Tuesday, January 29, 2013

Housing Emerges as Economic Bright Spot

Here's some news remodelers and builders may have never expected to see again. From today's Washington Post:
"The nation’s housing market is surging again after years of historic declines, and the unique forces powering its return could last well into 2013.

"The number of homes for sale is at its lowest level since before the recession, sparking competition among buyers that has led to 10 straight months of price increases. The volume of activity is the highest since 2007.
"Builders broke ground in December on the most new housing developments in four years. And interest rates on mortgages are expected to remain near all-time lows through much of the year, galvanizing once-skeptical buyers.

"Together, those factors have helped the beleaguered housing market regain its footing and emerge as one of the economy’s bright spots this year.
"...The return of real estate marks a key milestone in the country’s economic recovery — and not only because it was at the root of the collapse. A healthy housing sector could boost gross domestic product by more than $400 billion, based on housing’s historical portion of the overall economy. It is also a major source of new jobs in construction and indirectly supports industries as varied as retail and local government."
Amen to that.

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Thursday, January 24, 2013

Today's Numbers: Architecture Billings, Calif. Defaults, Hamptons Home Prices...

Consecutive months that architecture billings have risen: 5

From the American Institute of Architects:
"Business conditions at architecture firms continue to improve. As a leading economic indicator of construction activity, the Architecture Billings Index (ABI) reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 52.0, down from the mark of 53.2 in November.  This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings)."

Calif. homes to receive Notices of Default, 4Q 2012: 38,212

That's a six-year low which hasn't been seen since the dawn of the foreclosure crisis. From Mortgage News Daily:
"DataQuick attributed the decline in early foreclosure filing to rising home values, an improving economy, and a shift toward short sales which accounted for an estimated 26 percent of statewide resale activity in the fourth quarter.  The median price paid for a home during the quarter was $300,000, up 22.4 percent from a year ago and 32.2 percent off the median's $227,000 bottom in first-quarter 2009.
"Home values increased through most of 2012, and the rate of increase picked up toward the end of the year. That means fewer and fewer homeowners are underwater, where they owe more than their homes are worth. That in turn means they can sell and pay off the mortgage, or perhaps refinance at today's low interest rates."

U.S. union membership in 2012: 14.3 million

From the New York Times:
"The percentage of workers in unions fell to 11.3 percent, down from 11.8 percent in 2011, the bureau found in its annual report on union membership. That brought unionization to its lowest level since 1916, when it was 11.2 percent, according to a study by two Rutgers economists, Leo Troy and Neil Sheflin. 
"Labor specialists cited several reasons for the steep one-year decline in union membership. Among the factors were new laws that rolled back the power of unions in Wisconsin, Indiana and other states, the continued expansion by manufacturers like Boeing and Volkswagen in nonunion states and the growth of sectors like retail and restaurants, where unions have little presence."

Average home price in New York's Hamptons: $2.13 million

From Bloomberg:

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Real Remodeling Reviews, False "Filtering"?

And speaking of online reviews ... does Yelp have something against small companies? 

A remodeler writes:
"We as a company have been asking our clients to review us online at various sites like Yahoo, Google, Houzz and Yelp. We have had two new reviews on Yelp's website in the past couple months, only to find that those reviews have been “filtered” by Yelp because they say these are fake or “less relevant” reviews. Although I have responded to Yelp with the clients' information (phone, address, project pictures, etc.) I cannot get even a response back.
"Some companies have noticed that only companies who pay to advertise on Yelp get to 'keep' all their reviews. This website has a link to a petition for the attorney general to investigate Yelp. Could you could rally the troops and gain some support for us and other remodelers around?"
Here is how Yelp describes "filtering," by the way.

So, what say you, remodelers:

Has Yelp filtered out any of your "less trustworthy" reviews? How have you responded? Please comment below.

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Smells Like Home Fries: Remodelers in the 'Hood

What are you good at when you're not "working," remodelers? Can you share it with your clients?

