Which came first ... the chicken or the egg? We all know there is no good answer to that conundrum. For builders, it's a lot like choosing which amenities are offered as standard vs. which ones are options ... there is no good answer.
As the market slows, now is the time to look closely at your standard vs. option offerings. I recommend you transfer as many amenities as you can from standard to option with a goal to reduce the base price of your new homes to the lowest level possible.In most cases, the price of the home is the primary criterion that will pique the initial interest of a potential buyer.So if the base price of your new home is $30,000 cheaper than your competitor, you are likely to get more leads.
The key to this strategy, however, is not to eliminate amenities altogether. For the sake of profitability, you need to maintain most, if not all, of your amenity offerings as options. Remember, the options -- especially the tech options -- are where most builders boost their profit margins.
Here's my list of home tech amenities with a standard vs. option recommendations.
Structured wiring: Standard -- High-speed bandwidth for the Internet is a must today. Setting aside all the other amenities that can be tied into a structured wiring enclosure,having multiport jacks in multiple locations throughout the home is necessary. Just ask yourself, how often do you check e-mail or go on the Internet? If you're like most people ... every day. If it's important enough for every secretary in your office to have a high-speed connection, it's certainly important for your homebuyers. Besides, the infusion of new highspeed-bandwidth-based services, including IPTV and smart appliances, will make it invaluable. Finally, if you don't include it, you can say goodbye to the next generation of homebuyers who cannot live without it.
Multiroom audio/video: Standard -- This is proving to be very popular among homebuyers, but the big reason every builder should be offering it is the margin. Builders can routinely make 200 percent on every in-ceiling speaker.
Surround-sound speakers: Standard -- Again, speakers are too profitable to risk leaving the minimum of five surround-sound speakers out of the home ... even if home theater is an option.
Home theater: Option -- Flat-screen TVs with mounts or front projectors with screens are nice differentiators,but they immediately bump up your base price.
Security: Option -- Even though it's cheap to install, no homebuyer really wants to buy a security system. For most, it's a necessary evil. Besides, if you tout that the home has a security system, you are making a general statement that the home is in a rough neighborhood. Also, there's no margin for you.
Lighting control: Option -- This is a tough one. Lighting control can definitely be a differentiator, but it still needs more awareness among homeowners.
Energy management: Option -- Logic dictates that consumer awareness of energy costs will continue to increase, but it's still a niche play.
Intercoms: Option -- These are becoming more popular, especially with DVD players and multiroom distribution capabilities.
Digital phone systems: Option -- Advisable for second homes.
Whole-house automation: Option -- Elegant touchscreens offer the wow factor and solid margins. Only recently a Lake Tahoe community became the first production development to standardize on home control. It's still early.
What are you doing?