Licensed to steal your time – Part 2

by rheselbarth@solagroup.com

Sam the prospect just called to say he liked my proposal and will get back to me after he hears from three other builders he is interviewing. Sam bought a home in April for $1 million and demolished it to clear the lot for his new 5,000 sq. ft. custom home.

 

He originally called me in April, following his home/lot purchase. After we met twice, I sent him a Professional Services Agreement and asked for a fee for assisting him with his new home design, architect selection and budget. He declined my offer and opted to hire an architect he found who subsequently completed Sam’s construction drawings last week. So, we met again and he brought me three sets of plans so I could start bidding out his home. He opened our meeting by saying, “So, Jay, I know you will figure this out during your bid, but give or take a half-million dollars, how much do you think this home will cost us to build?”

 

How many times is Sam going to try to steal my time and get me to work for him for nothing, on the hope that I will get a contract to build his dream home? During our two initial sales meetings he picked my brain and toured two of my clients’ homes. The other builders have taken the bait and are working on preparing their fixed-price-with-allowances bids. Depending on their estimating expertise and methodology, I assume they will invest at minimum several days to prepare their proposals, maybe more. If Sam is being straight with me and only talking to four builders, then each of us has a 25 percent chance of landing the job. These are not terrible odds; I was tempted to compete, not rock the boat and meet his bid expectations and submit a fixed bid. But, I chose to stick with my regimen of offering open-book construction management and asking to be paid for my budget expertise, which I believe is a better win-win business model for a custom builder/remodeler and our prospects/clients.

 

Sam had emailed me PDFs of his approved schematics prior to our recent meeting, which revealed a stunning Georgian home with slate roof and stone veneer on four sides. I spent a few hours preparing budget estimates to share with Sam. It showed him the following:

 

• A photo journal of a 4,000 sq. ft. custom home I completed last month

• A job cost summary of what my actual cost was to build that home

• An Excel report showing him what my ballpark estimates are for building his slightly larger home with more expensive finishes, without profit

 

I explained that the combination of the completed home job cost, my experience and his plans allowed me to tell him within a $100,000 range what I believed the budget would require to build his home. Then, I explained open book construction management to him and told him that I would not be submitting the fixed bid that he expected. I would, however, be happy to build his dream home for him for a fixed builder management fee. The fee I proposed would make me happy and his reaction to it was that it was a fair proposal. I left the meeting feeling cautiously optimistic about my chances.

 

I refused his request toward the end of our budget review to hand him any copies of the reports I shared. He said he understood. If he hires me, I will email him a copy of them, spend the time needed to gather multiple bids on every major phase of his home and hand him a financial roadmap of where all his money will go during the construction process. I will be doing all this for Sam the client, however, not Sam the prospect!

 

I still feel good about my chances. I feel very good not spending any more time on Sam the prospect than I already have. Naturally, I will be disappointed if I do not get this job, but I would feel worse if I did all the work necessary to give Sam a fixed bid and I still didn’t get the job.

 

Sam tried to steal my time and my budget expertise. I politely refused and stuck to my business model. Clearly, Sam is an excellent prospect. However, apply this situation to any of your prospects for remodels or new homes. Think about all the time and energy you have spent in the past on jobs you did not get. Reflect on all the time you may spend in the future bidding on jobs, competing with other qualified builders. It is enough to drive you to bankruptcy or run you out of the custom building business!

 

What would you have done with Sam? What will you do with your next prospect like Sam? I would love to hear your thoughts.

 

Editor’s note: Jay Grant will be sharing his prospect management and related business strategies in two live seminars in 2013: One in New York on May 23 and one in Chicago on Oct. 24. Keep your eyes open for more information about these Profitable Design/Build seminars.

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