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What Are Customers Buying?

 
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Old 11-16-2009, 10:56 AM   #1
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What Are Customers Buying?


Recent news reports that with declining home values there is no pay back for remodeling work. Return on remodeling investment is a negative. I have seen this in my cabinet work orders. Most my work now is repair, maintenance, or thermal updates including window and door replacement.

What types of work are your customers paying for in 2009 and into 2010?

Also, I am expected to start each contract immediately. If I don't, someone else will. Is this common in your areas?
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Old 11-16-2009, 01:34 PM   #2
 
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Re: What Are Customers Buying?


Quote:
Originally Posted by macatawacab View Post
What types of work are your customers paying for in 2009 and into 2010?
People are no longer paying for work.
.
.
.


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Old 11-16-2009, 06:00 PM   #3
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Re: What Are Customers Buying?


Quote:
Recent news reports that with declining home values there is no pay back for remodeling work. Return on remodeling investment is a negative.
The problem is not what customers are paying for - it's what you're selling. Or more specifically, how your selling what you sell.

If you're selling your cabinets as a property investment, you're not gonna sell as much. If you sell them as a more efficient, more convenient, or easier to maintain kitchen accessory with the investment return as a positive side benefit - in the event they ever decide to sell - you'll sell a hell of a lot more.

What people are paying for now are things to maintain their current property or things that make their life easier / more convenient / more comfortable.

A year ago remodeling money's main benefit was the r.o.i. It is now personal comfort benefit. When I sell a bathroom remodel now it is not "bathrooms and kitchens have the largest ROI of any remodeling project" (one of my former key selling points) to now "spa luxury everyday" (my latest ad's tagline).

They are paying for personal benefit rather than monetary benefit.
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Old 11-16-2009, 06:31 PM   #4
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Re: What Are Customers Buying?


I wouldnt listen to anyone who says adding upgrades to a house dont increase it's value. I have heard this so many times over the years and normally it's a way for the customer to try and knock you down on price saying that the work wont add any value onto the house.

Just as an example i am about to buy a house that needs a full remodel. I got it for $90k and the houses in the same area after a remodel sold for between $165-$180k. I am thinking about keeping it as a rental property so resale aint on my mind at the moment but i know for a fact even if i got someone elese to do the work and not me i would still make good money from the house. It dont even need anything doing to it but im want to update it so that i can mae something out of it someday.
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Old 11-16-2009, 06:58 PM   #5
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Re: What Are Customers Buying?


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I wouldnt listen to anyone who says adding upgrades to a house dont increase it's value. I have heard this so many times over the years and normally it's a way for the customer to try and knock you down on price saying that the work wont add any value onto the house.

Just as an example i am about to buy a house that needs a full remodel. I got it for $90k and the houses in the same area after a remodel sold for between $165-$180k. I am thinking about keeping it as a rental property so resale aint on my mind at the moment but i know for a fact even if i got someone elese to do the work and not me i would still make good money from the house. It dont even need anything doing to it but im want to update it so that i can mae something out of it someday.
Unless you're working for flippers only, the vast majority of your customers didn't buy their house that way, pretty much zero of them did.

Quote:
Originally Posted by macatawacab View Post
Recent news reports that with declining home values there is no pay back for remodeling work. Return on remodeling investment is a negative. I have seen this in my cabinet work orders. Most my work now is repair, maintenance, or thermal updates including window and door replacement.

What types of work are your customers paying for in 2009 and into 2010?

Also, I am expected to start each contract immediately. If I don't, someone else will. Is this common in your areas?
There has never been a payback for remodeling work, unless you've been charging so little for your work.

Homeowners are buying from us at retail prices right? Not wholesale.

Customers paying us contractors retail for our work shouldn't be able to make money off it.

TileArts got the right idea.

Remodeling is about wants not needs. Nobody really needs to remodel.
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Old 11-16-2009, 07:51 PM   #6
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Re: What Are Customers Buying?


Maybe I worded this wrong. looking for more of a survey.

My work has changed from customs to decks (elaborate), retaining walls, window replacement on some nicer homes because now they have decided to stay in the house and take the 1500 credit.

I know how to charge and know how to sell. I have made a good living at this for 35 years.

Just wondering what is selling in different regions and how that has changed. Michigan is a tough market but I had a good summer and fall because I did targeted mailings with a specific market (decks and outdoor areas in a resort area)
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Old 11-16-2009, 08:03 PM   #7
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Re: What Are Customers Buying?


Well your declinging home values intro sent your thread in a different direction.