In Atlanta, David Sturm of Attention to Detail Home Remodeling loves to cook. And he's good at it. So after some of his remodeling projects, he cooks for his clients -- maybe a nice dinner in their newly remodeled kitchen, and maybe a casual brunch in their cul de sac.

That's what's going on below. Sturm (shorts and green polo shirt) whipped up "fresh coffee, eggs to order and my famous hash browns" for the neighbors of around this project, a kitchen and second-story makeover.

"We do this every time we remodel in a neighborhood where we desire to do more work," Sturm explains. It's a lot of effort, but I love doing it."

It's good marketing, too. After this particular brunch, Attention to Detail lined up two additional jobs in the same neighborhood.

We're looking for more stories along these lines, remodelers. If you'd like to share a "community building" marketing strategy that works for your business, feel free to comment below. Or shoot me an email: leah@daily5REMODEL.com.

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Value Selling: Tried This Approach, Remodelers?

Remodelers: Sure, homeowners can look up many of your costs these days -- appliances and fixtures, for instance -- but that doesn't mean they understand or appreciate the real value you offer. Or your real costs, for that matter. What about your company's vehicles, office space, staff training, licenses?

That's where you might want to do some value selling. Here's what Sandler Sales trainer Chip Doyle has to say:

 "My girlfriend took me to Hawaii recently so I was happy to offer to pay for some island tours for the two of us. Instead of letting me forget about work, she adeptly noticed that every tour brochure highlighted the value of the craft that each tour used. $1 million boats for fishing and snorkeling, $1.5 million dollar airplane for island sightseeing, etc. And of course for mere hundreds of dollars you could participate in a tour on each of these expensive vehicles. Their mention of these tour vehicle values was not by accident. They were exploiting a concept known as establishing context, validated by Cialdini in his book Influence. Several other authors have also documented this sales technique.

"Value selling is the concept of pricing products or services not based on their cost but on their value to the buyer. Understanding the context of the value to the buyer allows the buyer to justify the purchase and the salesperson to change how they quote and charge prices...."
Read the rest of Chip's post here

Read Chip's advice on remodeling sales specifically, from these past d5R articles:

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Wednesday, January 23, 2013

Project Management Software: Is There a One-Stop Remodeling Solution?

What do you use for project management software, remodelers? If you haven't already weighed in, join the conversation on d5R about project management software, in response to a reader who posed this question:
"I've been using Basecamp, however it's coming up short with managing multiple projects. One solution I am looking at is JetStream, which has been created specifically for the construction and remodeling industry. Are there other options out there?"
 Here's some of what your peers are saying:
I'm the definition of small contractor. Have even been referred to as a "Trunk Slammer" in some circles and I use UDA ConstructionSuite. My accountant and biz advisor once emphatically remarked when he found out I use UDA, "YOU use UDA?". It's a chunk of cash fer sure and most likely the big, big, big shops are more likely to use UDA....
I have yet to find one business management software for the remodeling industry that covers everything soup to nuts, from marketing for leads all the way through to re-marketing to customers after selling to them and completing their projects....
And thanks especially to John Clark of @designREMODEL, in Cape Cod, who shared this information (and more):
... I spent the better part of 2 days looking at (and trying out) the many Project Management Programs out there. (Note. I only looked at web based programs that I could access from anywhere with an internet connection.)

This is what I found. Many were very simple and limited. Example: Basecamp

Some had every feature and option possible. Example: Podio. Great for someone computer savvy, overwhelming and complex for most of my clients.

For construction and remodeling companies, there were a number of choices. Examples. Jetstream and BuildTools had many features and options that I liked. However at about an average cost of $250 month.

Ultimately I decided to go with a PMP called Project Bubble that had most of the features that I was looking for, had a shallow learning curve and was simple and easy for clients and trade partners to use. And at $24 a month, easy on the wallet. Most likely I will transition to a industry specific PMP at some point, but for the foreseeable future this program will meet my needs.... 
What about you, remodelers? Learn from your peers and weigh in here.

