THE APPLIANCE VALUE PROPOSITION FOR SINGLE-FAMILY AND … · 2016-09-02 · the value proposition for potential buyers. Consumers will often judge the value of a home by the quality

THE APPLIANCE VALUE PROPOSITION FOR SINGLE-FAMILY AND MULTI-FAMILY HOMEBUILDERS

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INTRODUCTION

Appliances may account for only a tiny fraction of a developer’s budget, but they represent a much larger piece of the value proposition for potential buyers. Consumers will often judge the value of a home by the quality of the appliances—whether that’s a state-of-the-art stainless steel French door refrigerator, a high-efficiency front-load washer and dryer or a super-quiet Energy Star-rated dishwasher. Appliances typically are a key indicator as to whether or not homebuyers feel a home is well-built and will meet their expectations.

Savvy builders will leverage this perception to add value to their properties, putting thought into the appliance selection. This helps to increase the perceived home value and avoid problems that could result in missing deadlines and exceeding the projected budget. When it comes to appliances, it’s all about planning ahead.

“Appliances are one of the last things to go into the building, when the project site is chaotic and schedules are compressed,” says Geoff Baird, divisional vice president of Sears Commercial in Hoffman Estates, Illinois. “If builders don’t make appliances part of the plan, this piece of the project, which represents 1% of the budget, can cause 20% of the pain.”

This special report from Sears Commercial explores the critical points in the project lifecycle, when builders need to make decisions about appliances, where they can find information on the best models and deals for their project, and the questions they need to ask their vendor to avoid costly mistakes and secure the best value for their appliance dollar.

BUILDERS MAY SPEND ONLY 1% OF THEIR BUDGET ON APPLIANCES—BUT IF THEY CHOOSE THE WRONG VENDOR, IT CAUSES HUGE PROBLEMS ON THE JOB SITE. LEARN HOW TO CHOOSE THE RIGHT APPLIANCES, GET THE BEST PRICE AND HAVE EVERYTHING INSTALLED WHEN YOU NEED IT.

“APPLIANCES ARE ONE OF THE LAST THINGS TO GO INTO THE BUILDING, WHEN THE PROJECT SITE IS CHAOTIC AND SCHEDULES ARE COMPRESSED. IF BUILDERS DON’T MAKE APPLIANCES PART OF THE PLAN, THIS PIECE OF THE PROJECT, WHICH REPRESENTS 1% OF THE BUDGET, CAN CAUSE 20% OF THE PAIN.” –GEOFF BAIRD, DIVISIONAL VICE PRESIDENT, SEARS COMMERCIAL

WE TAKE THE COMPLEXITY OUT

Complexity Brand Products SupplyChain

Support

Quality

Reliability

Design Delivery Ordering

Billing

Repair & Parts

Availability

Vendor Management

Account Management

Product Selection

Trust

Pricing InstallationHomebuyer Preference


GOOD NEWS FOR BUILDERS

After a recession that was especially devastating for builders, an economic uptick appears to be on the horizon. Across the country, builders of single-family and multi-family homes are breaking ground once again, planning new developments and custom projects for families who have been waiting years to make the next big move.

“Rising home prices, historically low mortgage rates and significant pent-up demand will drive a continuing, gradual recovery in the year ahead,” states National Association of Home Builders (NAHB) chief economist David Crowe in a release.

The January 2014 NAHB/Wells Fargo Housing Market Index (HMI) shows builder confidence in the market for newly built single-family homes is now 56. (A score of 50 means half of builders feel good about the industry. To put that number in perspective, in July 2010, the HMI was just 14.)

QUESTIONS TO ASK YOUR APPLIANCE VENDOR

To ensure your account manager knows exactly what you need, ask the following questions:

What do you need from me to make this project a success? A good vendor understands the key points in the project lifecycle that involve appliance decision-making, and will ask questions about your budget, your target buyer and your project schedule before giving you an answer, says Geoff Baird, divisional vice president of Sears Commercial.

