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Using the Cost vs Value Report to educate homeowners on budget/cost

Posted by Mark Paskell on Sat, Jan 18, 2014 @ 09:52 PM

The 2014 Cost vs Value Report is out and can be a valuable tool to educate homeowners on what they should budget for various types of remodeling projects. As you know most consumers are reluctant to share their project budget with the contractor out of fear that the number they share may be the price they are charged. You the remodeler or home improvement contractor want to make sure that you don't waste time with a homeowner who doesn't have a realistic budget.
Showing them the average cost of projects in their area using a third party neutral resource such as the Cost vs Value Report can break the ice and get the budget out on the table. 
The 2014 report shows that remodeling is very strong in many markets across the nation and the ROI for most projects is higher than the past few years. 
Cost Vs. Value Logo
Some notable trends include high ROI for Attic Conversions, Finished Basements, Baths and Kitchens. Exterior replacement projects roofing, siding, windows, front doors and decks are also showing very good ROI. Home improvements that take advantage of the existing space and are within the existing footprint are more advantageous than building additions.
How to use the Cost vs Value Report with your prospects and stop wasting time with homeowners who have unrealistic budgets.

Setting the stage; the homeowner has called and wants you to come out to look at a bathroom project. You or your office manager talks to the homeowner and writes down the pertinent information on your company lead form or client intake sheet. You set the appointment and run the lead. You spend the first 10-20 minutes getting to know them before you segway into discussing the project.
You use your Needs Assessment Questionnaire that has important questions on it to ask them what they want.

One of the questions is;

"have you established a set aside target budget range for your project"

Whatever the homeowner says it is likely a mislead or not the true budget. Often time they may say I have no idea that's why we called you. (Rest assured most homeowners know what their budget is)  

Preparing your cost vs value report support package to be shared with the homeowner

  1. Locate the Cost vs Value report for the Region and then major city near you.
  2. Download the PDF report for that city and save it to your computer and your tablet if you use one.
  3. Read and Study the projects that line up with the projects you normally focus on. This study should include knowing the scope of work and the average cost published in the report. If you do kitchens and baths study those projects in both the Mid-Range and Upscale Reports.
  4. Compare these projects scope and average costs to your projects. I would recommend pricing up these projects on your estimating program as a hypothetical projects. Then you will know where you are in comparison. (Check out our Estimating Workshop on 2/28/2014) 
  5. Print off the entire report for your city and insert into plastic sleeves and place it into a thin 3 ring binder. This can be used to show the homeowner when you are with them in person. 
Now that you have the prepared the report, study the projects and average costs and priced up these project types on your estimating program you are ready to broach the budget topic with the homeowner.
Word tracks
Let's say the homeowner says "I have know idea what the cost is or what we should budget, that's why we called you". 
You can say "no problem let's take a look at the most recent Cost vs Value Report for bathroom projects in Boston, Ma.(or a city near you)
You would explain that "this report is considered the Consumer Report for Remodeling in the United States for over 12 years. It is based upon the average costs obtained from professional remodeling companies in over 100 metropolitan areas. In addition the report includes the Return on Investment for each project. This information is obtained from Professional Realtors.
It is important to explain that the average cost numbers come from Professional Remodelers and Home Improvement Contractors, not Chuck in a Truck, Bubba, Mr./Mrs. Illegal Immigrant, Joe Contractor or your local Town/City municipal worker. And the ROI is based on real munbers from the real estate industry. 

Now knowing your numbers and how you compare with the averages in the report for similar projects you should have enough information to know the range that will work for you. Once they see the average budgets in the report for their area then you ask them how that compares to their set aside target budget range. At this point they should share the budget range they are shooting for. If their stated budget is way off the averages it may mean they are not a fit on that project for you. If they are sincere and they are let's say only willing to invest half of the amount needed you can end it there. 

Or if you are willing to persevere you can ask two questions

" could you see yourself increasing your target budget range for this project?"

or "would you like to discuss some other options that fit your target budget range?"

We have been teaching our clients to use the Cost vs Value Report for several years now and they say it is a great way to get the budget out on the table. Once you find out the homeowner doesn't have a realistic budget for their project you can move on and save yourself and the prospect valuable time. If you need help on how to use the Cost vs Value Report in your sales process Contact Me

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