TECH PIONEERS AND VISIONARIES sometimes talk like the digital home will happen overnight. The reality is that the home-technology industry is making only gradual progress in winning over home builders, home buyers, and other consumers.
A good example is the Twin Cities division of Ryland Homes, which earlier this year signed an exclusive agreement with Best Buy to market the retailer's digital-home solutions to all of its new-home buyers. The divisionwide agreement follows two years of pilot projects.
Best Buy has been working to develop relationships with builders for the past five or six years. Along with the Ryland relationship, the retailer has a strong program with Lennar's San Francisco Bay group and has other home-tech programs in place with Centex, Pulte, and Hovnanian.
Ryland's Twin Cities division built 787 homes in 2005. Home prices range from $200,000 to $500,000, and home buyers typically spend $5,000 or more on home technology.
“Technology is not our strength, and because it is so complicated, we didn't think it would be worthwhile to do it on our own,” says Wayne Soojian, president of Ryland's Twin Cities division.
“Best Buy has outstanding name recognition in this market,” says Soojian, adding that the next logical step would be for Ryland to negotiate national agreements or additional regional agreements.
The standard package is for Best Buy to install structured wiring that includes a full wiring package of two RG6 lines and two Category-5e lines for one media room. The two RG6 lines are for cable and satellite, and the two Cat-5e connections are for phone and data. The standard package also includes two more cable connections and two more phone connections in the balance of the house. The added cable lines typically go in the master bedroom, the kitchen, or the basement, and the additional phone lines are for the kitchen and the master bedroom.
Everything else is an a la carte upgrade. Options may include music, surround sound, central vacuums, security, a kitchen entertainment center, video monitoring for nurseries, blind controls, and home networking.
Steve Goebel, Ryland's purchasing coordinator, says that the company's sales and production team went through extensive training at Best Buy's corporate offices. The builder's design centers and model homes prominently display the technology.
Now, when potential home buyers come into a model home, the salespeople are properly trained to sell Best Buy's home-tech offerings. If the prospects become actual purchasers, they meet with a Best Buy salesperson at Ryland's design center. Home buyers also receive in-home consultations after closing, in which Best Buy agents demonstrate how the new systems work.
Buyers are wrapping some of the technology into their new-home mortgages, but Soojian says that Ryland takes a fairly conservative approach.
“Anything that's part of the home that stays with the home is fair game to roll into the mortgage,” says Soojian. “That includes house wiring, speakers, central vacs, home controls, even a plasma screen.” He adds that something such as an Onkyo receiver would not be wrapped into the mortgage because it's more of a standard consumer electronics device that would leave with the original purchaser.
Learn more about markets featured in this article: San Francisco, CA.