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Formica Gets Its Mojo Back -- and Now It's Green

Move over (quarried, imported, non-renewable) granite.

Did you see yesterday's d5R article about furniture recycled from beetle-killed pinewood, an otherwise "unusable" but abundantly available resource that, if not recycled, is a leading cause of forest fires? Here's a similar comeback story involving a sustainable, often-overlooked material. Sort of. 

From NPR's Marketplace program:
"...[B]y the 1970s and '80s, Formica had a bit of a bad rap. The smooth surfaces had been chipped or rubbed down to show the brown paper under the pretty colors. By the 1990s, expensive stone countertops became a status symbol, paving over passe Formica.

"But last year, Los Angeles designer Scott Lander chose white Formica for the kitchen in an award-winning project.

"'Most people were asking, 'What is this surface?' Most people didn't even know it was Formica,'" Lander says.

It's also getting more popular with budget remodelers. And, green builders. The company has switched to non-toxic resins, and uses recycled paper. Just one more way Formica is clawing back a little more counter space.
Formica is a classic, no doubt. At a museum several years ago, I saw a familiar item in a display case: a piece of 1950s-era Formica in the classic "boomerang" style. Not long before, I had purchased an old home whose kitchen had last been remodeled in the 1950s, as far as I could tell -- and the wonderful aqua-blue boomerang Formica countertops were a vintage highlight, along with the copper-colored double wall oven.

Too bad I didn't keep them when I remodeled.

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"Like an Online Review on Steroids"

Remodelers luv Houzz. At least that's the sense from many of the remodelers I speak with.

(Ummm, what's Houzz? It's not too late to get on board. Here are two d5R articles providing an overview: Remodelers on Houzz: a "Case" Study. Also: Houzz Party, Remodelrrss Invited.)

This week the site has awarded its 2013 "Best of Houzz" awards to some of the many thousands of contractors that have profiles on the site. One winner is Renewal Design Build of Atlanta, which won two awards, for design and customer satisfaction. Here's a screenshot of the company's Houzz profile.

Peter Michelson, Renewal's CEO (and also featured in this d5R article about online reviews), sent me this email last evening:
In many ways these two awards are like an online review on steroids. It's Lance Armstrong in his prime! Now don't quote me out of context, but if you think about it, winning this award is a highly respected third party that is heavily followed saying:  "You guys rock!" So I am absolutely thrilled to have my amazing team recognized for their excellence in design, craftsmanship, and customer service. 

We have been using Houzz for at least two years.  We direct almost every one of our clients to the site to create and share an inspiration book.  This allows our designers to understand and appreciate our clients' sense of aesthetics.  Conversely, our designers also create inspiration books to share ideas with clients, to ensure during the design and selections process that we are all in alignment.

As a business owner, I am deeply awed and inspired by the brilliance of the Houzz.com site. They have monetized an idea that is a free service to both consumers and professionals. They have found a way to motivate thousands of builders and designers to spend large sums of money (we spend about $1,000/project) on gorgeous architectural photography, upload it to the sight, and remain engaged with the general public. I was at a Houzz event last month in ATL. The room was packed with designers and builders, all begging to offer high quality content to the site with the hopes of using it as lead generation. What they have created is profound.  Truly brilliant.
What about the rest of you, remodelers? Do you have a profile on Houzz?

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Tuesday, January 22, 2013

HVAC Mistakes and Other Home Performance Problems

"Heating and air conditioning contractors, like the rest of us, make mistakes. They make mistakes that hurt performance and efficiency of the HVAC systems they install and maintain. They make mistakes that hurt their customers sometimes. And they make mistakes that hurt their businesses."
Those opening lines exemplify the kind of writing that makes Energy Vanguard's Allison Bailes one of the best and most accessible thinkers in the home performance industry. Thankfully, he's also a prolific and generous sharer of his expertise. Here are his blog posts from the last month:

The 7 Biggest Mistakes That HVAC Contractors Make.

