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'20 Club' Members Advise Builder to Eliminate Surprises, Front Load Selections Process

They recommended that he front load as much of the process as possible by having customers complete all selections before trade contractors bid on building their home plans.

NAHB’s 20 Clubs are a networking and educational opportunity for builders or remodelers from non-competing markets. Acting almost as each others’ “boards of directors,” the individual members of 20 Clubs meet several times a year to share their wisdom and learn from each other about ways to improve their operations and increase their bottom lines. They share and compare financial information, look for trouble spots and offer each other advice on how to increase their profit ratios and improve their performance.

In Thompson’s case, his fellow club members helped him take many of the wrinkles out of his selection process. “We’re trying to get away from the surprises and extras that people might not expect in the home building process,” said Thompson.

Before changing the process, On the Level collected a $5,000 deposit from customers. Now, because it puts much more work into the process before construction begins, the company collects a deposit of $25,000. The money is credited towards the purchase price once construction is underway. Thompson keeps the deposit only if a prospect has his plan built by another builder. On the Level retains the copyright and grants one-time rights to use the design.

At first, Thompson thought the new process might scare customers away because of the substantial deposit required. “So far, the response has been great,” he said. “People understand and like the idea of knowing what the final price will be up front. There are no allowances at all, if possible. And no surprises, either.” To date, no one has ever balked at paying the deposit.

Thompson is realizing other benefits from the selections changes as well. “It makes the pricing more accurate,” he said. “And I think we get better prices from trade contractors and suppliers.” It also cuts down on paperwork, since the new procedures practically eliminate changes in the field. With advice from his 20 Club members, Thompson installed a process in which everybody wins.

To learn more about NAHB’s 20 Club Program, click here or contact Cheryl Fortin, director of networking programs, at 800-368-5242 x8110.

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