I’m not going to compare builders to the awkwardly unchanging Galapagos turtle. But the dynamics of building have changed and, so too, must builders adapt. Where a builder once prided himself on craftsmanship, and relied on that to attract clients, today it requires much more to attract a sale.
For one thing, there’s a lot more competition and choice. Housing starts are down, consent times have increased and technical requirements have tightened the processing time. The result is cash fl ow and margins are being squeezed.
All this makes being a successful builder truly about survival of the fittest. Good building companies are dynamic and evolving. They’re willing to identify their needs and make the necessary changes.
So what do you need to generate more sales than the builder down the road? The answer is surprisingly simple. Add a new sales member to your team! Put a great lender on your sales team! Don’t just consider them an interruption to your business.
Partner with a lender who understands your business, wants you to make that sale and wants to get your prospects to contract. If the lender is on your team, they will deliver the prospect back to you, loan approved and ready to build. Clients are keen to know much more than just how good their builder is.
They want to know first and foremost if they can even afford to build with you.
While they walk through your show home “oohhing” and “aahing” about those cool features, in the back of their minds they are asking themselves a whole lot of questions:
• Can I really afford this house? My bank tells me I can’t!
• How can I pay the mortgage while we’re building? I certainly can’t cover both payments!
• What if my deposit is too low? My bank tells me it is!
• My friends have warned us against building after the nightmare they had! How do I know this builder is any better, and can I minimise the risk?
• Isn’t building just too hard? Perhaps like most other people who would prefer a new home, should we just buy a used home? After all, it’s so much safer and easier. These are all questions a good lender will answer for your prospect.
A good lender will have cleared the cluttered path to building a home. They will show the client how to afford every step of the process. They will allow a lower deposit, manage the process to prevent cost overruns, and provide a clear reason why building a new home is better (from a wealth creation perspective) than buying a used home.
Banks can limit your business or grow your business. But that choice is yours. Banks are notoriously conservative and not open to change. In spite of the changing environment that you have to operate within, bank requirements limit the number of people who can build a new home.
A large number of quality clients that NewBuild has financed to build had been turned away by their bank. Check out Auckland Registered Master Builder Marty van der Burg’s client. Marty called to say his clients had been turned down for finance by their bank, and could I help rescue this contract.
The client was approved in two days, and I visited their nearly completed family home recently. That makes my day. It also made Marty’s. Grant Brown of Registered Master Builder company Cardinal Homes states that their success has been “clearly a partnership with a lender that delivers clients approved, ready to build”.
The Galapagos turtle has managed to survive with little competition, but builders are not so lucky.
Fortunately, the ability to adapt to a new way of growing your business is not so hard.