Will these same appliances/features/colors be available in two years if I need to replace them? Your sales rep should know whether a line is going out of production and be able to talk about whether a certain feature is trendy now but has no staying power.

Am I choosing models that are well rated? Your rep should offer a variety of brands and features, and be able to compare them in terms of quality, reliability, customer service and price. Sears Commercial, for example, offers a range of top-rated Kenmore appliances and other brands in numerous styles and price categories, with a variety of Energy Star-rated products to choose from. Clients can also take advantage of the Sears Commercial Appliance Select Plus program, which allows homebuyers to customize their appliance package to fit their budget and lifestyle.

Are there any discounts that can help me lower my cost? Utility companies and federal and local government agencies regularly offer rebates and

incentives for buying energy-efficient appliances. Sears Commercial account managers are educated about these offers, so you can be confident you are getting the best deal.

What does my target audience look for in an appliance? Sears Commercial won’t just give you a sales pitch for a specific model or brand; it will provide data from independent sources, such as the National Association of Home Builders and J.D. Power, on what consumers in different age groups, income brackets and regions look for in an appliance.

Can you meet my schedule, and if my schedule changes, can you adapt? If you’ve got a small project involving a few basic appliances, search for a vendor that can accommodate delivery times with a few days’ notice. Keep in mind, however, that on larger projects or for custom orders, there are situations that can make a mess of your plans. For example: Does your delivery date coincide with Black Friday, or the weekend that millions of college students move into new dorms? Do you need staggered installation to align with other subcontractors on the site? Will there be road construction that makes it impossible to access the job site? You want a vendor who understands the risks across the supply chain and can be flexible when need be. Because Sears Commercial can take advantage of its massive global supply chain and network of appliance centers across the country, it is able to offer incredible speed and flexibility to its clients.


The upward trend in the marketplace reveals that a recovery in the real estate sector is underway, giving builders more confidence in the industry. But competition is still fierce, and builders need to keep a tight rein on their budgets while delivering homes that thrill buyers without breaking the bank.

One of the best ways to deliver that wow factor is to think about appliance specs in the early development stages, which helps ensure that the project stays on task and on budget.

“The mistake many developers make is treating appliances like a commodity,” Baird says. “They lump appliance purchases into the same category as buying a load of drywall or lumber, making a quick decision and not thinking about it again until they need it to arrive.”

That shortsighted approach adds all kinds of unnecessary risks to a home building project. Builders must choreograph dozens of contractors working in tight spaces simultaneously to complete the job on time. And because appliances must be installed at the end of the project, any errors in timing, spacing or layout can create havoc just as the project is ready to be turned over.

“Appliances are miracles of engineering that are built and transported across the country,” Baird says. “That process is a lot more complex than delivering a pallet of drywall. There is tremendous complexity involved in that process.”

Fortunately, those glitches can be easily avoided through a little up-front planning and a strong relationship with a dedicated vendor, such as Sears Commercial, Baird says. “Every builder has a few key people he or she relies on, and appliance vendors need to be a part of that team.”

To do that, builders should follow these three simple steps.

STEP 1: WORK WITH YOUR ARCHITECT

Appliances today come in a broad range of sizes, shapes and technologies. Working with an architect to make sure the appliances will fit in the designated spaces is critical.

“It’s all about design,” says Bennett Goldberg, president of MDV Remodeling and MDV Custom Homes in the Washington, D.C. area. “Standard expectations for room proportions are driven by the footprint. There is only so much space you can allocate within a ‘box’ and still have functional, comfortable rooms.”

A 5,000-square-foot house in a high-end community, for example, will allow for very different appliance choices than a 1,500-square-foot starter home, both in terms of what buyers will want, and what there is space and budget for, Goldberg says. “You have to consider size, market demand and who your audience is.”

