Spiff Up Your Standing Inventory

Like most real estate agents these days, Lori McGuire has had to step it up a bit to get buyers to sign a contract. A Realtor in Orange County, Calif., McGuire is working with three different builders in Covenant Hills, a gated community in the master planned development of Ladera Ranch. Prices start at about $3 million.

“Some of the things we do have to do with the financial part,” she says. “We introduced a price range instead of a set price. If the buyer pays at the top end, you pay their mortgage for six months, or give them a lease on a Lamborghini, or a decorating package.”

Wait a minute. Did she say a lease on a Lamborghini?

Most builders haven't gone to that extreme, and we'd really like to keep it that way.

But whether it's the result of overbuilding spec homes or a deal that falls through at the last minute, just about every builder is going to have some finished houses to move at some time or another. What can a builder do to help sell his standing inventory, without slashing the price or piling on the incentives? We talked to builders and sales pros from across the country for some advice. Here's what they recommend:

When was the last time you were inside your inventory homes? Do you know how they look? How they smell? What's been left behind?

“The water in the toilets gets nasty, someone leaves a window open. It just doesn't smell as fresh,” says Bryan Lendry, president of Brylen Homes in Jacksonville, Fla. “Check the house at least once a day.”

First thing, before you start thinking about spending money on new paint, flooring, lighting, or landscaping, start at the curb and look at the house like a drill sergeant doing a barracks inspection before handing out weekend passes.

You are looking for:

• Stains on the driveway.
• Weeds in the flower beds and the yard, especially near the sidewalk approaching the front door.
• Bare spots in the lawn or dead plants.
• Trash or debris in the yard or the house. Don't forget to check the garage, closets, drawers, and inside cabinets and appliances.
• Peeling paint or major dings in the walls.
• Dirty toilets, sinks, tubs, and showers.
• Dirty floors.
• Cobwebs, spiderwebs, wasp or hornet's nests, fire ant mounds, roach droppings—any evidence of an insect infestation. If you don't think it matters, the No. 1 phobia—more than heights, enclosed spaces, thunder and lightning, or even death—is spiders.

• While you're at it, do the same kind of inspection of your entrance, your signage, your sales center, and your models.

Curb appeal is essential, and it all starts with landscaping. Far too often, builders do a bare minimum when it comes to the shrubbery, but plants that reflect the scale of the house make a tremendous impact.

“We had a house in the $1.2 million range,” Lendry says. “We added about $20,000 in landscaping. It made a huge di3 erence. Two or three people who were looking at it mentioned that the landscaping now fits the house.”

There's more to curb appeal than just plants, though.

Jim Greenfield, president of Columbia, Md.–based Columbia Builders, had a house in the $1 million price range that a buyer had canceled the contract on during construction. He, too, beefed up the landscaping but also extended the front porch, “wrapped it around the side, and put in a pergola.” He quickly got a contract.

Evanne Brock, COO of Atlanta-based Brock Built, got a similar result just from switching out a sidewalk. “We had a house that just sat for months,” Brock says. “There was a cement sidewalk going up to a beautiful flagstone porch. We changed the sidewalk to flagstone. Before we finished, we sold it.”

LANDSCAPE LARGE: Foliage to fit the scale of the house and a dramatic water feature transform the appearance of this Florida home.

Outdoor lighting is another easy way to boost curb appeal, says log home builder Pat Simpson of Griffin, Ga., and host of HGTV's Before and After. With most home buyers working, the only time they have to look at a house is after work or on the weekends. “If we throw some lights on the exterior of the home, it really makes it stand out,” he says. Another option is landscape lighting that shines up tree trunks and into the tree canopy.

Drawing on a background of working with Street of Dreams projects, Paul Mackie says there are plenty of inexpensive touches builders can do to dress up the exterior of a house.

A freestanding trellis or a four-post arbor doesn't require much labor or materials, “a couple of 6x6s and 2x2s,” he says, “but the architectural statement can be significant. You could add a trellis over the entry.”

Even just some planter boxes with seasonal flowers to frame the entry-way can dress up an otherwise uninteresting exterior. Add a settee, and you've created a welcome entry point, says Mackie, who is Western area manager for the Western Red Cedar Lumber Association.

Or, paint the front door an “unusual or striking color,” Mackie says, or change it out for a door with some architectural flair. “I've seen a trend toward more brightly colored doors,” he says.

Sometimes you just miss the boat on finishing out a house. Maybe you were trying to save some money by going with builder-grade fixtures or you didn't upgrade the finishes and trim packages on a higher-priced home. No matter the reason, you've got a house that says, “Whatever,” when it should be saying, “Wow!”

Greenfield learned this lesson on a house that was supposed to sell for $1,000,050. It had come back to him because the buyer's financing fell through. “People walked through it and sort of liked the house, but no one was getting excited about it,” Greenfield says. He cut the price to $975,000 and then $935,000. Nothing. “We had no interest,” he says. “We were forcing people to walk through it.”

He was prepared to drop the price again, to $875,000, which would have meant taking a loss, when his real estate agent gave it to him straight. Another price cut wasn't going to make any difference.

He pulled together a team of his marketing director, his COO, and an interior designer. Together, they approached the house as if they were buyers.

LOW COST, HIGH IMPACT: Adding a feature such as an arbor or a trellis is an inexpensive way to give a house a memorable visual element that stands out from the competition.

Outside, they increased the landscaping and added a deck. Once inside, Greenfield immediately saw the first problem. The buyer had selected a Brazilian cherry floor, but the stairs to the second floor were oak.

