Bathroom Remodeling Remains High on ROI Lists

According to a recent article from the ARA – while foreclosures are at record rates the vast majority of homeowners are still current with their mortgages. Between the low interest rates and the fact that most of these homeowners are opting to remain in their current houses, it is providing more opportunities for home improvement and remodeling businesses.

There are several very distinct advantages for people to have various home improvements and remodeling projects done and upgrading one or more bathrooms are high on the list. Among the advantages are:

*People want to improve the value of their property during these recessionary times.

*People want to enjoy the benefits of a more luxurious living environment.

*People can recoup as much as 75% of a bathroom remodeling project’s costs when they resell their home as indicated in Remodeling Magazine’s 2008-2009 Cost vs. Value Report.

*People can realize savings in energy and resources consumption through upgraded “green” materials including ceramic tile, water-conserving fixtures and energy-efficient lighting

*People find that investing in baths and fixtures that create a spa-like environment provide a more relaxing experience in their own home, reducing stress and saving them the time and expenses of visits to spas and massage therapists. According to Steven Deland of Acryline Bath Systems, “Demand remains strong for tub experiences that really underscore hat feeling of spa like relaxation in the home bath.”

The U.S. has continually experienced cycles of economic upturn and downturn since World War II. On average, despite these cycles most homeowners have realized a doubling of their home value about every 11 years. Deland says, “Investing in your home is still one of the most sensible ways to spend your money and improve your life.”

There are always opportunities in every adversity. A solid plan, flexibility and innovation are important cornerstones of not only surviving, but also thriving during these challenging economic times.

Best Regards,
Dave Yoho

Follow-up Failure

When we go into a client’s operation one of the things that we frequently hear is that they are doing their best to follow up with prospects who have expressed an interested in their business. Yet despite this, we have yet to interact with a client who has the time or resources to follow up with all interested parties on a consistent basis.

Sure, many do it better than others, but the fact remains that everyone would like to improve their prospect conversion rate.

So how do you accomplish this task?

What we have found is that the majority of our clients and customers do an excellent job following up with prospects and customers via phone calls and person-to-person contact and these both remain the most effective methods of interaction. However, the reality is that many homeowners are very inaccessible in today’s society and this is why e-mail communication can be so effective if it is done correctly.

Now before you stop and say that:

a) You have tried this before and it was not very effective
b) E-mail is treated as spam from most homeowners

I would like to ask you to rethink your opinion.

First of all, while these two points might be inherently true, the fact remains that most e-mail communication is composed in an ineffective manner. There are services or individuals that can be hired at extremely low rates (particularly in today’s economy) to write effective copy for you. Let other people handle the tasks that you do not specialize in.

Second, what are you doing to build your database? Are you attempting to double opt-in all of your prospects/customers? Do you realize how dramatically this will reduce your e-mail bounce rate?

Once these two tasks are accomplished then you need to consider investing in a software service that can automate your follow-up process. There are inexpensive services out there that can accomplish the task of multiple phone sales representatives simply by continuously following up with homeowners.

Why does it work so well? Because it keeps your company in the forefront of the prospect/customer’s mind. Studies show that it takes an average of 5 contacts before an individual processes the information that you are presenting them with.

The culture of our society is changing and it is vital that you do everything you can to stay in front of your potential customer.

Energy Tax Credits . . . Q & A - Part III

In this posting we’re going to wrap up the series of Energy Tax Credits questions and answers. So, on to the next question.

Q. If I’m not in the window, insulation, roofing, etc. business, is it difficult to get those products?

A. Get an alliance with a window, insulation, roofing supplier or retailer. They will help you work this out.

Again, we encourage you to do energy loss inspections.

Q. Which roofing qualifies?

A. Most metal roofing. Check www.energystar.com

Q. Don’t all Energy Star windows meet the qualification?

A. Go to www.efficientwindows.org to examine the minimal requirements.

Q. Will the Energy Star stickers on the windows (or other products) have to be submitted by the customer for their tax credit?

A. It is a good idea to have the customer keep the sticker off a window or the package of their product to substantiate their claim.

Q. How do I give credible information to the customer which eliminates my installation costs without jeopardizing my contract?

A. Construct a formula that is realistic and yet protects you. Give this to the customer as a receipt when they pay. Be sure your formula is fair, practical, and consistent.

There is a lot more information and the answers to more questions in the recorded proceedings of the first Home Improvement Economic Summit recorded in April 2009. The entire summit is available on 11 CDs plus an additional CD Rom with the Summit manual and 220 PowerPoint slides. For more information send an e-mail to admin@daveyoho.com or call our office at (703) 591-2490.

That’s all for this time. I’ll have more useful information in the next posting.

Best regards,
Dave Yoho

Energy Tax Credits . . . Q & A - Part II

Let’s pick up where we left off in the last posting with some more questions and answers about the Energy Tax Credits.

Q. How do we present the tax credit to prospects?

A. It is best to have it as a page in your presentation book together with a copy of the certification they will receive. Prospects can be advised to search the websites listed in the last posting for the same purpose.

