What Is the Remodeling Cost Disconnect?
While many elements in the remodeling space are changing quickly, there is one change that’s important to nip in the bud.
Many homeowners think that remodeling costs will go down. Every remodeler believes the cost of a remodeling project will go up.
Wow … this is huge.
While it varies across regions, we have seen some decrease in leads over the last month. There are many factors. These include homeowners getting out of Covid-jail, travel plans, and reconnecting with friends and family. Yet there is one other that may be even more significant.
Clients Believe Remodeling Costs Will Go Down
Recently, I informally surveyed remodelers with two questions. 1) Do your prospects think the cost of their remodeling project will go down over the next six to 12 months? 2) Do you believe the cost of remodeling projects will go down over the next six to 12 months?
About 50% of homeowners think the cost will go down compared to only 1% of the remodelers. In fact, 99% of the remodelers believe that costs will rise.
So why is this important?
When investors think the stock market is going down are they lining up to invest? No. If you think there will be an abundance of paper towels in the store, is it time to stock up? No again.
This misconception is understandable with the media making such a big deal on the lumber increase and the cost of electrical wire skyrocketing. What they do not publish is the rising cost of labor, or trade contractors going up, or even just the cost of making job sites safer.
Over the last five years, we have seen remodeling project rise 12% to 18% annually and there is no reason that will not continue. As a remodeling expert it is your job to educate and break down homeowner misconceptions.
A few tips
- Use facts not your feelings. Discuss the costs of a carpenter or plumber going up and then compare the $5K in increases vs the $1k in commodities (lumber) going down. The numbers do not lie.
- Communicate the three “Es.” It is important to stay on this theme: Easy, Early and Every time. Make it Easy for them to comprehend it. Do it Early in the sales process. And discuss it Every time.
- Training. Everyone in your business (marketing, sales, and production) should deliver a consistent message.
I know when you have a backlog of projects this may not seem like top priority. However, the difference between a good and great business is how forward-thinking they are. A great one proactively leads prospects rather than just reacting to market conditions.