Making appliance choices early on in the project lifecycle will also affect decisions such as the cabinet and countertop layout, mudroom or laundry room design, and where to place connections for power, gas and ventilation.

DON’T MAKE THESE MISTAKES

When builders don’t think these issues through during planning, it can cause problems later on that could potentially be costly to fix or lessen the quality of the home.

One common design mistake that novice builders make is not considering the direction that doors swing on front-loading washers and dryers, Goldberg warns. As a result, they put the water and gas or electric connections on the wrong sides relative to the room and entrance—which means the washer and dryer doors will bang into each other instead of opening out. This can lead to appliance damage and create a barrier for moving wet clothes to the dryer.

“It may seem like a minor decision in the design process, but it can be a difficult problem to fix later on,” Goldberg says.

Here are some common oversights in home design:

• Reversing the hot and cold water lines for washing machines and dishwashers.

• Awkwardly placed dryer vents that require extra-long or bent ventilation systems that can cause buildup


of lint, become a fire hazard and look unsightly from the outside of the house, Goldberg adds.

• A refrigerator that doesn’t fit into the designated space.

• Forgetting to add a ventilation system or proper cabinet spacing for a microwave-vent-hood combination over the range.

• Creating kitchens with poorly placed appliances. “The rule of convention says the fridge, range and sink should be in a rough triangle,” Goldberg says. “You don’t want to have to walk 30 feet from the refrigerator to get to the dishwasher.”

These mistakes are easy to avoid, says Kim Akers, national inventory manager of commercial sales for Sears Commercial. He recommends that builders talk to their sales rep about the kinds of appliances they want to include before the architect designs the building. You don’t have to choose specific models at this point, but you should determine the size and specifications.

Some builders wait until the project is nearly complete to reach out to their appliance sales rep, which could be too late to make changes that would have been simple to fix during planning, Baird says. “If you engage your vendor early on, you can avoid ‘spec-ing’ yourself into a hole.”

STEP 2: CHOOSE APPLIANCES WISELY

Budget, size, target buyer and current consumer trends should all be taken into account when choosing the specific appliances to include in a home building project. For custom homebuilders, many of those decisions are made with the client. But for spec homes, developments and multi-family properties, developers or builders need to make these decisions on their own.

In some cases, builders will create an appliance package, with various options: basic, standard and high-end. All of the packages must first fit the footprint of the house. “You can’t put a 33-inch fridge into a 32-inch space,” Baird notes.

Sears Commercial takes this customization one step further for its clients. Rather than limiting buyers to a few restricted appliance packages, it offers the Sears Appliance Select Plus program, which lets homebuyers pick and choose the appliance styles and brands they want with a consultant at an Appliance Select office.

STEP 1:

STEP 2:

STEP 3:

• Discuss which way cabinet doors swing.• Consider placement of gas, water and

electrical lines.• Strategically place dryer vents.• Make sure appliances sizes fit into

designated spaces.• Think about user experience when placing

appliances, such as proximity of sink to dishwasher.

• Make sure all appliance packages fit within the footprint of the house.

• Work with a reputable sales rep to evaluate aesthetics, cost and value.

• Consider energy efficiency.• Understand the power of brand recognition, such

as the Energy Star label.

• Order products with enough time to meet project deadlines.

• Make sure appliance installation is scheduled to happen after the cabinets, counters and the like are in place.

• Check that appliance hookups, like plumbing, gas and electrical, are ready to go before installation.

• Follow up on the project timeline with your sales rep to confirm you’re on schedule.

BE PREPARED FOR DELIVERY AND INSTALLATION

CHOOSE APPLIANCES WISELY.

WORK WITH YOUR ARCHITECT.

THE STEP-BY-STEP APPLIANCE CHECKLIST

Without proper planning, appliance buying, delivery and installation can derail a project. By following this checklist, though, homebuilders and property managers can avoid costly mistakes and ensure as smooth a process as possible.


“That’s a real benefi t for homebuilders,” says Sears Commercial account manager Mary Conway. “It gives them another way to market their houses to potential buyers.”

