W45tyw45remodeling magazine september 2015

YOUR TOOLBOX FOR SUCCESS

Clean Sweep

Sealing off jobsites won sales for Bob Gockeler— plus the Fred Case award for entrepreneurship S EP T EM B ER 20 15 /

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Contents 09.15

VOL. 31, NO. 7

08 F R OM T H E E DI TOR

21 Y OU R B USI N ESS Aging in Place / An AARP

Joshua Curry

Nautical Stylings Functionality meets flair in this master bath upgrade—page 96

41

ONLINE NOW

COVER STORY / 2015 CASE AWARD

For Bob Gockeler, owner of Chatham, N.J.-based Kraftmaster Renovations, a bold personality married with fastidious business practices has led to entrepreneurial excellence.

Trends: Labor / Remodelers must be proactive to overcome the

industry’s labor shortage: insight from NARI’s president.

Trends: Social Media / Big50 remodeler Darryl Rose interviews

the CEO of Porch.com on social media’s evolution.

Trends: Regs / An update on federal rulings headed your way.

Trends: 2025 / Three advancements that could change your

future operations.

72

The Big50 perspective on page 50 is just the tip of the iceberg: tune in to Remodeling’S Big50 Bites every week to hear what your peers have to say about some of the most important issues facing the industry today. From marketing strategies to hiring and retention to healthy homes, find inspiration in our podcast series featuring remodeling’s elite.

study sheds light on housing preferences for the 45+ crowd Design / Four tips for making the most of small spaces R|D|J / Don’t miss the Remodeling Show | Deck Expo | JLC Live this October Forecast / Metrostudy’s latest RRI predicts major growth Technology / Six simple ways technology can improve your business—and your profits Operations / Use these tips to win over a dissatisfied client Finance / Avoid tax troubles with the right paperwork and processes Operations / Turn off your phone, regain your sanity RM 550 / We break down the data on the nation’s biggest replacement contractors

81 P R ODUCTS Trucks / The latest options and accessories for your jobsite vehicles Brand Use / The products you know best and use most

96 Y OU BU I LT I T

Seaside soak

SP ECI A L SECT ION / F I NA NCI NG

More remodeling firms are offering increased financing options for their customers—if you’re not doing the same, you may be missing a valuable market.

On the cover: photo by Steven Freeman REMODELING (ISSN 0885-8039) Volume 31, Number 7, is published 10 times per year in January, February, March, April, May, June, August, September, October and November by Hanley Wood, One Thomas Circle NW, Suite 600, Washington, DC 20005. Copyright 2015 by Hanley Wood. Opinions expressed are those of the authors or persons quoted. Reproduction in whole or in part prohibited without written authorization. Subscriptions are free to qualified recipients. Publisher reserves the right to determine recipient qualification. Out-of-field subscription rates: US and possessions: $44.95; Canada $59.95 (Canadian dollars); all other countries $65 (US funds). Single copy price: $8.00 except Buyer’s Guide, $10. For subscription information, write Circulation, REMODELING, PO Box 3494, Northbrook, IL 60065-9831. Canada Post Registration #40612608/G.S.T. number: R-120931738. Canadian return address: IMEX, PO Box 25542, London, ON N6C 6B2. Periodicals Postage Paid at Washington, DC, and at additional mailing offices. POSTMASTER: Send address changes to REMODELING, PO Box 3494, Northbrook, IL 60065. Member: BPA Worldwide (BPAWW) and American Business Media (ABM).

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SEPTEMBER 2015 / REMODELING 5

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ĆŒĹ?ĹŒÇ Ĺ˝Ĺ˝Äš ĹŻĹ˝Ĺ?Ć? ĂŜĚ ĆŒĹ?Ç€ÄžĆŒ ĆŒĹ˝Ä?ĹŹ žĞĚĹ?Ä‚ ĞŜŚĂŜÄ?ĞžĞŜƚ ĹŹĹ?ĆšĆ? ĞŜĂÄ?ĹŻÄž Ä¨ĆľĆŒĆšĹšÄžĆŒ Ä?ĆľĆ?ƚŽžĹ?njĂĆ&#x;ŽŜ ƚŽ Ć?ƉĞÄ?Ĺ?ÄŽÄ? ƚĂĆ?ƚĞĆ?

“We also realized, that people’s moods change, and that was ƚŚĞ Ĺ?ĹśĆ?Ĺ?Ĺ?Śƚ ƚŚĂƚ Ć?Ć‰Ä‚ĆŒĹŹÄžÄš Ĺ˝ĆľĆŒ ĹśÄžÇ Ć‰ĆŒĹ˝ÄšĆľÄ?Ćš Ĺ?ŜŜŽǀĂĆ&#x;ŽŜ KĹśÄ?Äž ƚŚĞ new smart-phone control app hits the market a few months from now, the rest of the market will be playing catch-up.â€?