A Ventless Gas Fireplace is a Liability

and, for fun
What's the BTU Output of a Dragon -- a Furnace with Wings?

Read much more and sign up for the Energy Vanguard blog.

Today's Numbers: In Search of Skilled Construction Labor

Number of employees Bank of America shed between the end of 2011 and the end of 2012: 14,601

 Dogged by continuing problems after the mortgage collapse and subsequent $8.5 billion settlement over foreclosure abuses, Bank of America is whittling expenses -- and employees -- to shore up profitability. From the New York Times:
"For Bank of America and Citigroup, the recent mortgage settlements are a reminder of past mistakes. During the housing boom, Citigroup, like other Wall Street firms, sold to investors billions of dollars of securities backed by subprime mortgages that later hurt its balance sheet. Bank of America largely inherited its mortgage woes through Countrywide Financial, the subprime lending giant it bought in the depths of the financial crisis."

Estimated crowd at Barack Obama's second inauguration yesterday: 500,000 to 1 million

From Reuters:
"Obama's ceremonial swearing-in fell on the same day as the national holiday honoring slain civil rights leader Martin Luther King Jr. -- and the president embraced the symbolism.
"He took the oath with his hand on two Bibles -- one from President Abraham Lincoln, who ended slavery, and the other from King. Myrlie Evers-Williams, widow of slain civil rights figure Medgar Evers, was given the honor of delivering the invocation at the ceremony."

Number of construction jobs lost since housing peak: more than 2 million

Yet many housing markets around the country are experiencing a shortage of skilled workers. From NPR:
"'I have heard many reports from builders who say they can't hire enough people, they can't find subcontractors, they're unable to get the labor necessary to build homes that they do have on order — even at the low level of building that's occurring right now,' [NAHB chief economist David] Crowe says.

"...Decades ago, [Maret Brothers regional vice president Mike] Holland says, unions trained workers in the trades — skills like plumbing or electrical wiring. But now, companies typically rely on independent contractors — and the companies themselves are reluctant to invest in worker training. "

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Sticker Shock: Could Your Contract Have Avoided This?

It's probably the biggest source of disputes between homeowners and remodelers and also the issue that remodelers least enjoy discussing: the project's ultimate cost, and the reality that it's likely to range higher than the estimate.

From "It's In the Contract (if not, It Should Be)," January 12 d5R:
Set and monitor expectations about pricing

Temptation: You developed a strong and honest estimate. The client understands that actual prices may be higher.

Reality check: The client is shocked that your actual costs are that much higher than the estimate.

Solution: Add language specifying that the job will probably exceed the budget by at least 10 percent.
Attorney Andrea Goldman: "If I had a dime for the number of homeowners who have been shocked by the fact that their job exceeded their budget, I would be a rich woman. It is your job to educate your clients. Do not be coy. Tell them that more often than not, there are concealed conditions that will increase the cost of the project. Make sure they have a cushion built into their budget. I can't tell you how many homeowners are blatantly refusing to pay for change orders because they were unanticipated. Tell them verbally and in writing, and then tell them again."
How do you set and monitor expectations about pricing, remodelers? Read the full story here, and share your thoughts.

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High-Pressure Sales Pitches: You Mean They're Still Around?

On a research assignment during the remodeling go-go days, I observed some sales training for a large, high-volume remodeling company. I couldn't wait to leave the room. Though the sales methods were successful, as the company was (and is) a selling machine, I cringed not only for the fictional homeowners they were preparing to pitch to, but also for the salesmen (yes, they were all men) whose careers hinged on their ability to close the deals.

I thought of the Jack Lemmon character in Glengarry Glen Ross.

