5 Ways Home Builders Can Help Manage Homeowner Expectations Despite Home Building Supply Disruptions
Being a home builder has always had challenges, and in the year since the pandemic began, it’s become harder than ever before. After all we had persevered through 2020 with COVID-19, the Suez Canal blockage and then gas shortages have given us another reason to place our heads in our hands and think, ‘What could be next?’ After all, when it rains, it pours in our industry!
Around this time last year, many people were forced to shelter-in-place. The building industry was put on pause. Homeowners frighteningly banned contractors from their homes, new starts and multifamilies were asked to take a timeout. Suppliers and manufacturers shuttered in anticipation of major business disruptions due to stoppages in demand, as well as battling bouts of COVID infiltration onto their premises, causing rolling shutdowns all over the country.
All of this combined has created supply chain disruptions that have not been resolved and won’t in the near future. However, construction is booming and homeowners still want their homes built to their specifications. So how can you manage homeowners’ expectations?
We’ll get to that. But first, you have to understand how we got to this point and what exactly is happening right now. And who better to tell you than our Executive Vice President, TJ Shaheen.
Insight From Builders’ General
We sat down with TJ to hear his insights on the current state of the industry and how to manage homeowner expectations.
“The pause button was pressed within our building industry, unlike anything we’ve seen before, locally, nationally and even globally. And what happened next, nobody could have ever predicted or been prepared for: The reaction of a sudden retraction, followed by a massive maximum propulsion. It’s what I’ve termed “The Rubber Band Effect. (I have the rights to that term and am seeking copyright on it, ok? Good.)“
TJ continued, “This has never happened before in our industry. So, as a nation, captive to their homes, employed, unemployed, this “Sheltered-in-Place” life was the new frontier that no one has really ever experienced in our lifetime (unless you were around for the Spanish Flu).”
“With the accessibility and ease of the internet to kill the boredom, armed with viral degrees of education, incited consumers went beast mode with the following stance: ‘No vacation this year, so forget it. It’s time to put in that kitchen we always wanted or that brand new deck.’ Or: ‘You know what, I need an office now in my house because I’m working from home and I can’t have my kids’ dogs and cats slobbering all over me during my next zoom conference. Time to build that addition, not tomorrow. Now!.’
“The rubber band began to pull back and intensify. It was now just a matter of time before it snapped forward. Demand began as a simmer and quickly came to a raging boil. And then, SNAP. You could almost hear it,” TJ said.
“The building industry gradually started opening up, and though in some states it never really closed earning the classification of an ‘Essential Business”. However — as we retailers, suppliers and manufacturers would soon find out — we were out-manned, unprepared and had little ammo to meet demand. We were already dealing with a virus of biblical proportions, and now we had A “Cats and Dogs living together, Mass Hysteria!” moment.” (TJ says he had to throw in the Ghostbusters quote from the legendary Bill Murray. It was non-negotiable.)
TJ continued, “An explosion of demand, retailers and suppliers were scrambling to supply with the COVID handcuffs still on. A massive Econ101 on steroids began to script an unbalanced ratio of demand over supply — and the lumber commodity index was now rocketing north. Prices were squeezed and popped over 25%, then 50% and then 100% and beyond. The normalcy of meteorological patterns and events that have occurred historically per annum only added more fuel to fire.”
“Hurricanes, wildfires, Canadian tariffs, rail companies, trucking issues and labor shortages (which were already an issue and only made worse by government stimulus packages), all affected not only the ability to procure product but to also deliver to the final destination. It was the perfect storm, and it is still raging and idling over our entire LBM industry. But it’s not just the United States: It’s also a global problem,” TJ points out.
“It is a micro/macro perfect storm; we are witnessing the Rubber Band phenomenon as we speak. The result of the socio-psychological wear and tear of billions of people all going through the same challenges you and I have had to bear over the past year.”
Now that TJ has set the stage of where the industry is, let’s move on. Here are five ways new home builders can set expectations for clients.
1. Establish Customer Expectations Early on and Streamline the Sales Process
Communicate! Email, text, call. Yes, we said call. Going back and forth, ping-ponging information via text or email can become exhausting. When it reaches a stage of exhaustion, pick up the phone or visit in person. Texts and emails can be taken out of context and can go on longer than a tennis match.
One of the single most critical factors in managing homeowner expectations is to establish those expectations as early as possible. You can achieve this by streamlining the sales process and maximizing the value of post-sales calls.
If the homeowner has a specific vision of something in their mind that they haven’t communicated, it can lead to problems and confusion later on. Getting filled in on every detail and working out the full extent of their expectations before work begins is imperative.
