Show time: a show home can put your company in the spotlight – The Business of Design – benefits of building custom homes
Every custom builder has heard the stories. A builder signs up to build a show home with a magazine or a charity. He quickly finds that the architect hasn’t a clue about market realities, that the magazine requires that all of its advertisers’ products go in the house, and that he gets carried away by his own excess. The house keeps getting bigger while the budget and schedule won’t budge. And then the house doesn’t sell–even a loss.
Given this scenario, why would any custom builder sign up to build one of these homes? And then sign up for a second? Despite the pitfalls, there are a lot of good reasons to build a show home. “There’s no other way you can get as much promotion for your company as you can with a show home,” says Lowell White of Calvert & White Custom Homes in Lake Oconee, Ga. White built Southern Living magazine show homes in 1992 and 1999. “Being affiliated with Southern Living is a huge plus. They have a very loyal readership.”
Other custom builders who’ve successfully completed show homes report substantial benefits from the experience. It has pushed their companies to the forefront of their markets, improved their operations, and been a personal and satisfying challenge. Then there’s the residual impact. Even three years later, Derrick Koger, who built Southern Living’s 1998 Florida Idea House in Celebration, Fla., near Orlando, meets with people who were among the 64,000 who walked through his open house. “It gives us a leg up,” he says. “We automatically have more credibility.”
Of course there’s risk as well as reward. A builder who works with a magazine carries all the financial liability on the show home, though he doesn’t have control. It’s like having custom home clients who are spending your money. “Most custom builders are used to making the final call,” says Joan McCloskey, builder editor of Better Homes & Gardens magazine. “On a show home, the editors have that right.”
And when building a show home with a charity, as Tom Dannenbaum of Classic Stellar Homes did in 2000 with the American Cancer Society in Scottsdale, Ariz., there’s a danger of putting in all the bells and whistles and creating a white elephant.
By their very nature, though, show homes are meant to go over the top. On magazine homes, the architect typically donates his services, so he wants to make a statement. The magazine builds these houses to showcase advertiser products and create beautiful pictures for its pages. The manufacturers want to put in their latest, best, and most expensive products. With all these agendas pushing and pulling on the builder, bankruptcy may seem like a pleasant alternative. “We’ve worked with builders who ended up going bankrupt toward the end of the project,” says McCloskey, “but most builders come out well.”
So who’s suited to this kind of high-pressure, high-profile project? Though it can be ego-boosting, show homes go smoother when egos are kept in bounds. “We’re looking for someone who really wants to be a team player,” says Bill McDougal, who manages the show home program for Southern Home magazine. “You have ourselves, the sponsors, the interior designer, the architect, and landscape architect. The builder has a very important role, but he has to understand that he’s just part of the team.”
Koger says successful show home projects are anti-ego. “You need architects and builders who are doing this for the right reasons. Carson Looney [of Looney, Ricks, Kiss in Memphis, Tenn.] was the architect on our project, and he is totally a team player. He listened and he understood.”
The builder also must bring his good name and industry connections to the project: McCloskey looks for builders who have “a good `Dun and Brad’–a sound business with an excellent reputation. We also want them to be very promotion-minded and have good contacts with the local manufacturers and dealers.”
For his part, the builder must be equally choosy about who he will enter into a show home project with. Ralph Haskins, who built Better Homes & Gardens’ 2000 Home of the Year in Des Moines, Iowa, believes key to his project’s success “was having a good architect and a good magazine staff on the project. When they made a decision about the design, they knew that I was paying for it.”
And that brings up the final component for a successful project–a custom builder with open eyes and a strong backbone. “At the end of the day, the builder is paying for the house,” Koger says. “You have to give them the budget on what the house can stand and stick to it.”
When magazines plan to do a show home, they typically interview a half dozen or more builders to decide who has the right stuff for the project. On show homes for charities, the process is reversed; the builder goes looking for a charity he wants to be affiliated with and that wants to gain the proceeds from the show home. “It’s not as easy as you might think,” says Dannenbaum, whose company has built two show homes for charities. “They tend to be very careful about what they get involved in. They can’t afford to make a mistake.”
Once he lined up the American Cancer Society, Dannenbaum says the project flowed just like a spec house–a $2.3 million, 7,500-square-foot spec house. Classic Stellar had complete control over the project, using its own design team to create the house and teaming up with a furniture store to furnish it.
Dannenbaum and his team outfitted the house with things he wouldn’t put in a model home, such as more custom cabinets, intricate custom stonework, and the latest in technological innovations. The temptation is to put more in the house than the market will pay for. Dannenbaum had to tight the tendency to go overboard, and for the most part was successful. Soon after the open house, the home sold.
