I’m reminded this morning about the value of our professional relationships. On Saturday afternoon, our well pump puked out. No water- no showers and no flushing and an almost full complement of kids at home. A call to our water- drilling sub (quick shout out to Jim Ayers at Ayers drilling http://ayerswelldrilling.com/ ) and within 12 hours a new pump was working to keep the kids fresh and flushed. The quick response from Jim is testament to the relationships that professional contractors running efficient companies foster over a long period of years. I’ve had Jim respond equally fast for our customers-and it’s because we’ve placed a high premium on the value of our trade relationships over the years. Without our trade partners, we can’t build anything! So, we’ve always place a high premium on listening to them, making sure that jobs are ready when we say they will be and that pay schedules are kept to so that everyone’s work is rewarded the way it should be. This doesn’t mean that our pricing on services is always the cheapest-but it means that we have a large cadre of seasoned and skilled professionals to call on whenever our customers need something. Even a well pump at 8:00 Sunday morning! What is that kind of piece of mind worth??
I was reminded again about the eternal debate in our business about cost vs. value. Working with a new client is always tough- most people have no feel for what anything should cost when it’s a one-off, hand built item like a new chimney or a family room built in. This encourages them to try to get competitive or comparable quotes, which, because there is no common drawing or playbook, is impossible. So, we recently quoted a chimney repair that requires the complete dismantling of the existing chimney, and rebuilding it including re-flashing it and repairing the roof around it. Our quote was for several thousand dollars- we anticipate at least a week of work with set-up of safety scaffolding and cleanup. The competitive quote was for $400!! So I asked the client if they were comfortable that the company that quoted $400 could really perform the repairs necessary for that amount-the answer was no. So, then I asked, what did you learn by getting that competitive quote? The answer? Nothing, really.
I’m convinced that the urge to search out “quotes” in this business is really a reaction to having no knowledge of what it takes to accomplish a given project, and so people try to latch on to the only thing they do know about it-and that is the cost. But, given the example above, do those numbers really give the client an indication about the VALUE they are purchasing?? What kind of people are you agreeing to do business with? Since everything in our business is custom made by hand, isn’t the most important thing you are purchasing the people? Sure, with Home Depot or Lowes anyone can buy the stuff to complete these kinds of projects, but it takes years of knowledge to really know how to install these things properly. The value, then, is in the service, not the stuff-This photo is of a chimney that we had to tear down- flashing was all wrong, the wash was all wrong, and the roof flashing was never installed. Note the bleeding down the stone and flashing from water running down the inside of the structure- yuck!!
This has been the week for hearing about the wrong contractor. We’ve been asked over and over this week to fix things that were already built or finished, but either built to wrong specs or finished with the wrong material. And, once we’ve determined the cost of repairing these unfortunate buildings, the client has remarked about the “extra” cost of the repair (when compared, I guess, to what the shoddy work cost)! So, not only are we performing the same general service as the prior contractor, before we do, we have to undo everything that the other guys did before we even get started-how can that ever be cost effective?? I’ve learned that when we build anything there is one chance to do everything the right way and be efficient- once mistakes are made everything gets harder and slower to move forward. That first chance to get things right is critical- and when we have to first undo something to get back to the beginning, that generally takes a lot of time and effort-there’s often something built in our way, or on top or underneath that needs to be protected or redone once our re-hash of the original job is performed. So, when I am asked why fixing a lot of these things is so costly, I often remind people about the adage- if you think hiring a professional is expensive, try hiring an amateur first!
A slew of recent articles have been focusing on the financial make-up of home-buyers in the last quarter. Over 40% of home sales were to cash buyers. http://www.cnbc.com/id/101654929#_gus That is a whoppingly huge number, by any measurement, and it points to a few things that make this housing recovery feel so different. And, what truly makes that number so freakish is it isn’t representing a lot of institutional buying- which has been going on for the last year (Wall Street Banks and hedge funds have been swooping up foreclosures from coast to coast by the thousands using Other People’s Money)-but has lately been tapering off as the deals have been getting more scarce. No, this represents something different, and is due to a few factors which might represent a structural change in the home-ownership equation in the US. First, I think that a lot of people were burned by their banks when those supposedly friendly banks called and cancelled home equity lines in 2008 and 2009. What were supposedly rock-solid loans and relationships were cast aside and cut apart- severing any type of positive feel people had for their banks and bankers. And, now in the aftermath, the lending requirements, paperwork, and regulations are so burdensome, many of us would choose to just leave banks out of our business all together.
Secondly, I think that there is a systemic fear of the future, which translates into a reluctance to borrow money stretching out into that future. Those of us fortunate enough to have owned a home have some basic grasps of economics- and a country that owes over $17Trillion sounds like a risky place to be. The stock market being at an all time high should be making people feel more secure-instead, it seems to make us all look at the horizon, waiting for another shoe to drop. Still, with super-low interest rates, amazing home-owning opportunities are still out there. A decade from now, I have a feeling we’ll be looking back and, for those that took advantage of these low interest rates, we’ll be thankful that we were courageous when others were fearful- just like Warren Buffet advises. And, for the lucky few that we build for, they’ll be enjoying their homes that we built for them well into that future.
I recently was made aware of a conversation that a local Realtor had with someone I know that had to do with a remodeling project she was doing at her home. She felt trapped- the people that were working at her house, rather than inspiring trust and confidence, made her want to stay home whenever they were there “I’m not going to leave them alone in my house!” If I could have, I would have asked the client why in the world she would hire people that she doesn’t trust-especially to do expensive things that involve ripping up her house!? But, I think I already know the answer- price and ignorance. Picking a contractor is no different than hiring anyone else- you want to be careful. Most consumer complaints filed in the Ohio State Attorney Generals office have to do with Home Improvement contractors. As well they should- since most people decide these things based on price. How many of you have thought, well, I’ll get 3 bids and take the middle one as a way to select your contractor? Do any of those bids tell you about whether you and the contractor are aligned in what he is going to deliver for the amount you are planning on paying? Do they tell you whether he has great trade relationships with real pros? Or how much emphasis he really puts on you having a good experience? What is a “bid” really? Is there a locked in, no questions left, specification book that they are attaching the price to? Almost never. So, a bid is often a contractor’s guess as to what amount of money will get him in the door, so then he can start filling out change order requests. There aren’t that many places to buy building materials, and most of them are priced within very narrow ranges, so differences in price are often differences in what a given contractor is planning on delivering to you. Quality of material, quality of labor, speed, or all three. Rule one of almost everything- there is ALWAYS something/someone cheaper-whether you want the service that implies is up to you-don’t say you haven’t been warned!