To avoid misunderstandings and disgruntled customers, builders can schedule a series of pre-construction meetings to iron out as many details as possible. The initial pre-construction meeting should be held between the consumer, their designer (if they’ve hired one), as well as the builder or remodeler responsible for the project.
While it’s best to cover as much detail in each meeting, it’s also important to avoid overwhelming the customer with too much information or too many choices in a single sitting. Opt for several smaller meetings to avoid overload and still get the information you need.
You don’t want to be stuck tearing out flooring or redoing an entire section of the home because the customer’s expectations weren’t fully communicated. Conversely, it’s also important to communicate the feasibility of those expectations as early on as possible.
2. Be Transparent About Any Challenges That You Anticipate and Communicate Them to the Customer
Lead times, affordability and a volatile building market are changing daily. LBM suppliers need to be transparent, and consumers need to be patient and understanding. These are unprecedented times. There are a lot of moving targets and variables unseen or predicted.
One of the biggest problems homebuilders are facing right now is securing material on time. When you’re shopping at a building supply, you’ll find that prices and availability fluctuate from week to week.
The pandemic made it mind-bogglingly difficult to get material delivered on time. Here at Builders’ General, we’re committed to supplying New Jersey builders with the best premium building materials they need as swiftly as possible. But we can only do so much, as we have to rely on our suppliers to succeed in this mission. This is why we partner with the best suppliers in the business. They have our back, and we have yours. It is a relationship business. And in times like these, you find out who your real friends are.
3. Protect Yourself With Special Clauses in Your Bid
One of the smartest things you can do as a homebuilder right now is to protect yourself by including clauses in each bid that cover changes in circumstances like fluctuations in pricing on material.
Stay in tune with the market, subscribe to whatever information platforms available to help guide you through moments like these or even in normal times. Keep educating yourself so that you can stay a step ahead of your customers and the industry. The worst thing you can do is do what you have always done. That’s a lesson often learned the hard way.
Keep a finger on the industry’s pulse at all times.
For example, if you submit a bid that includes $100,000 for material and that material ends up costing closer to $150,000 during a volatile market and after the price fluctuates, you could lose a lot of money.
By including an escalation clause in your bids and/or contracts and keeping your head on a swivel in tune with the industry’s rapidly changing events, you can ensure that you won’t go into the red on the project and protect yourself from unnecessary losses. It’s CYA 101
4. Work Out a Storm Schedule With Your Clients
If there’s any possibility of a major storm disrupting your project, it’s best to work out a storm schedule with your client ahead of time. Discuss making a storm schedule with your client proactively so they don’t become uncooperative, frustrated or both when a storm comes up and you have to adjust your team’s schedule.
And we got caught in a geno-viral-economic-sociologic storm called COVID-19.
5. Find a Reliable Source for Home Building Supplies
Since the pandemic began, top-quality building products have been hard to procure on time. This difficulty has led to a lot of misunderstandings and disagreements between builders and their homeowners.
Communicate and be proactive. Certain core products that were routinely 4-6 week lead times, may now take double the time. Prices can change at any time due to supply chain issues. Practice patience and understanding for your company, your stakeholders and customers.
General material and builders’ supplies are hard enough to procure — let alone top-quality building products — which has made it incredibly frustrating for builders trying to complete projects on time. Managing and meeting homeowner expectations is easier when you have a reliable source for purchasing material.
Builders’ General has been a trusted name in home building supplies since 1931. Our first priority is your success as a builder because we see you as part of our family — and we always take care of family. We are partners with many family businesses in the LBM industry, that’s why we get it and we’ve got your back as a 4th generation family business.
Not many building supply companies can claim that you can get an executive on the phone whenever you need help, but we can. TJ and his other family owners are constantly giving guidance, protection and support during this period of difficulty. We’ve been in business for 90 years for a reason: We help people successfully build and renovate homes.
And not just with nails, lumber and deliveries but with many other value-added options and resources that create that sticky factor with our customer. Our business is very much a relationship business, galvanized over four generations. We will always make it right, and we know you live to build and build to live.
I am TJ Shaheen, 4th generation, owner, Executive Vice President of Builders’ General Supply Co, and I approve this message.
If you need any more information or would like to discuss how our company can help you succeed in the LBM business, please email me at firstname.lastname@example.org. I look forward to learning and growing from these past years’ events. With passion, perseverance and grit, we will power through and will be better on the other side of it.
And who knows…everything ebbs and flows. Remember the beginning of the pandemic when the soup aisle was completely barren and you couldn’t get a roll of any papered product at any store? Not even Amazon? Now you can buy a roll of paper towels AND toilet paper at any surrounding CVS Pharmacy location and get $10 back in Extra Bucks. It’s possible that we’ll have an abundance of lumber products in the future, too.
As Winston Churchill once said, “The farther backward you can look, the farther forward you can see.”