Why Homebuilder Relationships Are a Hot Commodity for Security Dealers

Why Do Builders Install Home Technology?

So why do builders carry certain tech amenities? The top four reasons, according to the NAHB/CTA study, are:

1. They need to carry it to compete in the market
2. It was specified by an architect or buyer
3. It boosts profit
4. It sets them apart from their rivals.

Based on responses compared with previous years’ studies, a chunk of builders shifted their reasons for carrying security systems, home networks, multiroom audio and home theater from “profit potential” to “need to compete.”

Specifically, a builder today is three times more likely to install a home network because of competitive pressures than because he wants to make profit on that network infrastructure. Similarly he is twice as likely to install an electronic security system because he needs to do so to keep up with other builders.

On the other hand, another chunk of builders shifted their reasons for carrying lighting control, energy management and home automation from “need to compete” to “profit potential.” In other words, these product categories are being eyed by builders to boost the bottom line, not because other builders are offering them.

“There are so many categories of equipment that move from being margin-driven to volume-centric,” notes Weinstein. “In terms of Lutron’s categories, lighting and shade control have always been somewhat of a custom solution … there is measurement, selections and setup required.

We also know that two-thirds of buyers will choose professional installation. So the lighting and shade control categories, for example, automatically build in a higher level of profitability for the builder than categories of equipment that are becoming more generic or expected by the buyers.”

Beyond that, Weinstein says even for production and semiproduction homes, these categories will remain a profit center for dealers that serve builders in those markets.

Why Do Builders Avoid Technology?

So why do some builders still not offer certain technologies? According to data from NAHB/CTA, among builders who do not offer technology amenities, the primary reason is due to lack of customer demand across the board for all the technologies.

In general, three out of every four builders that do not offer technology refuse to do so because demand was weak. That goes for home networks, lighting control, multiroom audio, home automation, home theater, energy management, surveillance cameras, intercoms and monitored security.

“The reason we carry home technology is because we need to do it to be competitive. Also, it is kind of a sign of the times. If you are not doing it, you are going to be left behind,” says Globetti.

He notes that call-backs are not a concern for ARBC because they are working with a reputable provider in AAMI who can handle those service calls should they occur. Globetti adds that the key to a successful long-term relationship with the client is to bring the dealer into the process early so he is able to establish rapport with the homebuyer.

That makes the entire planning and implementation process go much smoother, as well as sets the stage for potential upgrades or service after the project is completed.

Marketing Home Technology

Promoting home technology to prospective homebuyers has become imperative. In fact, 84% of builders say it is “very important” or “somewhat important” to market a smart home to potential buyers. Why? Because 91% of new homes have high-speed broadband connections set up by the builder compared to 59% in 2009 — thus paving the way for smart homes.

Further evidence that drives the need is that 53% of new homes now have home offices compared to just 34% in 2009. And the bottom line is that home technology seems to be working for many builders. Fully, 36% of builders report home technologies increased their revenues last year (up from 25% in 2009).

ARBC has multiple design centers to help educate on and promote various home amenities. Interior and exterior selections are all made there for flooring, colors, etc.

“To be honest with you, we don’t have our designers do a lot of the discussion on the technology because they are not as educated as our integrator AAMI,” says Globetti. However, Toscano may meet clients and have technology discussion with them at the Arthur Rutenberg Homes’ design center.

“We will meet with the clients in the design center early on in the process, before there is even a foundation or walls for the home,” says Toscano. “We will do a conceptual meeting to get an understanding of what their wishes are and where they would like to see the house go in terms of technology. We also find out what technology they are familiar with … what they have used in the past and liked and what they didn’t like. We then will formulate an initial design plan.”

From there, AAMI will typically meet with the client in a model home and do a walkthrough. Later, AAMI will meet with the customer on the jobsite itself and do a full high-voltage and low-voltage walk-through, since AAMI is also an electrical contractor.

“Every piece of information we gather is reported back to the builder so we can be seamless in the building process,” notes Toscano. After that consultation, the rough-in installation occurs, then another walk-through meeting takes place, typically 30 days prior to the final closing date on the home.

In that walkthrough, specific technology needs such as television locations and where the furniture will be placed. “We want to make sure that we are not making changes that will cause an increase in the punch list for the builder or slow down the construction process. All of that will ultimately affect the closing date for the home,” says Toscano. “It is a constant partnership. Integrators who create partnerships with builders have a more seamless path to sell technology that works for the builder and for the consumer.”

Not sure what kind of contract to implement with a homebuilder? Hear some advice on the next page!

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