EĂƉŽůĞŽŜ Ć? ĹśÄžÇ sÄžÄ?ĆšĹ˝ĆŒ >sϹϏ ĹŻĹ?ĹśÄžÄ‚ĆŒ ÄŽĆŒÄžĆ‰ĹŻÄ‚Ä?Äž Ĺ?ŜƚĞĹ?ĆŒÄ‚ĆšÄžĆ? Ä‚ Ć?ÄžĆŒĹ?ÄžĆ? ŽĨ > ĹŻĹ?Ĺ?ŚƚĆ? ƚŚĂƚ ĹľĹ?dž Ç Ĺ?ƚŚ ƚŚĞ Ĺ?Ä‚Ć? ŇĂžĞ ƚŽ Ä?ĆŒÄžÄ‚ĆšÄž Ä‚Ĺś Ĺ?ŜĎŜĹ?ƚĞ palate of glowing reds, blues, greens, oranges, yellows, any color imaginable.

The LV50’s exclusive iOS or Android mobile app enables ĆŒÄžĹľĹ˝ĆšÄž Ä?Ĺ˝ĹśĆšĆŒĹ˝ĹŻ Ä‚ĹŻĹŻ Ä‚Ć?ƉĞÄ?ĆšĆ? ŽĨ ƚŚĞ ÄŽĆŒÄžĆ‰ĹŻÄ‚Ä?Äž

ĹśÄ‚Ć‰Ĺ˝ĹŻÄžĹ˝ĹśÄŽĆŒÄžĆ‰ĹŻÄ‚Ä?ÄžĆ? Ä?Žž

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From the Editor /

Invest in Your Growth Use the go-go market to go beyond getting out of debt. Set yourself up for future gains.

I

t’s official: Speaking nationally, we are in the best times for remodeling in this century—and perhaps ever. Metrostudy, the data-gathering and analysis unit that’s a sister company to Remodeling, reported last month that its national Residential Remodeling Index for the second quarter of this year had topped the old record set in the go-go days of early 2007. Of course, your local conditions may vary, but 355 of the 381 local markets are forecast to grow in 2015, and the average increase in activity expected in each of the nation’s 381 metropolitan markets tops 5%.

Hearing that phone ring and collecting enough money to finally buy a new truck are great feelings, and we want you to enjoy them. But at the same time, you should also take advantage of this hot zone to help set up your business so it can take better advantage of good times and be less susceptible to rough patches.

For instance: • Raise your rates. If you’ve noticed that your ratio of bids to accepted jobs has increased, that could be a sign your prices haven’t changed with the times. Try boosting your margins by a point to see if they stick. If they do, do it again.

• Recruit temps. During both the slow years and the buildup to today’s frenzy, odds are you let slide tasks that you knew could improve your business but you just didn’t have time to pursue. Examples could include cleaning up your website or researching social media. Now is a good time to hire temporary help for particular projects.

• Analyze Your Numbers. Busy times needn’t be financially messy ones, but often they’re one and the same unless you make an effort to look out for leaks in your spending. As Big50 member Mehdi Vatani pointed out, 1% slippage on a $3 million business totals $30,000. What could you do with an extra $30,000?

• Pursue Efficiency. The busier you get, the more important it becomes for your most valuable field staff—typically, your carpenters—to remain focused on those jobs where their skills matter most. That means you need to minimize reasons why they’d leave the jobsite, such as when they need a sawblade or an extra 2x4. In such cases, it’s probably cheaper for you to send a taxi to the store rather than the carpenter. Or expand by hiring a parts runner.

• Sweat the Early Details. This issue profiles Bob Gockeler of New Jersey’s Kraftmaster Renovations, this year’s winner of the Fred Case Remodeling Entrepreneur of the Year Award. Pay special attention to how he stages a project. Extra attention at the start of the job can save you time and money later—as well as win referrals.

• Re-Acquaint Yourself with Your Banker. You never know when you might need cash, so why not talk to a lender when your finances are strong?

• Invest in Long-Term Growth. Organizations such as GuildQuality, Remodelers Advantage and Certified Contractors Network cost money and time. But you’re more likely to have money now, and participants regularly tell us the hours they spent deliver a fabulous return on investment. It’s time to grow.

Craig Webb, Editor-in-Chief cwebb@hanleywood.com

Corrections: Since publishing the Remodeling 550 in last month’s issue, we’ve received some more entries that we felt should be included and, regrettably, noticed a number of companies for which we had incorrect information or omitted Big50 status. For updated lists, go online to remodelingmag.com.

8 REMODELING / SEPTEMBER 2015

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John McManus Craig Webb Jennifer Lash Aubrey Altmann Laura McNulty Ben Arshee Curtis Sprung Megan Mullsteff Austin Heller

Group Editorial Director jmcmanus@hanleywood.com Editor-in-Chief cwebb@hanleywood.com Chief Content Manager jlash@hanleywood.com Chief Design Director aaltmann@hanleywood.com Assistant Managing Editor lmcnulty@hanleywood.com Art Director barshee@hanleywood.com Assistant Editor csprung@hanleywood.com Senior Graphic Designer Digital Content Strategist

Contributors Bruce Case, Jim Cory, Mark Harari, Chris Hill, Melanie Hodgdon, Leslie Shiner, Paul Winans, Lauren Hunter, Rena Goldman Margaret Coulter Marni Coccaro Bernadette Couture Tim Bobko Betty Kerwin Chris Lustan Paul Ruess Lois Landa Chara Anderson Holly Miller Megan McCloud Rick Strachan

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Articles in this magazine are intended for informational purposes only and should not be construed as legal, financial, or business management advice.

