. That always translates into a few deals. When most Builders do so little extra for the Clients, it's easy to be dazzeling by just doing a few things that others don't. You can just see the look on your Clients friends faces, when they tell them a massage therapist is coming over to their home this evening and it was a gift from their friend the Builder.

I would appreciate hearing about some of the things you do.

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You can pay people to work for you, but you can't pay them to give you their heart. They have to give that of their own free will. The best Managers are the ones that can make that happen.
www.regalclassichomes.com

MikeTheBuilder

I guess since I have not received any follow up postings that most of the people on this site do not market to the high end custom home buyer or they are not willing to share. I suspect it's the former. It's a tough market. Most of the Builders in this area are in protected subdivisions with a small group of Builders and one on site Realtor Company. The Builders purchase 2, $500,000 lots and are required to alway have a speculation (model) house $1M - 2M either started or as a completed home ready to sell. If the project takes off you have to put down an additional $2M - 4M and tie up additional lot inventory. In round numbers that's a $4M - 7M commitment. That's a hefty down stroke. Add all that together with a large staff to really crank out the homes in order to make it pay and it's a serious outlay of cash and risk. I have chosen not to enter that arena, but instead build outside of protected communities on scatered lots. Is there anyone else out there that does this? It takes a different marketing plan. Builders in protected communities do very little marketing, but instead rely on the Realtor and Developer to market the Community. Prospects show up and are introduced to the BUilder looking for the best fit.

__________________
You can pay people to work for you, but you can't pay them to give you their heart. They have to give that of their own free will. The best Managers are the ones that can make that happen.
www.regalclassichomes.com

ultimatetouch

I would certainly like to know the same thing since thats where we are headed. I would like to start building custom homes instead of remodeling but the market is not so hot.

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

bookie

One of my builders builds in your range in suburban Chicago IL. He does 10-12 homes per year in the $900k-$1.3m range.

His marketing strategy is this:

He buys lots in multi-builder subdivisions. He gets a little traffic from the developer's website, but never a sale turned from there. He buys around 4 lots at a time in any neighborhood, right now he is carrying a total of 18 lots, 1 is a model, 2 are spec homes (one about 30% done, one stopped at 80% done to allow selections if a buyer is interested in that), and 1 build-to-order going (closes end of Nov). Lot price average is about $280k. He has a staffed model home at one of the subdivisions with an admin that works M-F 9-5 and Saturdays 12-4.

The fact that he always has a butt in the chair in the model and someone answering his business line is a HUGE leg up on his competition right now. The market is very bad here & other builders have let go all of their staff or have just plain closed up shop.

He markets aggressively to Realtors for transferee sales. I would say 50% of his sales are the Realtor/transferee combo. Typically 1 house he builds per year is a repeat customer that he has built for before. Typically 1 house per year is a referral from a satisfied customer.

He has a very professional website with great search placement & gets signifiant traffic from that.

He is 100% available almost 24/7 for proposals & pricing workups. He knows his product & the market, a typical turnaround for a BTO quote is about 2 days. His typical BTO sales price ends up at about 4x land cost, including land & excluding extras/upgrades (average about 10-15% of sale price). He's bid tons of houses and it all basically comes back to that general ratio. The specs end up going for about 3-3.5x land cost at final sale price.

I would say he gets an actual sale from 1 in 5 serious proposals he prepares.

His biz has gone from almost 100% build-to-order sales to almost 100% spec sales.

He also has a set-price agreement with a local listing agent and all of his properties (land, spec, model) are listed on the MLS.

80% of his sales this year & last year were Realtor deals. He pays 2-1/2% at closing (IL typically is 3% buyer/3% seller in resale, for example). He will pay up to 3% to a "repeat" Realtor.