THE POWER OF THE BRAND

Regardless of a home’s price, thoughtful appliance selection can make a big diff erence in its appeal. “You can choose inexpensive appliances that look great, and you can upgrade aesthetics without increasing your costs,” Akers says.

For example, some Kenmore appliances are off ered in stainless steel or black for the same price as white or beige. Kenmore also off ers Energy Star-rated appliances in every price category, which can leave a big impression on potential buyers who value energy savings and environmental conservation.

Almost 90% of the marketplace is aware of the Energy Star label, according to Environmental Protection Agency (EPA) statistics. “More than 70% of households purchasing an Energy Star product indicate the label is infl uential, and 75% would recommend Energy Star to a friend,” the EPA reports.

Choosing a well-established appliance brand can also increase the perception of quality, even if the appliance is a basic model. For example, Kenmore is considered one of the most trusted and well-established brands in the marketplace, and in 2013, the Kenmore Elite line received the highest rankings by J.D. Power for dishwashers, ranges, cooktops and ovens.

These high rankings for Kenmore also acknowledge excellent customer service from the brand owner, states Christina Cooley, director in the home improvement industries practice at J.D. Power, in a release. “In this extremely competitive environment, brands that have already proven themselves through their products will likely be able to further diff erentiate through their relationships with their customers.”

This added value benefi ts builders, who enjoy a wide variety of cost-competitive products and streamlined

delivery and installation, as well as the homebuyer, who will appreciate the quality and reliability of a globally recognized brand.

The NAHB report, What Home Buyers Really Want, demonstrates how important brand recognition really is. According to the research, quality and brand name are the top two features that buyers consider when looking for appliances. The study also shows that one in four recent and prospective homebuyers say the presence of high-quality appliances and fi xtures most infl uence their purchasing decisions.

“The average consumer judges the value of a home by the appliances inside,” says Gregory Smith, principal of Sonoran Crest Development, a commercial and residential contractor in Tempe, Arizona. “Women especially correlate higher-end appliances with higher-value homes.”

This off ers a unique opportunity to bolster the value of a home in the mind of the consumer, Akers says. “Except for a few fi xtures, the only thing in the home with a brand name on it are the appliances.”

“THE AVERAGE CONSUMER JUDGES THE VALUE OF A HOME BY THE APPLIANCES INSIDE. WOMEN ESPECIALLY CORRELATE HIGHER-END APPLIANCES WITH HIGHER-VALUE HOMES.” –GREGORY SMITH, PRINCIPAL, SONORAN CREST DEVELOPMENT


FINDING A TRUE PARTNER

The challenge for many builders is that appliance selection isn’t their area of expertise. That can lead them to make choices that won’t benefit their projects or their clients, and can cause delays and other problems in the delivery cycle.

A reputable appliance sales rep will help them avoid such mistakes, Baird says. He recalls working with a large developer who came to Sears Commercial to purchase a high number of specific kitchen appliances for a new project.

“They gave us the spec and asked for a quote, but we wouldn’t give them one,” he says. The developer was shocked at first, but Baird explained that the line they chose was about to be discontinued. “If we had sold them what they wanted, it would have been a great kitchen—but a year from now there wouldn’t have been any stock for future replacements.”

To avoid making costly appliance mistakes, work with a reputable vendor, such as Sears Commercial, that understands current trends, prices and upcoming models, and is willing to work with you throughout the project and beyond.

STEP 3: GET READY TO INSTALL

Once you’ve chosen your vendor and ordered the right appliances for your project, the next critical step is delivery and installation. This usually happens in the last weeks or even days of the project, for several reasons:

• Appliance installers have to follow electric and plumbing contractors so the equipment can be properly hooked up and tested.

• Appliance installation also has to follow cabinets, counters and flooring to ensure the equipment fits the finished space.

