From file "057_PSs" entitled "CUSTstd2.qxd" page 01
From file "057_PSs" entitled "CUSTstd2.qxd" page 01
From file "058_PSs" entitled "CUSTstd2.qxd" page 01
From file "058_PSs" entitled "CUSTstd2.qxd" page 01

There are plenty of places around Charlottesville, Va., where Randy Rinehart can buy building materials for the four to six houses his company, Rinehart Custom Homes, constructs annually. But for the past 35 years, his supplier of choice has been Better Living, a local pro dealer whose operations include two retail locations, a millwork shop, and a components plant. “The owner [of Better Living, Richard Nunley] sold me my first lot in 1970,” recalls Rinehart, whose homes currently range in price from $600,000 to $1.3 million. He likes the fact that Better Living gives back to the community through a foundation its owners established in 1988. “And I know that every dollar I spend there stays in the community.”

On the other hand, Rinehart does no business with another local lumberyard because “they've never approached me.” Lowe's is out of the question because “it doesn't have an outside salesperson and can't deliver to the needs we have.” And while he considers the salesperson at his area Stock Building Supply a friend, Rinehart has stuck with Better Living—which generated $25 million in revenue last year and has a product mix that includes kitchens, baths, and even furniture—because “price isn't always a driving factor.”

Figure 1 Nailing Down Service When deciding where to buy construction materials, custom home builders say they place a premium on long-standing relationships with suppliers, propped up by three legs: service, product knowledge, and delivery. The good news for you is that most custom builders hold pro dealers' operations in high regard in all three of these areas. An exclusive PROSALES survey of 502 custom builders across the country (see “About the Survey,” below) found that nearly 70 percent of those polled rated their local building material dealer “good” or “extremely good” at delivery, and nearly two-thirds gave the same high rating to local dealers for knowledge and overall service (see Figure 1, right).

However, custom builders still might use several lumberyards or building supply outlets for commodities like framing lumber and dry-wall, and they are just as likely to diversify their sourcing for finishing and décor items. Participants in the study identified pro dealers as their primary sources of supply in 13 of 35 product categories, including doors, windows, lumber, house-wrap, and wood and fiber-cement siding. The builders identified specialty dealers and distributors as the most-used source in 12 categories, including appliances, bath fixtures, carpeting, lighting, and tile (see Figure 2, page 58).

To supplement this nationwide research, PROSALES interviewed a dozen custom builders in 11 states, most of whom say they keep their sourcing options open to accommodate the tastes of their discriminating clientele and consultants. More than three-quarters of the survey's respondents say that home buyers play a “major role” in selecting products for their projects; nearly three-fifths of those polled say architects and designers are major influencers. It is, perhaps, unsurprising then that pro dealers with showrooms have a decided leg up in their efforts to attract business from custom builders and their buyers.

In other areas, the survey uncovered some unexpected ambivalence among custom builders about relying on suppliers' turnkey installation. Around 80 percent of those polled said they don't use pro dealers' installation services, but nearly half said they are likely to do so in the future, a response that no doubt reflects current labor volatility. “Whenever we can get a supplier to install, we do because that's one less person you have to deal with, and there's less finger-pointing,” says Lucy Katz, co-owner of Austin, Texas–based Katz Builders, which annually builds 20 homes that generate an estimated $4.5 million in revenue. Andy Rosenthal, owner of Potomac, Md.–based Rosenthal Homes, says he favors one local kitchen and bath dealer because it offers the Cavico cabinet line his clients like and because it installs. “When I can get someone to install kitchens, it saves me money.”

Trump Cards The benefits of cost savings, though, go just so far, as most custom builders say they avoid big boxes like The Home Depot or Lowe's except for hardware, tools, and the odd 2x4. “I've seen them trying to go after builders more,” says Flay Dalrymple, who owns Dalco Custom Builders in Fair Play, S.C., which builds between 12 and 20 homes annually and last year generated $6 million in sales, “but they have a basic problem with service.”

Figure 2 Purchasing Patterns Most custom builders, and 71 percent of those polled, insist that service usually trumps price when they select one supplier over another. But price is never out of the equation entirely, and almost half of those polled rated pro dealers' prices as only average (a “3” on a 1-to-5 scale, with 1 being “extremely poor” and 5 being “extremely good”). More than 45 percent want lumberyards to lower their prices and 31 percent would like to see more volume discounts (see Figure 3, page 60).

Chris Perry owns Riverside Builders in Satellite Beach, Fla., and he's followed the same salesperson from dealer to dealer for two decades, from that seller's first job at Wickes Lumber to his current post at Cox Lumber. But Perry, whose company builds eight to 12 homes annually that start at $750,000, says he still price-shops other suppliers “to keep [Cox] honest.” Riverside Builders recently moved its window purchases from a specialty dealer to 84 Lumber because 84 now carries the BetterBilt brand Riverside prefers and “its pricing is competitive,” Perry says.

Jay Grant, whose Grant Homes in Mendham, N.J., annually builds between 10 and 15 homes that generate $5 million in revenue, says he gives a major portion of his purchases to Fox Lumber in nearby Clinton, N.J., partly because “their prices generally beat competitors', and they offer me extended terms [at least 60 days], and I can still deduct 2 percent off of the invoice.”