Builders take a gamble with spec homes, which are houses built without a specific buyer, in the hope of finding someone who will purchase them. While building spec homes can be a profitable and efficient way to sell properties in a hot market, a slow market can leave builders with thousands of unsold homes sitting in their inventory. This can be a financial burden, with interest payments potentially running into millions of dollars. As a result, it is crucial to sell these homes as quickly as possible.
The digital design center is a platform that allows builders to showcase the finish option selections for their new homes. This can be a powerful selling tool that allows builders to sell their homes more efficiently. So, what are some benefits of a digital design center?
Enhance the Home Shopping Experience for Buyers
By using the digital design center, buyers can visualize the final home finishes and make informed decisions on option selections and upgrades, which can help build trust and create a positive buying experience. Additionally, builders can use the digital design center to help buyers understand what their new home will look like at different stages of construction.
For homes that are already 100% built, buyers can use the digital design center to visualize the finishes that have been selected for them by professional designers. For homes that are partially built, buyers can use the digital design center to choose finishes for items such as flooring and wall paint. And for homes that haven’t yet been built, buyers can select from a range of finish options provided by the builder. This level of transparency and communication can help to sell new home more efficiently and reduce spec home inventory.
Save on Operational Costs and Interest Payments for Builders
With the digital design center, there is less need to build and maintain expensive show homes that sit empty until they are sold. Additionally, digital design center helps to sell spec homes faster, so builders can reduce their inventory and save money on interest payments.
Let’s say the home builder has 100 spec homes, each costing $300,000, resulting in $30 million tied up in inventory. Six months of unsold inventory incurs $1.5 million in carrying costs, including interest, taxes, and maintenance.
If the digital design center helps accelerate the sales of 10 homes by 6 months, that’s a $3 million reduction in inventory. At a 10% cost of capital, this translates to a $150,000 savings in carrying costs over six months.
Download Spec Home Carrying Costs Calculator
The digital design center is a powerful tool for builders who are struggling with spec home inventory in a slowed housing market. Builders can reduce their inventory and save money on interest payments and provide a better buying experience, making it a win-win solution for everyone involved.
Interested in learning more about how a digital design center could work for you? Check out our product page: Virtual Design Centre.