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REMODELING’S

Your Business

GUIDE TO AGING IN PLACE

ACCESSIBILITY WANTED A recent AARP Home and Community Preference of the 45+ Population survey sheds light on how adults feel about aging in place—and how remodelers can help.

78% WOULD LIKE TO STAY IN THEIR CURRENT RESIDENCE AS LONG AS POSSIBLE

REGIONAL DIFFERENCES 69% of people in the South strongly agree that they’d like to remain in their current home, compared with 58% in both the Northeast and the West.

61%

SOME FEATURES VARY WIDELY DEPENDING ON INCOME Those with an annual household income of $75,000 OR GREATER were 30 percentage points more likely to have a mainfloor half bath than those with an income of LESS THAN $25,000.

WOULD LIKE TO STAY IN THEIR COMMUNITY AS LONG AS POSSIBLE

65%

27%

Amount of respondents in the Northeast who have a full bath on the main level, as opposed to 87% in the South.

FEEL THEY CANNOT AFFORD TO MOVE

MANY HOMES WILL NEED SMALLER UPDATES Only 35% of respondents’ homes have wider doorways; 32% have lever-style handles.

REMODELINGMAG.COM

8 in 10 have a full bath on the main level of their current home.

76% have a bedroom on the main level of their current home.

SEPTEMBER 2015 / REMODELING 21

Your Business /

DESIGN

Think Tiny, Live Large

R|D|J

Three Distinct Events, One Cohesive Experience

With tiny houses growing in popularity, learn how to make the most of these small spaces

BY LAUR A MC N ULTY

BY LAU R E N H U NTE R

With the Remodeling Show | Deck Expo | JLC Live (R|D|J) set to kick off on Sept. 30, industry professionals and manufacturers are gearing up to bring the latest in education, training, and products to Chicago’s Navy Pier.

The multifaceted conference—sponsored in part by Remodeling—brings together a variety of residential construction professionals, including home builders, remodelers, contractors, and deck builders, and offers education and training sessions as well as a packed exhibit hall and networking opportunities.

This year, R|D|J has been revamped to include even more education/training tracks that allow attendees to tailor the experience to their own needs. Tracks include topics such as sales, construction materials and techniques, technology, and design. Attendees also can use show sessions for continuing education credits from industry organizations including NAHB, AIA, and NARI, and to maintain certifications.

With 275 exhibitors showing off over 100 new products and services, R|D|J’s expo hall is the heart of the action—but it’s not just for show. The hall is a hands-on experience, with nearly 90 live installation clinics and product demos for attendees. From Tool Alley’s head-to-head tool challenges to clinics ranging from a deck builders’ workshop to a breakdown of efficient building techniques, the exhibit hall is where the action is.

Though the three-day schedule is busy, there’s plenty of time built in for networking with other pros and catching up with friends. Taking advantage of the vibrant Chicago location, R|D|J will offer opportunities for a walking architectural tour of the city, a historic bar crawl, and dinner at Harry Caray’s Italian Steakhouse.

To attend, register for the show at www. remodelingdeck.com

They might only number in the thousands, according to a 2014 Bloomberg Business article, but tiny houses could be the next big thing. Single homeowners are turning to inexpensive tiny houses for solvency and flexibility of location, while small families are ready for adventure and simplicity.

Tiny houses may not be for everyone, but the concept of living in fewer square feet can still apply to the average home. College students moving in with their parents, aging adults moving in with their grown children, and more people working from home are all within current housing trends. And if family units are growing but home footprints are staying the same, that translates to fewer square feet per person. Beyond that, some homeowners are finding new revenue opportunities in renting out their homes while they live in tiny houses elsewhere on the property.

“When the housing market crashed, a lot of homeowners suddenly found that the houses they were in were too big for them,” says designer Kim Lewis, who has worked on shows like Tiny House Nation and Extreme Makeover: Home Edition. “On top of that, in a few years, the number of people that work from home will increase by 60%, and baby boomers are coming back to live with their other family members.

People are remodeling to make their homes work for them, and there are a number of design choices you can make to take better advantage of smaller spaces.”

Here are four ideas to help maximize your smaller-space designs.

Let in the light. What feels smaller than a small room? A small, dark room. Lewis says putting cabinets and shelving on walls is an instinct to avoid in a small room.

“Windows and natural light play a really important role in a small space,” she says, “so try not to put all your storage where your eyeline is. I use windows, transoms, and skylights to keep the space open and airy instead of feeling claustrophobic.”

