Cost vs. Value Report

I was just working with a renovation firm in Calgary, Alberta named The Pinnacle Group. Paul Klassen is a smart individual and has developed one of Calgary’s premier Renovations businesses. His focus is on Building relationships with his clients and his team is dedicated to that vision. Our marketing efforts have been geared towards enhancing his clients experience, being unique at every turn and creating an advantage. We are tapping into the emotional aspect of his clients and how they make their buying decisions. Why this focus on the emotional aspect?

Many remodeling and home improvement business  owners, or sales people,  are  pre programmed or wired to prove they can be trusted to the customer. Company’s consultants or representatives may expend too much work and time trying too hard to impress others, and in trying to earn the trust factor with their potential clients, that they miss the whole essence of building the relationship with the potential client. We have to remember that remodeling is still an emotional decision and in order in develop a solid relationship with your client, like Pinnacle Renovations, there needs to be a focus on your client.

How many remodeling businesses are showing the cost vs. value report?

Is this really the direction you want to go right now? Is it really? Should we be talking about the investment value or the real reason people are remodeling today…..because they want to make there house a little more like home! An emotional investment. Emotion usually wins every time!

I read  recent article by Nina Patel, Senior Editor for  Remodeling Magazine. Nina pointed out some interesting research about  how people view their home these days, and  how the  long term investment value of home ownership has diminished. Here is the article and some highlighted   quotes from here article.

A researched the 1929 stock market crash. Assistant professor Anna Scherbina found that a decade before the crash, there was a booming real estate market in New York city that she says resembles the housing bubble of the 1990’s and 2000’s. She extrapolates from the research that “owning a house is not necessarily a lucrative long-term investment based on its long-term exchange value.”

Nina commented;

I’ll grant her that. During our most recent boom, many people bought and sold houses with the sole purpose of making money. However, most of the public and the government realize that ownership goes beyond making a quick  buck. Homeowners are invested in their neighborhoods and have a strong connection to the community. Buying a house also hits us on an emotional level. Some of it is scary–like the panic I felt right after my closing where I wondered “What did I just do?.” But along with the fear comes elation and pride. So researchers can review history and statistics all they want–the true value of buying a house is the enhanced quality of life. Successful remodelers understand that emotional value and use it to help clients create a place they love to call home.

Here is an excerpt from the grad school’s site about Scherbina’s research:

“In a recent radio interview, Scherbina discussed an index of home prices in Manhattan between 1920 and 1939 that she and Associate Professor Tom Nicholas of the Harvard Business School collected by hand from the Manhattan Public Library archives. This data set is informative because the housing market in Manhattan represented 5% to 10% of all the U.S. real estate wealth at that time.

According to Scherbina and Nicholas’ working paper, “Real Estate Prices during the Great Depression,” the prices for a typical Manhattan house increased 62% in a run up of the 1929 stock market crash and then lost 51% of that value by the end of 1933. By 1932 and 1937 the stock market showed signs of rebounding, but real estate did not, according to Scherbina.

A house purchased in 1920 would have lost 51% of its value (in inflation-adjusted terms) by the end of 1939. Scherbina and Nicholas report that it wasn’t until 1960 that housing prices recovered.The upshot for today, according to Scherbina, is that owning a house is not necessarily a lucrative long-term investment based on its long-term exchange value. She explains that given maintenance costs and fluctuations in the real estate market, it is difficult to profit financially.

Scherbina contends investors would do better investing in stocks and bonds because they can spread wealth across diverse investments and have the flexibility to sell some assets when necessary. Home owners, on the other hand, can’t sell some of their house when the economy shrinks, yet families do not value or think of their homes simply as a long-term investment.”

Should we focus on the emotion or cost vs. Value?

Nina Patel-

“So researchers can review history and statistics all they want–the true value of buying a house is the enhanced quality of life. Successful remodelers understand that emotional value and use it to help clients create a place they love to call home.”

My thoughts…

“Should we be talking about the investment value or the real reason people are remodeling today…..because they want to make there house a little more like home!”

You decide……….

I was reminded from browsing Michael Stone’s Blog and wanted to post this, with my thoughts too.

In the November issue of remodeling magazine is a great sales tool. The Cost vs. Value report for 2009-2010. If you are a remodeler or home improvement company you can subscribe to a free issue here.

A question you need to ask every potential client is “What is your budget for your job?”

Using the Cost vs. Value report can help you address this topic. Many remodelers and home improvement businesses and their sales staff use this. I know I did very frequently. When I was meeting potential clients, and my sales people were instructed to &  did present this also, ….we made color copies of the page in the magazine that was needed to refer to, and kept copies with us for our presentation and even ordered extra inserts of the Cost vs. Value report. When the topic about their budget came up and at the right time, I would show them the magazine and refer to the project we were discussing. Another great use of this magazine is to put a copy on your website.

 

There is an widget that you can download and post to your blog, sidebar, newsletter or even have a link from your contact page when people submit appointments online. There are many uses for this and I recommend them all. Here is the link to the widget below. Just click on the image.  This was third party literature that showed the approximate budget that would be needed and it wasn’t me defining a number from my calculator. What a subtle way to show your potential customer what they can expect and if this fits in their budget and lifestyle. Very subtle and useful!