Your prospective home buyer is excited about having you build their new home….until they find out that buying a new home from you is more than they want to spend. That’s not that unusual. What is unusual is that you have spent a lot of time, effort and money investing in a “Green” home building business and can’t sell houses!
After they turn you down, they go down the street and buy their new home from another builder that says he’s a “Green” builder also. So what’s the difference?
Even though prospective home buyers want the benefits of new, more efficient homes, they are unwilling to pay much of a premium for a “green” home, according to a recent survey of NAHB members.
Viking Carrier
PFS Corporation
Mariotti Building Products
“Although we are seeing significant interest in green building, cost effectiveness is clearly a key concern among home buyers,” said NAHB Chairman Joe Robson. “Builders said that among buyers who are willing to pay more for green features, more than half — 57% — are unlikely to pay more than an additional 2%.”
It’s called the “2% Green Ceiling” by many builders.
Many “Green” builders use the approach that buying from them is a privilege. The buyer should want, no demand, that they own a green home. These builders put out a huge menu of green options and then try to persuade the buyer to buy into it.
If the builder is into a lot of green innovations, the cost of building green with them can quickly add 5 – 10- 25% to the cost of a home. And you know what that means to those 57% of home buyers….NO SALE!
A better way to approach this would be to include many green products and benefits into your base price as possible without raising your costs too high. Then inform the buyers what is superior about your homes and if they want to upgrade, remember to keep the green options about 2% of the total price.
Builders can talk for hours about how modular construction is green from the very beginning of the process. Talk about less waste, builder trips to the jobsite delivering supplies and worker trips, less garbage at the jobsite, better quality control of things that effect energy costs and many other small things that DON’T COST THE BUILDER A PENNY!
A lot of modular manufacturers are taking the necessary steps on the factory floor to ensure a good Energy Star rating and most are at very little additional cost to the builder. Another bragging point!
If 57% of the new home buyers only wanted to spend 2% of the cost of the home for green upgrades, make sure that these have proven benefits.
Let the California Architects build homes for the Ed Begley, Jr types; you have to build for the average buyer. $300 a sq ft works for a few buyers that have to have the best green house in the development, but your $125 sq ft houses will fill all the lots in the rest of it!
Don’t forget to order those personalized brass plaques telling everyone that visits the buyer’s house that it meets green expectations. The $300 sq ft architect houses don’t need them because they already have the silliest looking houses there.
One Response
This NAHB "study" is particularly troublesome since they won't release any of the data that led to their "findings". Ron Jones, on the board there for many years, questioned the data, and NAHB – our non-profit builders' advocate – refused to give up the goods. Their claim for doing so was embarrassing.
Reminds me of Detroit… blow smoke about how consumers don't want small cars, and then promptly lose their asses to every econobox and hybrid manufacturer out there when the we enter a recession (and oil & energy skyrocket).
YES THIS STUDY IS QUESTIONABLE AT BEST.