Q. Is there a special form that customers will have to submit with their tax return?

A. Currently, IRS Form 5696

Q. Suppose our product, i.e. bath refitting, coating, cabinet refacing, etc. doesn’t qualify as an energy saving product?

A. Start offering energy audits. You can use the H.E.L.P. package we’ve developed for this purpose. H.E.L.P. (Home Energy Loss Prevention) is a copyrighted package enabling those who sell windows with CDs, graphs, charts, support forms, energy audit folders and formulas to present this. Request information on H.E.L.P. with an e-mail to admin@daveyoho.com.

Q. Then what do we do?

A. Most bathrooms have a window. On the other side of the ceiling may be an attic (insulation). You can offer these products as a bonus or discount to help the energy crisis.

Q. Does the job then qualify for $1,500 tax credit?

A. Only the portion that relates to the energy credit that you installed.

Remember, you used energy conservation to get the lead and you have made them energy conscious.

Absorb these ideas and consider how you can implement them into your lead acquisition and sales appointment program.

We’ll answer some more questions in the next posting.

Best regards,
Dave Yoho

Energy Tax Credits . . . Q & A

We discussed the excellent marketing potential the new Energy Tax Credits in the massive government stimulus package provide for us in the last posting. There is $6 billion available for home improvement manufacturers and retailers. In order for you to benefit from this opportunity, you need to be well informed and capable of showing the homeowner how they can gain the maximum benefit from this tax credit. So, in the next few postings, we’re going to ask the questions and answer them for you. So, let’s get started . . .

Q: What are the qualifications?

A: Qualified home improvement products installed between January 1, 2009 and December 31, 2010 on homeowner occupied residences.

Q: How much is the tax credit?

A: Homeowners can claim a tax credit of up to $1,500 representing 30% of the purchase price (not including installation costs).

Q: How do we know the product we’re selling qualifies?

A: Get certification from your supplier. You will need this if you’re challenged.

Q: Do we have to leave a copy of the certification with a customer?

A: It is advisable, although not required to send this in with their claim when they report their taxes. They should be reminded to keep a copy for that purpose.

Q: Which products qualify?

A: All products must meet a standard specified within the Act. Windows, doors, skylights, insulation, roofing, certain types of HVAC equipment and solar products.

Q: Where can we get more information on qualified products?

A: www.ase.org, www.energystar.com, www.DOE.gov and your manufacturer.

These next two Q’s and A’s are very important to understand and remember so the prospective buyer fully understands how they get their benefit.

Q: What is a tax credit?

A: Homeowners don’t receive the tax credit when they buy the Home Improvement project. They claim the credit on their federal income tax form at the end of the year – 2009 or 2010. The credit then increases the tax refund they receive or decreases the amount they owe.

Q: What is the difference between Tax Credits vs. Tax Deductions?

A: In general, a tax credit is more valuable then a tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – (home mortgages or charitable giving) – lower the taxable income. If you are in the 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the amount of the tax credit.

Let’s wrap it up here for this blog post. I’ll have more Q’s & A’s in the next posting

Best regards,
Dave Yoho

Let’s Talk Energy . . . Savings!

You are probably aware that there is an energy tax credit incentive for home owners built in to the government’s massive Stimulus Bill. Let’s recap this tax credit incentive and examine how this can be a massive opportunity for home improvement retailers.

First, it’s important to understand that this is a tax credit not a tax deduction. There is an important distinction here. A tax deduction means you deduct the prescribed amount from your taxable income before determining your tax liability. A tax credit means you reduce the tax liability you owe by the amount of the tax credit. Thus, if you have a $10,000 tax liability and a $1,000 tax credit, you only owe the IRS $9,000.00. This has huge implications for home improvement retailers.

Another important aspect of this tax credit is that it increases the cap from 10% to 30% for certain home improvement expenditures (energy conservation products.)

Here is a summary of the American Recovery & Reinvestment Act of 2009. The more significant incentives provided under the new law include:

Residential Energy Property Credit – Increased to 30%

The new law increased the Code Sec. 25C residential energy property tax credits from 10 percent to 30 percent, raises the maximum cap to a $1,500 aggregate amount for 2009 and 2010 installations, eliminates the $500 lifetime cap and makes several other modifications. The changes are effective for eligible property placed in service after December 31, 2008 and before January 1, 2011.

Note: Higher energy costs should accelerate the “pay-back” period for qualifying home improvements. The credit was in effect in prior years through 2007, but Congress allowed it to lapse for 2008. Pre-2008 credits are not counted toward the new $1,500 maximum.

Note: Improvements eligible for the Code Sec. 25C credit include insulation materials, exterior windows including skylights, exterior doors, central air conditions, natural gas, propane or oil water heaters or furnaces, hot water boilers, electric heat pump water heaters, certain metal roofs, stoves and advanced mail air circulating fans.

For more detail on these tax credits check out this Energy Star link


Residential Energy Efficient Property Credit

The new law removes the individual dollar caps under the Code Sec. 25D residential energy efficient property credit for solar hot water property, geothermal heat pumps and wind energy property. However, the new law places a $500 credit cap on qualified fuel cell expenditures.

Next time, we’ll answer some of the important questions about this terrific marketing opportunity.

Best regards,
Dave Yoho