• Appliances should be installed after the envelope of the home is secure, so those new appliances don’t get stolen from an empty, unfinished house.

It makes sense to install appliances as late as possible, but that does add risk to the project.

“So many things can go wrong in those last days. They are so critical, and it is often where the process breaks down,” Baird says. And that can have a cascading effect on the installation process. If the plumbing or electrical contractor goes over schedule, it can delay installation of counters and floors, which ultimately impacts when appliances can go in.

If you are working with appliance vendors who don’t communicate with you, they could show up at the site with a truckload of appliances they aren’t able to install, adding stress and delays to an already tight timeline.

But if builders have a close relationship with a capable appliance vendor, such problems can be avoided. Sears Commercial, for example, is able to tap its massive global supply chain to ensure any appliance can be delivered anywhere in the nation—usually overnight if the client needs it. “We move appliances all over the country every day, and we provide the service, installations and any post-purchase repair that builders and homebuyers rely on,” Baird says.

And if they ever have a problem they need to address, clients of Sears Commercial know they have a single point of contact who will get them answers immediately. “That adds tremendous value to this process,” Baird adds.

THAT’S JUST WHAT A GOOD REP DOES

Tim McCurry, a Sears Commercial account manager, has seen his share of chaos in the last days of a project. He recalls working with a major client on a 200-unit residential facility. The entire building had to be finished in six months, with a rigid close date, and in those final days, the site was buzzing with a frenzy of last-minute activity.

Though it wasn’t his job to be on-site for installation, McCurry knew things would be hectic and wanted to be there for


his client in case something went wrong. So he showed up and ultimately rolled up his sleeves and started hauling boxes into units to help move the project along.

The vice president of the construction company also happened to be at the job site that day. “He saw me carrying a dishwasher across the parking lot, and we ended up having a long conversation,” McCurry says.

The VP appreciated that level of service, though McCurry argues that is just what a good sales rep should do. “It’s our job to deal with problems and expedite solutions that are cost-effective for our customers,” he says. “That is how you gain credibility.”

HOW TO ENSURE A SEAMLESS INSTALLATION

To avoid end-of-project chaos relating to appliance installation, do the following:

Choose a vendor who will provide you with a single point of contact.

Whether you have a question early on about colors to choose, or are facing an installation crisis on the last day of the project, you want to know that there is a specific person you can call to get answers. At Sears Commercial, clients work directly with their own account manager, who becomes their point of contact throughout the sales cycle. They help clients make the best choices for their buyers, ensure appliances are delivered and installed on time every time, and follow up to be sure everything is in perfect working order.

Build a relationship with your sales rep. Appliance reps shouldn’t see you as a single point of sale, but as a client who should be taken care of and nurtured over the long term. That means they will call you prior to delivery to confirm you are on schedule, give you their office and cell numbers in case any problems arise and follow up after a delivery to make sure everything is in order and you are happy with your purchases.

Confirm you are on schedule a few days before the appliances arrive. To avoid a truckload of appliances showing up on your job site before you can use them, make one last review prior to delivery:

• Are all plumbing and electrical lines installed so appliances can be connected? • Will there be space for installers to work while other contractors are wrapping up their pieces of the project? • Are the roads, stairs and other access features completed to the point that a semi full of appliances can drive

onto the job site, and equipment can be moved in? If you can’t answer yes to all of these questions, call your vendor and reschedule.

CONCLUSIONAppliance selection offers builders a great way to add value and quality to their homes. Make the most of that value by working with your vendors throughout the project lifecycle. Involve them early, ask tough questions and set expectations for their involvement until the last unit is installed.Not only will this help avoid costly mistakes and delays, it will gain you a competitive advantage to achieve your ultimate goal: selling that home quickly and at a good price, to someone who is going to love it.

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THE APPLIANCE VALUE PROPOSITION FOR SINGLE-FAMILY AND … · 2016-09-02 · the value proposition for potential buyers. Consumers will often judge the value of a home by the quality