Store in the floor—or the sideboard. If windows are taking up space where shelving usually lives, designers need to find alternative areas to store homeowner belongings. In a tiny house, Lewis says she borrows space beneath floorboards or in ceiling rafters, but that’s not always attractive or practical in a “normal” house. Try double-duty furniture instead.

Rock the pocket doors. When every single inch matters, pocket- and barnstyle doors can help a room reclaim as much as 14 square feet by some estimates.

Unlike standard swinging doors, pocket doors take up no floor space, and many designers are finding that homeowners appreciate the space and the aesthetic.

Rethink small appliances. Designing a small bedroom or office is a cinch compared to managing a kitchen with a small footprint. Even compact kitchens still need to allow for cooking, cleaning, refrigeration, storage, and high traffic.

With this in mind, GE’s innovators are launching a “micro kitchen” concept that combines numerous functions in smaller packages. “As we watch what’s happening in the U.S., there’s a clear trend toward smaller, more efficient living spaces,” says Lou Lenzi, director of industrial design for GE Appliances. The micro kitchen designs are ideal for homeowners who live in urban environments.

22 REMODELING / SEPTEMBER 2015

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Your Business /

FORECAST

Get Ready to Get Busy Metrostudy’s latest RRI shows a major jump that brings remodeling volume past its old peak

BY CR AI G W E BB

The RRI is produced through a statistical model that leverages detailed data on remodeling activity, including household-level remodeling permits and consumer-reported remodeling and replacement projects. “Activity” includes home improvement and replacement projects, but does not include maintenance or projects of less than $1,000.

Metrostudy also issues RRIs for each of the 381 metropolitan statistical areas (MSAs) in the U.S. This year, 355 MSAs are expected to see year over year growth in their remodeling and replacement projects, with average growth of about 5%.

The national RRI has risen 13 straight quarters year-over-year since the end of 2011, Metrostudy noted.

Metrostudy, July 2015 RRI report

Remodeling and replacement activity nationwide grew 5.5% in the second quarter from the year-earlier period to produce its best showing since at least before the housing boom, Metrostudy reported with the release of its latest Residential Remodeling Index (RRI).

The index of economic indicators hit 100.8 for the April-toJune period, topping the high-water mark of 100 set in the first quarter of 2007. Metrostudy, the Hanley Wood division that provides primary and secondary market information to the housing and residential construction industry, previously had thought the RRI wouldn’t reach 100 until this fall.

“Growth through the first two quarters of 2015 is much stronger than what was observed in 2014, when the overall housing market had cooled,” Brad Hunter, Metrostudy’s chief economist, said in a statement. “A big driver of recent remodeling activity has been solid job gains, but the industry stands to benefit even more over the next year from existing home sales hitting an eight-and-a-half year high at the end of second quarter. Stronger resales benefit remodeling activity, as recent home buyers typically spend more on home improvements than other homeowners. Continued home price appreciation is also encouraging people to put money into their homes.”

Metrostudy now forecasts year-over-year RRI growth of 5.9% in the third quarter, 5.5% in the fourth quarter, 4.8% in the first quarter of 2016, and 4% in the second quarter of next year. It also believes that the number of pro-worthy projects for all 2015 will total 11.1 million, a 6% gain from 2014.

Stronger resales benefit remodeling activity, as recent home buyers typically spend more on home improvements than other homeowners.

Continued home price appreciation is also encouraging people to put money into their homes.”

24 REMODELING / SEPTEMBER 2015

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Your Business /

TECHNOLOGY

Mobile Toolbox Six simple technology tips to increase efficiency, profitability, and credibility INSIGHT BY GARY THILL

When Brad Beldon needs to find a work order, he doesn’t shuffle through papers.

Instead, he uses a cloud storage system accessible via computer or mobile device that lets him find what he needs whether he’s at the office, on the road, or at home.

“We don’t worry about looking for a lost piece of paper,” says Beldon, CEO of the Beldon Group. “It’s always there, and it’s always searchable.”

Putting documents in the cloud is just one example of how contractors can use technology to make workers more efficient and business more profitable, experts say. And, they add, judicious use of technology also can boost credibility with customers. Here are five more ways contractors can use technology to their advantage.

1. Use and share online calendars. Beldon, who gives all employees tablets, also asks them to put their schedules on the calendar and share them with the company. That way, everyone can see where conflicts exist and schedule around them accordingly. “Email and calendars are two huge things people take for granted,” he says. “But if you become proficient at them, it’s a huge help.”

2. Introduce customers to existing technology. For example, Dawn Cannon, executive vice president of bank operations for EnerBank USA, says HVAC contractors can add a lot of value just by offering customers smart home technology such as the Nest thermostat. “The homeowner feels like they’ve gotten a lot of value and the contractor has had to do virtually nothing to offer it,” Cannon said.

3. Look for technology that’s tailored to the industry. For bookkeeping, many contractors simply use off-the-shelf software, such as QuickBooks, says John Mike, national marketing manager for Allied Building Products. But there also are software options specifically designed for contractors to help them better manage their profit and loss, material and labor costs, and operational overhead.