Show homes have to be more than just big houses with lots of features and amenities; they tend to come with a mission statement that may or may not mesh with a builder’s market. For example, Better Homes & Gardens’ 2000 Home of the Year was a “Healthy House,” built with materials and products that promoted good air quality. Lowell White’s last Southern Living show home was designed to showcase lakeside living.
With all this focus on bigger goals, the basic goal of designing a house that people in the market will want to buy can get lost. It’s the builder’s responsibility to keep it at the forefront. “Our biggest input was on floor plan issues,” says Tom Hall of Renaissance Homes, which built Sunset magazine’s first show home in Colorado in 2000. “We knew they had to display the home, but we also knew somebody had to live in it.”
One of the biggest potential conflicts between the mission of a show house and its marketability is the magazine’s advertisers. The magazine wants to showcase as many advertisers as possible in the house because that participation increases ad sales, but some products may not be appropriate. “I was responsible for using certain manufacturers,” says Koger, “but I worked my own deal as to which products we used. I would say between 30 and 40 percent of the materials came through sponsors.”
The challenge comes in using what has to be included while still maintaining architectural integrity, marketability, and budget. “We had 15 different colors of paint on the walls because they had a paint sponsor,” says Hall, “and they selected a bright palette. In the end, we were able to pull it off.”
In most cases, manufacturers who want to showcase their products will forgo a portion of their cost. For example, Koger went to Marvin Windows with his window budget and told them that if they wanted to put in a higher-end product, it was their choice. “They came through in a big way,” he says.
The challenges of a magazine show home don’t go away when construction starts; they actually intensify. Most show homes are built on schedules that are so tight that they could be measured in minutes and hours rather than days and weeks. Koger’s experience is not uncommon. “We got involved nine months before the house had to be open,” he says. “And then it took three months before the plan was ready. It was an enormous undertaking.”
Unlike custom homes, show homes don’t have any flexibility on the completion date. The magazine has to photograph the home and get it into the scheduled issue; those deadlines are immutable. Hall met his deadline, “but it took a couple of years off my life. At the end, I started in the back corner of the house and just pushed everyone out the front door.”
Think back to your most indecisive client to get a taste of what building a show home can be like. These houses are perpetual works in progress. The magazine staff and the architect are forever tweaking the plans, and the manufacturers are often slow to decide which products they want to showcase. White remembers how his 1992 show home came to a screeching halt midway through construction. “The house was framed, and we needed a decision on the roof shingles, but Southern Living was still negotiating who the supplier would be.” he says. “The house sat there for six weeks. I was ready to stick pins in someone’s voodoo doll.”
But finally the house is finished, and suddenly all the problems and challenges of the previous months are forgotten in the bright colors of the magazine pages and the steady stream of visitors “oohing” and “ahhing” through the house. This is when the builder reaps the rewards of investing his time, effort, and money. A successful project will create buzz about his company for a long time to come.
If it’s a magazine project, its staff will not only publish the house, but also organize media visits and keep the house open for a period of time to show it off to the local market. “We had our house open lot eight weeks.” says Hall. “Probably 40,000 people came through it. Nothing else we ever did could generate that much publicity for our company.”
Show homes for charities generate their own publicity. Newspapers and television stations cover the project because it doesn’t have any profit-based overtones. “We got a tremendous amount of publicity in the local papers and television.” says Dannenbaum. “Advertising in those media would have cost us hundreds of thousands of dollars. And at the same time we were able to raise funds for a charity.”
It’s not enough, however, for the builder just to rely on others to generate the buzz for the house. He must take the responsibility to market the house and his company. During the three weeks he held the house open, Dannenbaum kept it busy with a series of events: an opening gala, a wine-tasting party, and a series of home improvement seminars.
Lowell White used his last show home as a model for as long as he could. “I took people through the home personally, pointing out the features,” he says.
Show-home builders order reprints of the magazine article and stories that appear in other publications, using these collateral materials for years after they finished the house. “They have remarkable shelf lives,” says Koger.
While most builders don’t make any money on the show home itself, they do report a big jump in business. Dannenbaum says he can attribute at least a half dozen new contracts to his show home, most with bigger budgets than the homes he’d previously built.
And Haskins signed two contracts–one for $840,000 and another for $630,000–soon after building Better Homes & Gardens’ home. “That’s not bad for a couple weeks of open houses,” he says.
CORRECTION: In the May/June issue of CUSTOM HOME, the Web site address listed for Rutland Corp. was incorrect. The correct address is www.pro-vent.com.
Gerry Donohue is a freelance writer in Silver Spring, Md. You can reach him at firstname.lastname@example.org.
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