Most people walk through display homes hoping to find the right home design to suit their tastes. But what about those that can't find the right design. What are their choices and why don't Project Builders cater for them?
As an ขายบ้าน ex-General Manager of a building company I know the overheads associated with running a display campaign;
First you have the holding costs of the land and the home while you're constructing the home. Then you normally sell the display home to an investor and come to some kind of 'lease back' arrangement. That arrangement generally sees you paying above the current market interest rates for the lease - meaning the investor is making money on the home from day one. Most builders will try to factor this leaseback cost into the sales price of the home, so they don't have immediate out of pocket expenses. However it's not always possible to cover the general lifespan of the display home which is typically 3+ years. Then there is all the associates costs with the display home which include; Artwork, pricing, modelling, signage, brochures, cleaning, landscaping upkeep, insurances, furniture, phone & internet, power, water, ongoing maintenance and security. An amount is also allocated towards advertising to generate traffic through the display home though this is normally shared between the portfolio of display homes.
To cover the costs, most builders will have a 'break even analysis' completed showing how many homes will need to be sold each month from each centre. That may range from as little as 1 home per month to 4 homes per month. Of course there are a lot of factors to consider here so this is example may be a little generic. My point is simply this, if the builder is required to sell 'x' amount of homes, they will specifically design a home that suits the majority of homebuyers. Or at least, their view of what the 'majority' is.
This is why there is always a percentage of people that cannot find what they are looking for. It would also seem that we are becoming far more unique in our lifestyle these days, and considering the energy efficiency ratings required when building, most display homes aren't cutting the mustard.
So if you want a home that is different to the standard design they are offering, what do you do?
Sales consultants will tell you that you can modify the home to suit your needs. However, the changes will be priced at a higher margin than the discounted display home price. This is due to loss-leaders or price comparisons amongst the other builders range of homes in the display village. Display home prices tend to be reduced for a few reasons - but the main reason being the easy comparison against the competition along the street.
It's been said many times before by most people that built through a project builder "We liked the home and wanted some changes made, but the changes cost us a fortune. Then we had to pay all these other additional costs on top for things like a concrete pump, kerb and footpath deposits and electrical and sewer runs."
All these additions are charged at significantly higher margins, which is where the builder really builds his profit margin to an acceptable level for mass turnover in homes.
Twenty years ago I worked for a builder that used this model;
Construction Overheads 11% Sales & Marketing 8% Erosion 4% Target Profit 5% Total Mark-up 28%
These numbers are quite different today. However, using the above example, if you were to use a Building Broker you are removing a marketing overhead which is why I often explain that in today's building market and on today's margins we can often save 5-10% on building prices by using a number of builders who don't have display homes.
However, if you feel the need to pay more for your home for the privilege of walking through a regurgitated display home, there are a number of good ones I could recommend!
This article is Copyright November 2010 - Your Building Broker
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