“You walked in the door, and it just killed you,” he says. The solution: They stripped and stained the stairs to match the floor and ditched the oak rail system on the stairs, replacing it with white balusters and newels. The interior designer also designed a custom carpet runner.

The next item to be addressed was the powder room, which had a pedestal sink and a builder-grade mirror. It was repainted, and the sink and mirror were replaced with higher-end pieces. The great room featured a fireplace that got lost on the wall. The designer came up with a series of inexpensive shelves that helped fill up the space.

The other major upgrade to the house was finishing the basement and installing an eight-seat home theater, which Greenfield got his installer to provide at a substantial discount.

With all the new features, the house is generating considerable buzz, he says. He actually raised the price to $985,000, and “the sales agent said this house will be gone in a month.

“We get caught up in this price-slashing game that the big guys do and smaller guys like me can't afford,” he says. “The lesson for us is to step back and try to think like a purchaser. It's good old marketing. You've got to be turned on by a couple of features in the house.”

The second lesson Greenfield learned, he says, is to look at every house he builds as one he might have to take back. He's eliminated the wide range of choices he gave his customers and gone to design packages that make sure the various elements of the house work well together.

“We never should have let the people pick the stair rail system they picked with the floor they chose,” he says, “and we should have given them a bigger mantel. A lot of the [upgrades] we did, we should have done from the beginning. … This really excites me. If this house still doesn't sell, it won't change my mind.”

Of course, an interior make-over doesn't have to be that drastic. When Brock has a house that hasn't sold, she starts by looking at the paint scheme. Then she looks at lighting, accents, and outdoor living spaces. “Sometimes we'll make a fireplace more grand or go in and do the whole wall in stone,” she says. She's added tile backsplashes, columns to better define a living space, or a backyard wall with a grill to accentuate the outdoor living space.

Many builders have found that staging inventory homes helps buyers visualize living there. Plus, when buyers walk into a furnished room, they're looking at how the house lives instead of nitpicking where the light fixtures are located. Debra Gould, a home staging trainer known as The Staging Diva, says that builders can achieve the goals of staging without spending a fortune, just by paying attention to some basic principles.

CREATIVE TOUCHES: Unlike model merchandising, which emulates a prospective buyer's lifestyle, staging helps buyers see how the rooms function. Small touches, such as flowers on the tub surround, give warmth to an empty house.

“You could probably do the average three-bedroom home for about $5,000,” she says. “We're not talking about huge sums of money, if it makes the difference between people walking in and falling in love with it and picking it apart. … It's all about perception and context. You can buy a cotton T-shirt at WalMart for $5 or a fancy one for $150. They're [similar], but one of them is in a fancy boutique.”

When you're staging, take a minimalist approach to the amount of furniture you put in the house. You need a focal point in each room, but the idea is to show off the house, not sell knickknacks and linens.

“You don't need to cram it with as much stuff as someone who is living there,” she says. “You don't want it to feel vacant, but you don't need as much seating as you would normally have in a home. … Set up little scenarios where people can see themselves. If you have an empty corner, make it a little reading corner. If there's an eat-in kitchen, put a table there, but you don't need to set the table.”

Where you do want to go a bit over the top is the master suite.

“Bedrooms are important,” Gould says. “Dress the bed really well. I hate going to houses that are half a =million dollars and the bed has nothing on it. If you [go] to a bedding store, see how the beds are dressed. That's what you want.”

The master bath can be warmed up with a stack of nice, fluffy towels. Gould says her idea of staging a bathroom is “what a bathroom in a Four Seasons hotel looks like before you unpack all your junk.” That means it's sparkling clean with decorative soaps, a shower curtain if it's not an enclosed stall, art on the walls, and, yes, toilet paper.

In a family neighborhood, make sure one of the bedrooms is staged as a child's room. “It doesn't take much to create that ambiance—one twin bed, one table, a lamp, some stuffed animals, and kid bedding,” she says. If you're selling to young families, show a nursery. “It gets Mom all excited,” Gould says.

Iowa builder uses three strategies to sell an inventory home.

MasterCraft Estate Homes of West Des Moines, Iowa, had a house that had been sitting on the market for over a year at a list price of $367,000. Carrying costs were running about $3,000 a month. MasterCraft knew the house had design issues. It was an older plan the builder had inherited and no longer used.

“When you first walk in, there's a living room that's very un-user-friendly,” vice president Matt Taylor says. “The complaint we kept hearing was that it was not a great layout.”

Great layout or not, MasterCraft needed to sell the house. So Taylor and his team came up with a trio of strategies to get it out the door without slashing the price. People just couldn't figure out how their furniture would fit in the living room, so Taylor had an interior designer stage that one room. “We didn't have to spend tons of money to decorate it,” he says. “We did a couple of couches and end tables and showed how the room would be used.”

The builder also decided to change real estate agents (a custom home builder, MasterCraft Estate Homes doesn't have an in-house sales staff ), switching to an agent who owned a home in the neighborhood. “She was more involved and motivated,” Taylor says. “She lives in the neighborhood, so it's a benefit to her to sell it.”

Third, and most importantly, the builder got the community involved in selling the house by hosting a cookout with the neighbors. “We get a lot of referrals,” Taylor says. “Our buyers' friends say it's a great neighborhood.”

Both the residents and the real estate agent invited people they knew were looking for a home. “From a marketing standpoint, that's a pretty cheap way to do it,” Taylor notes.

Within a month of those three efforts, the house was sold. The total cost for the staging and the cookout was less than one month's carrying costs.