4. Ask industry partners for solutions. Mike says many manufacturers and distributors offer apps and programs to help contractors sell more efficiently.

“We’re used to customers shopping us for materials,” he said. “It’s no different with technology.”

5. Remember, there’s an app for that. Beldon says contractors have a multitude of apps to choose from to streamline work and take advantage of mobile flexibility. “The more data you have available to you at your fingertips, the better you can be at addressing issues in your company,” he said. “And by addressing those issues your customers ultimately get a better product.”

While technology shows a lot of promise, Beldon and others encourage contractors to adopt it slowly and with a fair amount of skepticism. The best advice, they say, is to talk to other contractors about what’s working for them. Another approach is to use free solutions, such as Google Docs, before paying for more robust options.

But the biggest mistake most contractors are making today is disregarding technology altogether. As more customers and employees come to expect technology solutions, Mike says contractors must come on board. “You can’t ignore this,” he said. “You’re either on the tech bus or you’re under it.”

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OPERATIONS

Re-do Resolution With the right approach, client conflict can turn from a problem into an opportunity I NS I GH T BY VI CTO R I A D OW N I N G

RESPOND TO THE NOTIFICATION

give your clients more space for living.

This is when your client first voices his concern. You may receive a phone call, but even more common is an email (probably because it starts the paper trail for the worst-case scenario). While email is a great way to communicate, it’s not the way to respond to problems. Even if your client chooses to complain in an email, resist the urge to follow suit. Instead, pick up the phone and set a time to meet face to face. A friend and fellow business owner says, “If you find yourself having difficulty writing an email in response to a client, that’s a clear sign that it’s not an email issue.”

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Every company has some conflict with clients from time to time. The way your team handles these occurrences can mean the difference between creating a loyal client for life and a disgruntled homeowner who will spread dissatisfaction throughout the community. There are four stages to the client conflict cycle. Following are four tips on how to handle a disgruntled client throughout the process.

REMOVE THE SPLINTER

The longer it takes you to address the problem, the bigger it gets in your client’s eyes. No one enjoys facing unhappy customers, but speed is one of the most important elements in handling these issues effectively. The minute you hear about a problem—whether directly from a client or through an employee—reach out immediately. This shows that you are concerned and dedicated to client satisfaction.

RELEASE THE PRESSURE

When you meet with the client, keep your cool. Losing your temper will get you nowhere and could damage your relationship forever. Most important, listen first.

You may be tempted to try to solve the problem right away (or worse, defend your position). But by this point the problem has been festering. You need to allow the client an opportunity to vent. Don’t interrupt. Just listen carefully to what’s being said. It shows that you sincerely care about the problem and want to help.

CREATE THE SOLUTION

Once the client has released all the pent-up emotion, it’s time for you to talk. The first words out of your mouth should be his—repeat the concerns he voiced. This reinforces to the client that you were listening and understand the problem. In addition, repeating the issue will ensure that you and the client are in agreement about the full scope of the problem. If you’re not certain what will make the client happy, ask him. This way, he can have some input into solving the issue. Plus, in many cases the client will offer a solution that’s much less time-intensive or expensive you had expected.—Victoria Downing is president of Laurel, Md.-based Remodelers Advantage, an organization dedicated to helping remodelers build high-performance, profitable businesses.

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Your Business /

FINANCE

Sub Rosa The right paperwork can help you avoid tax problems over your use of subs I NS I GH T BY J U D I TH MI L L E R

You’re probably sick of all the talk about the Greek bailout by now, but I’m fascinated by it—not just because I studied macroeconomics in college, but also because of a particular reason behind Greece’s financial troubles. It’s this: If Greece were able to collect all the taxes its citizens should have been paying, it could pay off 80% of the bailout money it has borrowed.

Tax avoidance isn’t a problem in Greece alone, though. Estimates indicate America’s underground economy is so big it would generate $1 trillion worth of new tax payments. And as

we all know, non-payment of taxes in the construction industry is rampant. I’ve heard remodelers around the country say things like, “I know John Doe should be an employee, but he doesn’t want to be taxed.” What this really means is “I don’t want to pay all those taxes on John Doe’s behalf.”

Ultimately, Greece must come to account with its tax cheats.

In the United States, we’ve seen mounting evidence that the federal government is going after companies that it believes avoids taxes, worker’s compensation, and liability costs by treating people as independent subcontractors rather than as employees.

Answering the sub-vs.-employee question has always required a judgment call, and until recently the determining factors have involved the amount of control a contractor had over the sub and the amount of control a contractor had over his own decisions.

But recently, the administrator of the Wage and Hour Division in the U.S. Department of Labor issued a memorandum that analysts say puts more emphasis on the sub’s economic independence. In essence, the more that subcontractor relies on you for his living, the harder it will be for you to prove he’s independent.

Meanwhile, the IRS is increasing its audits of contractors, with 1099 classifications in its crosshairs. Protect yourself now!

