Small-Volume Success

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Model homes are often thought of as strictly big builders' territory; only those with hundreds of closings per year can carry the cost of an unoccupied home.

November 03, 1999
The interior of this home is open yet cozy, simple yet luxurious. Buyers love the wetland views outside the windows.

Model homes are often thought of as strictly big builders’ territory; only those with hundreds of closings per year can carry the cost of an unoccupied home. But one small builder in Minnesota is proving that line of thinking to be false. By approaching the whole idea of model homes in a different way, Pillar Homes has used a model in each of their first three developments to build a strong business and an even stronger consumer following.

"We’ve used our models to gather marketing information for our next series of homes -- information on market-specific preferences such as radiant floor heating, granite countertops and mixed-hardwood flooring," says K.C. Chermak, who along with Steve Bohl founded Pillar Homes in 1995 in Wayzata, Minn.

The Breckenridge at Fieldstone Woods, the 3565 square-foot model featured here, has incorporated several features that new-home shoppers have asked for in the western suburbs of Minneapolis. Many buyers in this market are move-ups with children, and are looking to get out of the typical suburban community and onto homesites with substantial acreage. These families prefer large front and side yards, so this home features screened porches on the side and back of the home, and a front porch across the entire facade for an almost wraparound outside area.

 

Buyers in the western suburbs of Minneapolis are responding very well to the cottage-style architecture of Pillar Homes. They especially enjoy the large lots, which allow for spacious front and side porches and three-car garages.

"We’ve designed and sold three homes off this one," says Bohl. "A lot of that has to do with the family feel the porch and decks provide. It gives the parents a place to sit and watch the children play."

The Breckenridge sits on a five-acre lot, as do most of the twenty homesites in this community, and only two remain unsold as of early October. This gives Pillar homes a lot of space to provide other features which are in demand with this affluent market. The first floor is very open, especially around the kitchen/dinette and great room area, and a wide stairway carries that open feel up to the spacious second floor.

Every home in this neighborhood has a minimum of a three-car garage. "A lot of buyers are requesting bigger garages in order to store their snowmobiles or other big toys, or just to give their large vehicles more room," says Chermak.

This garage space provides Pillar another deal-closing item: a large bonus room over the garage. "Nearly everyone is demanding that space for a computer room or game area," says Bohl.

This home sold for $599,900 immediately after opening in the Parade of Homes in early August. Hard costs were approximately $106 per square foot. Building 12 - 15 homes in this price range gives Pillar Homes over $6 million in volume per year, as well as the financial freedom to build models when other small-volume builders may not. By using these models to become more knowledgeable about their buyers, they are able to capture more of the market, which turns back into being able to build more models.

"The cottage style is hot in western Minneapolis right now, and we feel that with these particular homes we’ve been able to create a niche for ourselves and dominate that niche," says Bohl.

"We want to be ahead of the market, but modestly," says Chermak. "We may not be big enough to do enough market research to identify a brand-new trend, but we do like to be seen as innovative."

 

Market Focus Demands Focused Marketing

Not only does Pillar Homes take a unique approach to using their model homes, but they also take an often under-used approach to advertising. "We like to use a lot of co-op advertising," says Bohl. "The local utilities, manufacturers and developers like to give us co-op dollars as long as we use nice, substantial marketing pieces."

This situation comes from being recognized as a quality builder, and presents other opportunities. A local window supplier likes what Pillar Homes does so much that they feature large pictures of Pillar projects on the sides of their trucks, which travel all over the area. Jenn-Air appliances were used in another of Pillar’s models, and they were so impressed they used that model in their product photo shots.

"This all goes to subliminal advertising," says Chermak. "Even though it may not be our exclusive piece of advertising, it has really helped us with name recognition over our first five years." Bohl points to another important aspect in helping Pillar Homes capture so much of the upper-income market in the western suburbs. Even though they advertise primarily in local publications in order to "micro-market," as Bohl puts it, they rely heavily on realtors to draw in potential buyers from outside the area.

"We’re real advocates of realtors," says Bohl. "We don’t butt heads with them because they really help us with the upper-income buyers."



Major Products Used: Appliances: Kitchen Aid. HVAC: Venmar. Windows: Scherer Bros. Radiant Floor Heating: In Floor. Decking: Trex. Paint: Hirschfields.

Also See:

Market Focus Demands Focused Marketing

Modern Main Line

Mesquite Suits Buyer Tastes

New Old World

Happy Trails At Ladera Ranch

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