For better or worse, some contractors still specialize in high-pressure sales, though one would expect homeowners to be wary of the consequences of buying before they feel ready. Many, in fact, are. Check out this excerpt from an actual online review for a high-volume replacement contractor.
"The 'free estimate' took nearly 3.5 cumulative hours of my time over the course of 2 visits, employed greasy and predictable sales tactics to first create sticker shock and then slowly lower the price to something almost reasonable (but with the requirement that we had to decide on the spot, instilling a sense of very high pressure)... 

"...The whole thing is just so slimy.  I expect this kind of pitch from someone trying to sell me a timeshare, not someone trying to convince me to trust them to do construction on my house!"
Selling is critical to business success, and it is an honorable profession. But aggressive sales tactics can backfire in myriad ways, including when clients resent making hasty purchases and reputations are tainted by unsavory perceptions. What do you think of high-pressure sales tactics, remodelers? Would the industry be better off if nobody practiced them?

Or would very little get sold -- at least of some types of products?

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Monday, January 21, 2013

Today's Numbers: Homebuyers and Skylights Rising, Jobless Claims, Lobbyists

Home shoppers are on the prowl

From Saturday's Washington Post:
"There is growing evidence, anecdotal and statistical, that there are more shoppers on the prowl in many parts of the country than is customary this time of year, more people requesting "preapproval" letters from mortgage companies, more people visiting Web sites offering homes for sale.... Coldwell Banker, one of the largest brokerages in the country, says traffic to its listings Web site was up 38 percent during the past month.... ZipRealty... reports that its Web site has seen an unusual 33 percent increase in home shoppers in the first half of January compared with December."
Much more here.

Growth in residential skylights in 2012: up 6.5 percent

From the American Architectural Manufacturers Association and The Window & Door Manufacturers Association:
 "Residential skylights are expected to close the year at more than 900,000 units, a growth rate of 6.5 percent over the 2011 volume. New construction skylight activity has proven to be greater than expected at 23.3 percent, while remodeling and replacement skylight activity has fallen behind initial expectations at 2.9 percent growth."
More here.

Decrease in jobless claims, week before last: down by 37,000

Fewer Americans applied for jobless benefits in the week ending January 12 than in five years, according to Labor Department figures released Thursday. From Bloomberg:
"Fewer claims indicate businesses have grown comfortable with their current headcounts, a necessary development before hiring starts to pick up. At the same time, higher payroll taxes that shrink paychecks may prompt companies to hold the line on expanding headcount should Americans cut back on discretionary spending."

dept of curiosity: Number of D.C.-based lobbyists working for biotechnology firm: 74

From the Washington Post:
"Just weeks after pleading guilty in a major federal fraud cause, Amgen, the world's largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the 'fiscal cliff' bill that did not mention the company by name but strongly favored one of its drugs."

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Presidential Inaugural Addresses: Video Highlights

It's a big day here in Washington, D.C., and despite the rumors that some remodelers are less than thrilled by Barack Obama's presidency, surely most remodelers -- for the sake of their own businesses and communities -- support his efforts to steer the economy toward greater recovery in the next four years.

In the meantime, let's see how his second inaugural address today stands up to some others from the past 80 or so years. Here's a highlights reel from the Wall Street Journal:

Here's to four more years.

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5 Words That "Just Amped up the Delivery"

"This is how we work."

