Build vs Buy, Part I: Evaluating Your Options

This is part one of a three-part series. For more, check out the Introduction.

Key Takeaways

• “Build vs Buy” is an age-old question.
• In the past, homebuilders who wanted to use buyer-facing technology to improve their business had few options — primarily, building it themselves.
• Using a high-level buyer journey framework to evaluate “build vs buy” opportunities can help articulate opportunities and tradeoffs.
• With Foundation, homebuilding finally has a vendor that provides a Silicon Valley-grade product suite for builders who may choose to “buy.”

Introduction

In last week’s post, we framed three key questions for running a “Build vs Buy” process:

1. What are my options? Is “buying” software even a possibility?
2. What am I getting, and when am I getting it?
3. What’s my ROI?

This week, we’ll tackle the first question — “What are my options?” — in more depth.

“We need X”

When we say “software” in this case, let’s be specific. We mean using technology to transform not just the home buyer experience, but how efficiently homebuilders operate.

For most home builders, these conversations can begin in different places:

• A corporate executive or owner who’s motivated to drive hard, measurable business outcomes.
• A marketer or CIO who’s up-to-speed with modern technology and has a vision for how they can help their builder improve performance.
• Innovative division-level leadership looking for ways to compete better and drive results.

Sometimes, the initial prompt can be as broad as “How can we better use technology to sell more homes or drive efficiency?” Other times, we hear a more specific challenge:

• “We want to grow sales next year by 50%-100% without scaling our sales team to match.”
• “Our buyer satisfaction scores are worsening, especially during closing [or post-close]. How can we improve these?”
• “How can we reduce warranty operations as a % of VSGA?”
• “How can we drive more buyer leads, more efficiently?”

Finally, sometimes the cart comes before the horse (even if it’s the right cart ??):

• “We need a buyer portal.”
• “We need an owner/warranty portal.”
• “I heard X is building an app — where’s ours?”

Regardless of the initial impetus, the opportunity is real — homebuilding is one of the most impactful industries in the United States, and it’s coming online.

Frame your opportunities

Before jumping into the weeds to answer a question as specific as “How can we double the number of referrals we get from past buyers?” a helpful approach can be to start with a framework to orient you and your team.

One framework we like is returning to a simplified view of the buyer journey:

• Shopping — how does a buyer find you in the first place?
• Closing — what’s the buyer’s experience from contract to close?
• Ownership — what’s the buyer’s experience owning and operating their new-construction home?

Then, for each phase of the journey, ask:

• How can we improve the buyer experience and improve buyer conversion?
• How can we make our teams more effective?
• What are the measurable business results we can drive?

Here’s a sample visual framework you can use to start framing problems, opportunities, and potential solutions.

Research your options — across the buyer journey

Before you dive in — remember that, in 2024, there are actually options across the buyer journey!

Shopping

The good news is that — when exploring your options for Shopping products — homebuilding is well-served today. From programmatic advertising to website design to interactive communities and home visualization, builders have options.

If you’re looking for advice on where to explore new upper-funnel experiences, please ask — we’d love to introduce you to some of our favorites.

Closing

Closing — which we usually frame as “contract through close” — is the part of the buyer journey that has historically been hardest to serve with digital technology.

Homebuilders often feel that “we build homes differently than other builders.” It’s true that the overlapping sales, construction, and closing workflows are also complex enough that your average software developer from San Francisco or New York isn’t likely to understand your needs well enough to deliver a solution that actually improves you & your buyers’ lives.

So: If you wanted a digital closing experience — last year or last decade — your only option was to build it yourself (or with an agency partner). Today, a handful of Top-20 and Top-200 builders have digital buyer experiences that almost all of them have built themselves (KB Home, Tri Pointe,? and David Weekley Homes are a few examples worth mentioning).

But one thing we’ve learned is that while all homebuilders build and sell homes a little “differently,” all homebuilders build and sell homes. For example:

• All top homebuilders have their own brand they want reflected to buyers.
• All top homebuilders have a construction process with consistent milestones.
• All top homebuilders have a defined closing process with milestones.
• All homebuilders have things they need buyers to do during closing.

We built Foundation to meet this core set of shared needs across builders.

• Foundation is white-labeled — it’s about the builder’s brand, not ours.
• Foundation is designed and built to be highly configurable:- Your construction process and milestones.- Your closing process and milestones.- Your tasks (what we call “Action Items”) for buyers.
• Foundation doesn’t try to shoe-horn builders into how we think about building homes — we reflect your brand, processes, and operations.

Closing is complex, but it’s also know-able. You can use your Southwest, Delta, or United app to book, change, and track your flights; you can use an app to deliver a smooth digital closing for your home buyers, too.

Ownership

Today, most builders we talk to still think of their post-close buyers as cost centers and liabilities. We get it — servicing warranties costs money, and unhappy buyers may try to take it out on you.

That said, we encourage builders we talk to to think about their owners more holistically. Yes, we can use modern technology to reduce warranty workloads (and even deliver happier owners). But what happens when you start thinking of your owners as an asset, instead of a liability?

For example:

• How many homes have you sold in the last five years?
• What’s the state of these owners & homes today?- How many of these owners still live in their homes?- How many have sold or rented out their homes?- How much home equity have they built?- What do they think of your brand today?
• How are these past sales helping your business today?- How many referrals are they driving?- How many repeat purchases —?move-up or downsizing?- How much ongoing revenue are they driving for you?

At Foundation, we think of Ownership as an opportunity for homebuilders. Our Ownership Experience and Ownership Network products are designed to deliver across all fronts: happier buyers, more efficient teams, ongoing referrals, repeat purchases, and revenue.

Who’s going to own & maintain it?

Something that’s often missed (or at least underweighted) in “build vs buy” conversations is a practical consideration of who will be responsible for maintaining and improving these products over time.

Older-school motivations — like “we need a buyer portal (or app or…)” — often miss this reality.

It can help to think of software — especially modern software — as a living thing. If you don’t maintain it, it slowly dies. If you nurture it, it continues to improve over time. With Foundation, continuous improvement means continuously improving business results without the ongoing headaches and maintenance costs of your own software.

Final Thoughts

“Build vs Buy” is an age-old challenge for businesses considering implementing new technology to serve their customers and improve their bottom line.

For the last decade+, homebuilders have had basically one option for delivering a digital buyer and ownership experience: build it yourself (or with an agency).

With Foundation, that’s changed. Homebuilders finally have a vendor with Silicon Valley-grade technology that can deliver buyer and business value by turning contracts into lifetime relationships.

If you’re a homebuilder thinking about how to leverage modern technology to drive buyer satisfaction and business impact, we’d love to chat. Even if you’re set on building your own solutions, we’d love to be a resource for you. From high-level advice, down to feature-level design reviews, we’re happy to help.