“When you go through a house, are you conscious who’s giving you more standard stuff?” It wasn’t as interesting to watch the nine people who were being interviewed answer the question, as it was the 17 homebuilding representatives on the other side of the one-way mirror lean forward, notebooks open, to sketch in the response.

 

Bob Mirman, the moderator, had in front of him a focus group of eight people actively looking to buy a home in Orange County and a ninth who just did.

 

The topic this night was “Options/Features, the must-have versus the nice-to-have.” Mirman is a psychologist and president of Eliant of Irvine, CA, a consumer research firm. In addition to almost 200 focus groups they conduct each year across the country, Eliant holds these targeted focus groups on six subjects each year for homebuilders who come to see what the consumer really wants. And doesn’t want. Mirman also conducts focus groups on advertising, senior housing, flex space, the sales process, and customer service. All are hot buttons in the residential market, where homebuilders seek market share in a warmed-up industry.

 

So they need to know if the options they offer and the features potential buyers want go hand in hand.

 

“This is the hottest topic in the building industry today,” Mirman says later in an interview. “This is the No. 1 topic of conversation. It is an extension of the concept that the building industry is becoming more consumer-driven. So builders are much more anxious to meet and exceed their customers’ needs.”

 

“There is more customization in today’s marketplace than there ever has been,” says Les Thomas, president of Shea Homes Southern California Inc. “That’s because the building industry is reacting to what’s happening to the overall world of the consumer. They’re being offered more choices.”

 

Buyers Decide

On this night, Mirman meets for two hours with five women and four men. He reminds them that they are a cross-section of the 20,000 people who go out each weekend in search of an Orange County home.

 

The panel – all of who are homeowners since this is a move-up kind of question – is asked why each wants to change addresses. Their answers range from an expanding family to the need for a one-story home to the wish to get away from homeowner associations.

 

One Tustin Ranch townhome owner laments the cost of moving up. Orange County remains one of the most expensive home markets in the country.

 

Dream List
If they could change anything in their current home, Mirman asks, what would it be? More space; more closet space, a bigger kitchen, more garage space are among the answers.

 

So then, when out on the model home tour, how do you define quality?

 

“The front door,” answers one. “It’s a start.” This answer and others indicate that these nine don’t miss much. They look for tiled showers (that’s a plus), the railing on the stairway (metal is out, although wrought iron is good), molding around the doors.

 

Says one: “After you’ve been looking long enough, you know whose homes are good homes and whose are just stucco and wood.”

 

While every buyer wants his or her new home tweaked in a unique way, there is a general sense of what most people desire within the framework of quality: kitchens that offer significant would cabinet space, islands, perhaps a walk-in pantry, and certainly an accommodating space for a large refrigerator.

 

Is the house well lit? Does it have accents, as one panelist says, proving that somebody took the time to create a personalized home as opposed to a box with three or four bedrooms and two to three bathrooms?

 

Options, options

Mirman bores in. “How many options are too many?”

 

The panelists wish more of those options – which come at a cost that quickly can escalate – were standard features. They often see something they really like in a model home, and then read the little card that says it is available as an option.

 

“This light will be an extra,” recalls one, “and this will be extra and it came up to $15,000 more.”

 

Another suggests that option packages – that sounds familiar to anyone who has bought a new car this decade – be offered.

 

The auto industry is a comparison that Mirman uses in a later interview to describe the cost of customizing a tract home: “if you’re building a production home, or a production car, like a Ford, you have a straight production line, and everyone does the same thing over and over again, and you have great economies of scale. But Ford started to offer three different types of halogen headlights, and six different types of radio systems. The whole production process changes, and it becomes much more expensive.”

 

Confusion can erupt in two ways – the number of options can leave a buyer hesitant and the cost might seem, as one panelist noted, overwhelming. It becomes an issue of buyer demand versus economies of scale.

 

But there is a rationale for charging $60 for an extra electrical outlet, Mirman says. “Because it takes the builders away from the pattern, and it slows them down, and they can’t close (sell) as many houses, and their margins are decreased.

 

“The cost of adding to a tiled shower, a shampoo niche, for instance, is $200. The buyer asks, “why does it cost that much?” There are changes in framing, drywall, tile…it changes everything. Someone has to stop and do all of those things. And buyers don’t understand that. It becomes an educational process.”

 

Says Mirman: “They are making money on options, and that should be a profit center, but they can’t make it work until they figure out the most effective way to do it, to meet and exceed buyers’ needs, and at the same time, not get buried under this avalanche of customized requests.”

 

He adds this about homebuilders: “If they don’t yell stop soon, they’ll have to yell help next. They’re getting swamped.”

 

The Focus Group

Mirman continues with his nine-person group of active home shoppers.

 

One of the most important questions is the requirements for a home office, what wiring is required, where phone jacks need to be placed. Six of the nine panelists do considerable work from their homes, and all have computers.

 

“What about a computer niche in the kitchen?” Mirman asks. Not a good idea, they respond. “I don’t want to be shoved into a corner,” one says.

 

And so it goes. A panelist asks, “Why can’t we have basements in California?”

 

Another suggests that a built-in safe is a good idea.

 

Don’t be surprised to someday walk into a model home and find a basement. With a built-in safe.

 

The consumer has spoken again.