Here's an upbeat story to kick off the remodeling week. It's especially relevant if you think you're wasting your time with Twitter and other social media tools. Even more so if you're committed to thinking there's little you can do (other than slashing your prices to rock bottom) to get remodeling newbies to trust and hire you.
A Midwestern remodeler reports that he is "very, very close" to signing a $165,000 project of an old home in an upscale, historic neighborhood. The couple has never remodeled, "and they are very nervous," he says. "They called three of our past clients and also requested a walk-through of one of our projects."
During the walk-through (at another old home), the couple asked wisely about the "unforeseen changes" that often arise in old structures. "I saw this as a great opportunity to use these five words" the remodeler says. "I said, 'This is how we work' in the context of anticipating changes, performing thorough pre-construction planning and minimizing changes as much as possible.'"
The couple responded positively to that statement and everything that came with it. "I think it showed conviction," the remodeler muses. "I think just giving someone something to have confidence in gives them comfort. And the five-word statement just amped up the delivery."
So what's the Twitter connection? The couple was referred by an architect with whom the remodeler has been communicating on Twitter. "Score one for a great Twitter lead," the remodeler says. 
And the genesis of the five-word statement? From the talented Kyle Hunt, who provides marketing advice to remodelers. One of his recent emails recommended the "This is how we work" statement thus:
"Make it clear. Make it easy. Limit the options. Have it written out for them. This puts them at ease, makes their choice easier and converts more of your prospects to clients.
"Homeowners crave a PROCESS. Give it to them!"
Sign up for Kyle's email at his website. And follow his marketing tips on Twitter: http://twitter.com/KyleHunt.

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What Are You Really Thinking, Mr. and Mrs. Homeowner)?

Are you sure you want to do business with that homeowner, remodelers?

In his blog yesterday, Shawn McCadden provided a great list of questions to use in that first conversation with remodeling prospects. From revealing basic facts about the home and the prospect's timeline, to shedding light on how they might be as clients, the questions are helpful not only for identifying whether certain people are a good match for your business in the first place, but also for streamlining the sales and actual construction process that may follow.

On the list:
  • Why do you want this done?
  • Have you remodeled before? What was that like?
  • What are you looking for in a contractor?
  • Are you looking to hire a carpenter, or a professional remodeling company?
  • Are you speaking with any other contractors?
See the full list on Shawn McCadden's blog.

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Is Yelp Mostly Irrelevant to Remodelers?

Remodelers might come out smelling like roses or stinking like rot when they're reviewed on Yelp -- as on Angie's List or Kudzu or Google + or so many other sites where consumers can post reviews of businesses. Over at GuildQuality, Geoff Graham makes a compelling case for why Yelp isn't terribly relevant to the building and remodeling industry. Which is not to say that remodelers shouldn't be aware  of what's being said about them.
"... Yelp works well for prospective customers seeking feedback about businesses with a large volume of customers. Restaurants (their biggest market) may serve hundreds of people in a day. With a very large volume of customers, over time a business will attract a meaningful number of reviews on Yelp. This is good for customers, and it's also good (in the long run) for elevating professionalism in the restaurant industry. It shines a spotlight on great restaurants, and makes it tougher for less-than-great ones to attract customers."
"...Yelp, Google, Angie's List, and others all face the same problem: the way they gather information and communicate quality is inherently biased in favor of businesses with large volumes of customers and against those with small volumes of customers." 
Read the rest of Geoff's post here.

In the meantime, we at d5R have covered online reviews a number of times, most recently tracking the story of a DC-area remodeler who sued a client for posting inflammatory reviews. (See that thread here.) And on Wednesday, we'll publish a big story about the potential hazards of online reviews: how to get good reviews, how to avoid negative reviews, and how to mitigate the damage of negative reviews when and if they happen.

If you'd like to share your experience in avoiding and mitigating damaging reviews, post a comment below, or email me: leah@daily5REMODEL.com.

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Wednesday, January 16, 2013

Kitchen Design Trends: #kbtribechat gleanings

If you're not on Twitter you probably don't know #kbtribechat, a popular virtual round-robin that brings together kitchen design enthusiasts for online conversations 140 characters at a time. There was a #kbtribechat Wednesday about "learning from automotive design," but I think remodelers would enjoy more the previous chat from last week, which covered kitchen trends for 2013.

Since there are hundreds of tweets, many of them verbatim repeats (retweets) of others and many others along the lines of "Hi!" and "Welcome!", I've culled some of the meatier ones for you.

The opening question:

Some responses:

Which prompted this question:

Some responses:



And this is only 12 minutes into the chat, which went on for hundreds more tweets. See the full thread here.

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