Large home builders are called “national” builders for a reason. They’re big and they’re everywhere – probably in your market, too. Even if they’re not competing with you directly, they’re likely competing with you indirectly in one form or another.
If you’re a smaller builder, that can be daunting. But competition is good. It’s healthy. It can bring out the best in those who embrace it. It even has some advantages.
Sure, big builders have big reach and big resources. You may not have either of those aces, but you have plenty of other cards to play. You can use them to not only compete, but to win your share of the pot. Here’s how:
Feed off their traffic.
They say all publicity is good publicity. The same goes for traffic, at least when it comes to selling homes.
Your national competitors are spending big bucks on marketing initiatives and advertising to drive prospective buyers to their markets. Once they’re in the market, those buyers tend to look around a bit, and that means shopping other nearby builders –- like you. That’s a nice opportunity they’ve created for you, and it hasn’t cost you a dime.
If a large builder drives 100 units of traffic to their community in a week, for example, it’s unlikely they’re going to sell 100 homes. If 20 of those happen to pop into your model, too, and you can sell to three or four, that’s money won.
When big competitors deliver prospective buyers to your door, you need to be ready. You also need to show them something they didn’t see in the last model they toured. Something different and truly unique.
Whether it’s an approach, a design feature, an upgrade option or something else, you need to be appealing and memorable in a way the bigger builders can’t. In other words, you need to find your niche.
The best way to do that is to understand your market and your buyer better than the competition does, and then deliver a product that speaks to their needs. Being “not them” is the best thing you’ve got going for you. Make sure your buyer sees and understands what makes you you.
Think value, not price.
Your big-builder competitors are all about volume. They buy land in bulk, have purchasing power with suppliers and contractors you can’t match, and have dialed-in systems and processes that can make them pretty economical. That means you probably can’t beat them on direct cost – so don’t. Beat them on value instead.
Not every shopper is a lowest-price buyer. For many, it’s about having the right location, the right design and the right features. And while they may prefer the lowest price, they’re just fine paying a competitive price, as long as they get the house and community that best meets their needs.
Know your buyers. Many value value more than price, and so should you.
Buyers want what they want, and everything you can do to deliver it to them is a competitive advantage. Oftentimes that means being more flexible than the other guy.
For smaller builders, especially those in the age-restricted market, for example, there’s a big group of buyers who are transitioning from a custom home. They liked the layout, the features and the finishes. They don’t want to give those things up when they downsize.
Big builders, with a restricted set of floor plans, and limited choice and finish options, can’t cater to every buyer. But you can. With a few personal accommodations and enough flexibility to give them what they want, you might just earn their business.
Competitive markets drive innovation, and homebuilding is no different. The more competition there is in your market, the more you need to be doing things better, smarter and faster.
That’s actually an advantage for smaller local and regional builders. Once national builders have a solution that works, they tend to stick with it. It’s the “if it isn’t broken, don’t fix it” mentality. That complacency presents an opportunity to find the gaps they’re not filling and fill them. If you can, you won’t have to compete on price per square foot because you’ll have moved the market instead.
If you haven’t noticed, “local” is having a moment at the moment. People like the idea of buying locally sourced products and doing business with people in their communities. Some companies center their entire marketing strategy around it.
You don’t necessarily have to go all-in on local, but if buying from homegrown companies is something people value in your market, make sure they know who the local builder is – and who’s from out of town.
Sometimes less really is more. And that’s something that, as a smaller builder, you can exploit.
For example, many of the big master-planned developments are based around golf courses. That’s great for golfers, but not necessarily for those who’ve decided to downsize their lifestyle along with their home. They’ve just moved from one of those communities and they’re ready for a little less. Less noise and traffic, fewer streets and lower costs. You might have just the right size community they’re looking for.
To a lot of buyers, community means more than a collection of homes, – it means people. Especially when it comes to the age-restricted market. These buyers want to know their neighbors. They want to stop for a chat while they’re out walking. They want to start a pick-up game at the pickleball courts.
As a smaller builder, that sense of community is something you can create. The bigger-is-better builders can only simulate it. Marketing that difference is a way to capture more of their share of the market.
There’s another advantage to being smaller. Smaller builders are nimbler and therefore can be more responsive. Giving buyers your full attention can result in not only the sale, but loyalty for the long term.
If your client asks to change the location of a door opening in their bedroom, you might be willing and able to do it. Bigger builders can’t and won’t. That’s because 700 special requests are a lot more to manage than seven. And because you have those advantages in size and commitment, you can be responsive to a degree they just can’t. That’s attractive. So is having the builder’s personal email address and cell phone number, which is something the big guys won’t give out.
Keep it clean.
Another differentiator that seems like a small thing, but can turn out to be big, is presentation. As a smaller builder who can exercise greater control over your community, you can make sure things like the cleanliness and orderliness of the site get the proper attention.
There are prospective buyers touring your community all the time. You may not see them, and they may not look like buyers because they’re just driving by, but the impression they get is important. If they see overgrown weeds, disorganized piles of materials and overflowing trash bins, they’ll make a judgment about your company and your community – whether it’s fair or not.
Don’t give your competitors an edge in the first-impression department. Keep everything outside your sales center as tidy as the inside so buyers will want to stop in and stay a while.
The best way to take on something big is to band together. It’s something franchise builders do every day to compete with their national counterparts.
Small-builder franchisees from across the country combine their expertise and buying power to flatten out steep learning curves. They also share and implement best practices that can make taking on big competitors a lot less daunting. If you’re thinking about how to get a leg up in your market, teaming up with a franchisor might be the path to beating them.
You have every opportunity to compete with the national builders in your market –– they’re even helping you do it. You just need to find the gaps between your offerings and theirs, and then exploit them. You don’t have to have stacks of cash to do it, either. All you need to get started are some great ideas and a lot of tenacity. Of course, if you follow that formula, you may not be a small builder for long!
Competition is just one challenge home builders face. Download the guide “10 Challenges Home Builders Face” to learn more about how to overcome each one.