You’ve made your checklist, you’ve prioritized and now you’re driving down strange side streets. Then you see it, the community of your dreams. You walk through the model, and it’s just perfect, from the darling little boy’s room upstairs to the media room nicely tucked away from the traffic flow.
This is not exactly serendipity. They’ve been expecting you.
The model has been carefully planned and decorated to appeal to your I-gotta-have-it emotions. As a window into the entire community, the model represents the culmination of a long process that sometimes begins long before the builder even closes on the land.
Well-designed models are a lot more than good decorating; they reveal how well the builder read his market. The builder’s fundamental first decisions revolve around what type of housing to build–the size, price range, number of bedrooms and bathrooms, etc.
Some builders rely more heavily on their own intuition and experience. But virtually all use sophisticated market research to define and refine their target market and develop buyer profiles.
“We’re starting the buyer profile first, before we even plan the home,” said Pam Schawel, regional sales manager of Lexington Homes. “Deciding your target is key.”
The market research will tell the builder who to target (young professionals, empty nesters or young families, for example), their spending habits, and what they want in a home (such as an office or two-car garage.)
To come up with the perfect model or the ideal mix of homes for a community, the company creates detailed buyer profiles with the help of demographic and psychographic analysis, said Ed Fitch, vice president of marketing of Town & Country Homes.
That translates into mythical people, with mythical ages, jobs and more. The builder then presents the profiles, one for each model, to the design team, which decorates the home to suit the profile. “It’s kind of like creating TV families,” Fitch added.
The builder has done the job right, he said, “if (the buyers) immediately see it as not just a house but a home where people live,” he said. “The next step is seeing themselves living there.”
In the best circumstance, the builder perfectly anticipates the buyer and sells out the project faster, thereby maximizing profit.
“We look at ourselves as a retail operation,” explained Christopher Shaxted, vice president of marketing and product development for Cambridge Homes and Lexington Homes. “The store for us is our models.”
The cost of building a model is relatively minor for a builder whose greatest costs are tied in with land development. Most builders see models as an essential expense for a successful community. Decisions on how many homes to model, as well as which floor plans and elevations to show are keyed to anticipated sales.
“Models are typically picked by looking at what might be the best product you’ve got by your consumer information, your market research. . . . You want to hit the most people with your models,” Shaxted said.
The builder wants to show in three-dimension as much as possible. While the company won’t be able to show every single elevation, or exterior design, for example, the models can at least show the materials that will be used, Fitch said.
Sometimes a builder will choose to model a floor plan because it’s difficult to understand from blueprints, Shaxted said. A less-expensive option, he noted, is to show prospective buyers houses being built on –without a buyer, but certainly for sale–or those being built for another customer. These houses typically aren’t decorated. As they’re sold, prospective buyers would be shown other houses under construction, and no pure models–kept off the market until the subdivision nears sellout–would be built.
Shaxted’s rule of thumb for determining how many models to build is to assume 20 sales per model. “So if I’m budgeting or predicting 60 units in a community to be sold annually, I will say that community warrants three models.”
Each of those models should offer the buyer something different, as measured by price, size, layout and target, Shaxted added. “If somebody comes in the home and says, `Gee, this is almost what I want, but the kitchen’s just too small,’ you’ve got the ability to move them to the next model to offset that objection,” he explained.
“You try to cast as broad a net into the marketplace as you can,” agreed Fitch.
So highly does Town & Country view the power of the model that last year it discontinued its policy of opening communities with a sales office in a trailer.
The builder opened out of a trailer at Sumner Glen in Lake in the Hills last July and, after selling 10 units from blueprints, closed it three weeks later. The first model was scheduled to open in mid-February.
“We were selling very well,” Fitch said, but “we decided that wasn’t the way we wanted to go to market.”
Waiting for a model to open increases a builder’s carrying costs, but avoids discounted preconstruction pricing, Fitch continued.
Also, he said, people typically choose more options from a model. And the community tends to sell faster once models are open, so what a builder may lose up front is made up at the end, he said.
A major reason to build models is to allow buyers to see what they’re getting and avoid unhappiness later, Fitch said.
Sometimes a person who bought a house based on blueprints sees the finished house and says, “I didn’t think it was going to be like that,” Fitch said.
And, in fact, the house may be somewhat different from what the blueprint showed, because oftentimes a house will undergo modifications during construction to improve its market face, he noted.
“With models you have a much better opportunity to have a satisfied customer,” he said.
Like most builders, Cambridge, which bought Lexington Homes last year, has several fail-safes in place in order to maximize its model profile. The company builds prototypes, then takes a team of designers, architects and previous home buyers through several walk-throughs to detect possible problems.
Some mistakes may not be obvious in a blueprint, but pop out in three dimensions: ceiling heights, such as dropped headers that unintentionally divide a hallway, for example.
Views can be another problem, Shaxted said. If you walk in the front door and you’re looking right at the kitchen sink, the design is unappealing. Not too many buyers will forgive that kind of mistake.
“Furniture layout is critical,” said Brian Harris, president of Westview Homes, in Gurnee, noting a key point his company looks for during walk-throughs. “If we put doorways or windows in the wrong spot (making furniture placement difficult), it can destroy a room.”
While most builders say a good model is critical to merchandising their communities, selling from blueprints has its advantages, too.
“Sometimes you can sell more from blueprints than you can sell from models because you can sell blue sky,” said Eugene Corley, president of American Heritage Prime Real Estate Corp., of Northbrook. Buyers have their choice of lots, for example, he said.
Corley, however, takes great care with his models, spending an average of $50,000 to decorate each one. “There are also the people who cannot visualize anything,” he added. “They have to see a finished product.”
But, as with any business, demand has a lot to do with a builder’s decision to put up models.
In high-demand areas, buyers may be so eager to lock in a site they won’t wait for models to open.
Consider Optima Inc., a builder that specializes in building where land is scarce. An Optima community can be 40 percent sold before a model even appears, said Kate Lane Ferraro, a sales consultant.
Optima’s latest development, HedgeRow, is a 40-unit development in Winnetka targeted to the empty-nester. The units are selling quickly from blueprints, she said, noting pent-up demand for Winnetka. The village hasn’t seen a new multi-family development in more than a decade, she explained.
Prospective buyers browse in two dimensions at Optima’s Glencoe office, where they can speak directly to its architects, said David Hovey, president of the company and an architect himself.
“Buyers can see the architects working,” he said. “They also have the chance to customize.”
While HedgeRow is selling rapidly now without a model, Hovey, who personally oversees the decorating of all Optima models, considers models critical to selling a community.
A model “sparks people’s imaginations as to what the possibilities are in a certain kind of space.”
