Put more in, and get more in return
As recent as 2006 builders could not produce homes fast enough, and they were able to experience unit profits of 100% in some cases.
Today, the profit margins are much slimmer, and sales of new homes have slowed by more than 80% in some markets.
Many conversations surrounding ways to improve the housing market buzz with redundant ideas. The most common pleads are for the loosening of credit so builders can build again and consumers can buy. Others discuss the hardships builders face because they are unable to attain appraisals.
The traditional business model of build it and it will sell or attain financing is long gone. Today, in order to compete, a project must meet the demands of the consumer. There is a lot of opportunity for those who are willing to put more effort forward and provide a product that is in demand.
Even in the most challenged markets, there is a lot of opportunity for building professionals. The path to profits is not as easy as it was during the days of sub-prime or heartbeat lending. But, by executing a business model that meets the demands of the market, including affordability, professional design, conveniently located, energy and water efficiency, and comfort of the remodel or new construction, then one does not have to wait for the loosening of credit or the blessing of an appraiser to create a thriving business.
In fact, if the above strategies are implemented then the appraiser will need no justification for higher appraised values and may assign the label of ‘unique property’ as is done with every G Home.
No longer is it possible to build or remodel a structure without it being the best, and expect the market results of 2006. But, by planning and designing according to market drivers one does not have to worry about appraisals or buyers. The buyers will follow, as will the higher appraised values.
This difficult economy maybe the best test for ones product or business model. Last week, a major production builder reported losses of 3.4M. Maybe the problem does not lie in the economy but rather in an outdated product or business model that has lost touch with the market.
If one is willing to put a little more effort into a project, then the result will be a lot more in return, including a higher appraisal.