Four years ago, attorney and accounting professor Barry Leibo-

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wicz wrote an essay saying an employee has these characteristics: • Is paid by the hour/week/month/year • Works only for you • Is reimbursed for business expenses such as mileage and cell phone use • Is trained or monitored by someone in the company • Provides oral or written reports Leibowicz said an independent contractor shows these traits: • Is paid by the job and can suffer a profit/loss based on the job bid • Makes his/her work available to the general public • Incurs business expenses not related to work on your job but in running a company • Is responsible for his/her own training • Has a periodic relationship with you In summary, Leibowicz says, “When a worker determines means, manner, and time of performance, in the context of a relationship where he can either profit or lose money in the process, any job, regardless of how complex or menial, can be performed by an independent contractor.”

So, how to protect yourself from the potential liabilities of incorrectly classifying an independent contractor this year?

1.

Set up an alphabetical file into which you’ll place all vendor 1099 information.

2. List all potential independent contractors whom you have paid $600 or more (1099 dollars are based on payments made) in 2015 and who are not incorporated—except for lawyers: talk to your accountant about this.

3. Determine the basis on which this payee has been classified as an independent contractor.

4. Send the list, together with the basis for determination, to your accountant for their review and sign–off: this protects you in case of audit.

5. Secure the payee’s Taxpayer ID Number by requesting a completed W-9 form. At the same time, you might send a letter notifying them of the increased scrutiny of independent contractor classifications—you’d be doing them a favor as well.

6. Secure the payee’s workers comp and general liability insurance certificates, if applicable. If not applicable, include a letter or email in the alphabetical file clarifying why this payee was not responsible for these insurances.

Don’t be like Greece—pay the taxes you owe and don’t get caught paying penalties on behalf of workers who don’t do the same.— Judith Miller is a Seattle-based business consultant and trainer.

Your Business /

OPERATIONS

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Chicago October 1 - 2, 2015 Booth #1824 • Remodeling Show • Navy Pier • Chicago, Illinois Lumber Liquidators is North America’s largest specialty retailer of hardwood flooring. Our buying power allows us to negotiate directly with the mills, and pass the savings on to you.

Cutting the Cord Yes, even in today’s ever-connected world, you can turn off the phone and still enjoy success I N SIGH T BY PAUL W IN AN S

Recently I talked with a client and his production manager about the stress and fatigue the production manager is experiencing. The production manager more or less responds to any text or call that he receives, no matter what time it is. The result is that he is almost always stressed and tired, which probably makes anything he tries to do not as well-done as he would like it to be. With the resulting errors and things being forgotten, the production workload gets bigger and bigger.

You might say that the production manager is addicted to the stimuli his phone provides. This is not unusual. A recent New York Times article gave the reason why: “Smartphones are a potent delivery mechanism for two fundamental human impulses, according to Paul Atchley, a psychology professor at the University of Kansas: our quest to find new and interesting distractions, and our desire to feel that we have checked off a task.” The problems with our inclination to be controlled by these two impulses are that we can never stay focused on the task at hand, and we can never disconnect and rest. What to do?

SET LIMITS WITH YOUR CLIENTS

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The only way your clients will get the good job they are paying for is if the clients don’t communicate with you and your employees 24 hours a day, 7 days a week. On work days between, say, 5 p.m. and 7 a.m., let the clients know you will have your phone on airplane mode or off. Do the same with your weekends.

Have one cellphone that rotates each weekend between all the people in the company. That is the number given to the clients for when a true emergency has occurred outside of the boundary hours you have set up for regular communication.

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Put the phone down for at least a couple of hours. Live your life without it. Some of you may remember when smartphones and cellphones did not exist. Life went on, pretty much as we know it, albeit at a slightly slower pace. A slower pace can be healthy for people. Give that gift to yourself, at least for part of your day.

The world is a great place. You can’t see much of it looking down at your screen.

Do you have children? If you are looking at a screen all the time, how will they learn to socialize with others? It all starts at home. What is really important to you? Is it being connected to your clients or being with your family?

Several months ago there was a Kickstarter campaign for the NoPhone, a slab of plastic in the shape of a smartphone. Feel the need to have the security that carrying your phone gives you but don’t want to be connected? Try the NoPhone!

The production manager I mentioned is a wonderful man. He truly cares about those the company serves and his co-workers. His opportunity is to put his own needs above those of others. Even with addiction, one can make a different choice.

You have to decide it is worth it to do so.—Paul Winans, a veteran remodeler, now works as a facilitator for Remodelers Advantage, and as a consultant to remodeling business owners.

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Your Business /

RM 550

Digging Deep What the Remodeling 550 revealed about the nation’s largest replacement contractors

BY CURTI S SP R U NG

The tried and true marketing method of referrals helped replacement contractors have an incredible year in 2014, making a combined total of $2.54 billion in sales according to data gathered from this year’s Remodeling 550. (See Remodeling’s website for the list.) We analyzed the data of the 150 featured replacement contractors to find out more than just what was featured on the list, including data about which companies employed a sales manager and what kinds of benefits were offered to employees.