The recession has caused a lot more repair/patch/bandaid work to show up naturally and reduced the amount of big budget projects. Nothing out of the ordinary there right?

As for starting right now, right away, sure you hear that or more specifically once you tell a customer you are 2 months away from starting you hear something along the lines of "Whatcha talking about? I heard all contractors were desperate for work?"
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Old 11-16-2009, 08:25 PM   #8
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Re: What Are Customers Buying?


I'm finding that people who have a lot of equity in their homes,even with the current market,are the ones that are having work done now.
My last three sales were to HO's that have owned their homes for many years.
One hadn't done anything to his home for 20 years.
The other (repeat client) is constantly making upgrades for aesthetic and maintanence reasons.
The third is for necessity.

Three more are waiting till spring.
All seem to have liquid assets,and aren't counting on the banks.

All are basically improvements that will either save energy(Windows,Doors)or give their home a facelift(siding,decks).
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Old 11-17-2009, 10:43 AM   #9
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Re: What Are Customers Buying?


Thanks oldfrt.

that is the info i was looking for and it is true with my last 7 months of work. you were spot on with your analysis.

people with equity, going to keep their homes, paying out of pocket.

Hope more people respond like you did. this is good marketing information.
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Old 11-17-2009, 10:12 PM   #10
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Re: What Are Customers Buying?


Quote:
Originally Posted by macatawacab View Post
Recent news reports that with declining home values there is no pay back for remodeling work.
I find that's usually not the reason people remodel. The most recent remodels I've done were all people who planned on staying in their homes. Except I did one lawsuit job, which was a gal who wanted it fixed up and taken care of so she could sell it.

I've only done a couple remodels where I think the homeowner could turn around and sell it, and make some profit off my work. And that was a long time ago, the way the economy is now, they would have a hard time making that work.
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Old 11-18-2009, 05:38 AM   #11
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Re: What Are Customers Buying?


Most of our recent customers have come to the realization that they will be in their house for a bit before the value gets back to where it once was. Therefore, they are updating more than anything else. We are working on and have quite a few more bathrooms to do which seems to be the biggest draw at the moment.

Of course, here in Atlanta there is quite a bit of water damage repairs that are still on going due to the recent floods.
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Old 11-18-2009, 08:33 AM   #12
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Re: What Are Customers Buying?


Quote:
Originally Posted by macatawacab View Post
Thanks oldfrt.

that is the info i was looking for and it is true with my last 7 months of work. you were spot on with your analysis.

people with equity, going to keep their homes, paying out of pocket.

Hope more people respond like you did. this is good marketing information.

I can break that down a little more if your looking for a target market.

I don't know why but quite a few of my recent projects have been for school teachers who are in,are close to retirement.
One is for a retired banker,who probably has a good feel for the current market,and believes now is the time to get it done.
Since these people have been around for a while,they base their choice of contractor on value and not price.

All my leads come in WOM, and that may have something to do with the run of similar backgrounds.
I was a little taken aback the other day when I learned that I was the topic of conversation in the local YMCA's sauna.

Someone mentioned doing work for a bunch of nurses and is bidding on a wine cellar for a Dr.who happened in on a conversation about one of his projects.
Although WOM isn't considered advertising,I think that it has more to do with being able to stay busy now for those that do quality work.

I'd try and hit a market where people of similar interests network with each other on a daily basis ,who are established professionals,and don't have to worry about their employment status.
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Old 11-18-2009, 10:40 PM   #13
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Re: What Are Customers Buying?


Most of our work lately are kitchen and bath remodels in upper end homes that are about 20 years old. The motivating factor is usually life style wants and keeping up with the Jones' types. Other jobs are with high equity owners keeping the value of their homes up by remodeling to the standards their neighborhoods demand.
These clients are usually Dr.s, Lawyers, Pilots and other professionals.
Most jobs come by word of mouth as well, you get into some of these circles of people and neighborhoods do a good and the work will find you.
We have done 6 kitchens for pilots in the last year alone!

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Old 11-19-2009, 12:11 AM   #14
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Re: What Are Customers Buying?


Great information, this is confirming and expressing what I am experiencing here.

interesting to see any differences in geography as to what is important to these groups.

Agree about WOM. My prospects that have not heard of me ask for references and examples of similar work, fortunately there is plenty of both.
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Old 11-19-2009, 11:07 AM   #15
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Re: What Are Customers Buying?


I'm going over the end of the year figures while I dabble on CT and listen to the news.
Just at a glance, it looks like decks and metal roofs were my biggest sellers this year.

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