The top marketing methods utilized were referrals (42.7%), re-

peat customers (32.3%), company website (28%), events (28.7%), and word of mouth (19.9%). And while online referral sites like Angie’s List or Houzz might seem to dominate the conversation, only 11.8% of the 136 respondents on the replacement contractor rankings listed it as one of their top three lead generators.

Replacement contractors’ average marketing cost as a percent of sales volume was just around 9.8%. Ten of the 132 respondents to that question spent more than 20% of their sales volume on marketing, while 28.8% of the respondents spent less than 5% on marketing. In addition, 60% of the companies said they employ a sales manager.

Replacement contractors varied in size much more than the general contractors, with gross sales ranging from under $1 million to just around $531 million at the biggest company. The bulk of replacement contractors, 30.7%, made between $2 million and $5 million in sales last year. The second largest group, at 21.3%, made between $10 million and $20 million in sales.

Over 81% of replacement contractors listed work with windows and doors. The next four service areas for replacement contractors are siding (65%), roofing (50.4%), gutter protection (43.4%), and decks (30.8%), with a majority of replacement contractors offering multiple services.

Congratulations TO HANLEY WOOD’S JESSE H. NEAL AWARD WINNERS

Hanley Wood is committed to publishing quality content that serves the information needs of construction industry professionals. Our editors have once again been honored by the most prestigious editorial awards program.

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2015 CASE AWARD

EASY RIDER

By Craig Webb

REMODELINGMAG.COM

SEPTEMBER 2015 / REMODELING 41

2015 CASE AWARD

The master behind Kraftmaster Renovations builds a solid path to profit even as he lives on the edge.

Photography By Steven Freeman

T

o understand why Bob Gockeler succeeds as a remodeler, ask him about his dirt bike.

Gockeler once spent six straight hours on the track he created behind his home doing nothing but practicing how to make a left turn. It’s just one of many skills you need to win in motocross, and you’d think that weather, the track you’re on, and the competitions would make every left turn slightly different. But Gockeler wanted to build consistency within that chaos, so he put in the time.

You could say that being able to balance control with spontaneity distinguishes the leaders at lots of great remodeling businesses, and in that pantheon now comes Gockeler, winner of this year’s Fred Case Remodeling Entrepreneur of the Year Award. And by spending time with him in New Jersey, you get a real sense of how unconventionally conventional Gockeler is.

On the one hand, Gockeler is a risk-taker, given to dropping phrases into his conversations like “one of the times I broke my collarbone … .” He’ll tell you he has attention deficit disorder. In the wealthy, button-down New York City suburb of Chatham where he works—where even the local Dunkin’ Donuts has a tasteful wood sign—Gockeler greets you in cowboy boots and what looks at first like a tie-dyed T-shirt, and his conversation might ramble toward his recently revived hobby of bowfishing on the Delaware River.

But this same Gockeler will tell you how he picked Chatham well ahead of opening Kraftmaster to maximize his chances for success, and how during the years he spent learning the basics of remodeling he took care to never come near Chatham, so that no potential future customer would ever associate him with the lowpriced service he was running. He also will tell you his sales process is so consistent his coworkers get sick of hearing it. And the care his company takes to stage a house reflects years of thinking about how to minimize dust while maximizing customer referrals.

Gockeler actually runs two businesses: Kraftmaster Renovations, a K&B outfit; and Kitchen Intuitions, a narrow storefront showroom on Main Street that sells cabinets and countertops primarily to fellow remodelers. They did $2.2 million in business last year, mostly jobs averaging $80,000 to $90,000—a price that 42 REMODELING / SEPTEMBER 2015

Kraftmaster, Roadmaster Case Award winner Robert Gockeler and his sons are avid dirt-bike racers.

Gockeler says puts him toward the upper end of the middle tier for projects in his area. Gross profit is in the high 30s and Gockeler aims for net profit of 10%. The full-time staff consists of Gockeler, son Robbie Gockeler, and two designers; beyond that he keeps a platoon of subcontractors busy almost full time.

PREP SCHOOL When the judges gave Gockeler the Case Award, they cited in particular the way his company prepares an area for renovation.

“The day you start, you set the stage” for how the customer feels about you, Gockeler says, so he regards staging as crucial to future business. His steps include: • Placing doormats at every junction point in the house.

• Laying ⅛-inch hardboards made from eucalyptus atop paper on all parts of the floor that could be walked on. Eucaboard stays in place, doesn’t rip, and minimize dents when tools are dropped. Gockeler says that benefits crews as well as clients: “Think of the stress level that has mitigated for the guys.”

• Using 1x3s to create a temporary wall onto which plastic sheeting can be stapled. A stable wall makes it much harder for dust to leak into living areas.

• Taping all return vents.

• Placing ZipWalls (basically, plastic sheets that can be opened or closed with a zipper) in areas where one has to move from REMODELINGMAG.COM

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2015 CASE AWARD

Walls of Protection Gockeler doesn't stint on finding ways to keep a project's dust and dirt from entering the rest of the house. He erects walls of plastic, puts eucalyptus boards and mats on the floors, and tapes every possible seam.

construction to living spaces. Along with the ZipWall, Kraftmaster often adds a second plastic barrier and a mat to catch stray dust.

• Creating a temporary kitchen.

• Using a lock box so workers needn't bother the occupants.

• Renting a port-a-john so that workers never invade a homeowner’s private space.

“Inspectors see our jobs all say they’re amazed at what we do,” Gockeler says.

SOCIAL STUDIES Gockeler used LinkedIn rather than email for all his messages related to this story. It makes sense given how much time he spends on social media. To bring in traffic, KraftMaster’s Facebook page features 150 albums of past projects, each of which has 50 to 100 photos. Recently, Kraftmaster had 55 projects on Houzz, two dozen boards on Pinterest, and a spot on Angie’s List. Even a Google search as simple as “kitchen remodeling NJ” will bring up Kraftmaster on the first page.

“Other than your personal reputation, your online reputation is the most important one you have,” Gockeler says. “If you’re not on it, you’ll never get that business.”

Gockeler turns to LinkedIn when he gets an inquiry so he can learn about the potential client, find potential connections, and decide how to talk to the future customer. “And it gives them an opportunity to look at me,” he adds—a viewpoint he backs up with a collection of bios, endorsements, and statements that stretch several times beyond what you find on most LinkedIn pages.

That LinkedIn page shows Gockeler, now 52, took a roundabout trip to professional remodeling. By the time he was 23 he owned a landscaping business with 30 employees, a slew of heavy equipment, and a 10,000-square-foot pole barn he had built by hand.

Around age 30 he got into an accident that crushed several discs at about the same time a drunk driver rolled over one of his trucks. Gockeler spent two months in the hospital, and by the 44 REMODELING / SEPTEMBER 2015

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2015 CASE AWARD

time he emerged in 1992, the business was gone.

So he found a recruiter who sent him to ADT Security for an interview with a persnickety hiring manager. Though he never had a job interview before, Gockeler was hired as a sales rep. In five years, he rose to become ADT’s director of small business security services, a division that he took in 36 months from a $50 million to a $350 million operation. By 2000, he was overseeing 103 managers and a commission-only sales staff of 1,100.

Then came six more years in corporate sales. Business was great, but his marriage collapsed. By 2006 he had been divorced for several years and was pretty much broke. But he wasn't scared of starting anew. “Giving up is never an option for me,” he says.

So he went into remodeling.

Here again, Gockeler had a plan: He created a kitchen refacing company called Empire Contracting so he could learn what’s involved in remodeling. It didn’t pay a lot—when he opened his store in Chatham, he says, “I had maybe enough money to pay the rent for one month, and no contracts”—but it and his past sales experience taught him what he needed to succeed.

STEPPING STONES Gockeler preaches at the church of the pre-sale, a place where marketing on social media combined with support for local causes and regular presence at area events help produce a closing rate from inquiries that he estimates is in the high 70s. “Sales probably accounts for the least amount of time that I spend,” he says.

“Marketing is what I do most.” Gockeler figures that by the time a customer does decide to call Kraftmaster, he or she knows a lot about what the company does. That helps cull the list; there’s less time spent on people who want stuff you don’t do or can’t afford.

Once he does get to the sales process, Gockeler hews to a consistent path. When a customer calls to express interest in hiring Kraftmaster, Gockeler spends roughly 20 minutes explaining the company’s operations practices. That includes mentioning that Kraftmaster charges a nonrefundable $1,500 retainer that will be applied to the job if the prospect becomes a customer. (On bigger jobs, Kraftmaster might require a second retainer later.)

He then gives the prospect homework by having him or her fill out a planning guide on the Kraftmaster website and an idea book from Houzz. “That suggests involvement,” he says. “By the time we come to their house, they have a lot more invested with us than we do with them.” The planning guide also includes a place in which the prospects list how much they can spend.

Meanwhile, Gockeler goes online to get maps of every home and discover the size of the house and property. He’s wary about places that don’t fit his upper-middle-class target. “Our custom is not the $200,000 kitchen,” he says. From the work submitted by the prospects, Gockeler says that in about 15 minutes he can get a good sense of the customer’s desires and its spending capacity.

Then comes the in-person meeting, usually featuring Gockeler and Kim Platt or Maureen Madigan, the two on-staff designers.

Visits typically take an hour to get to a customer commitment.

Gockeler says he’s so consistent the designer “knows the exact jokes that’ll come out of my mouth.”

“We try to guide people that if you’re not going to do what’s 46 REMODELING / SEPTEMBER 2015

Air Blocks Judges gave Gockeler the Fred Case Award in large part because of the care he takes in staging, such as erecting floor-to-ceiling plastic barriers as well as sealing the air vents.

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2015 CASE AWARD

Zip Code In cases where people need to go into and out of a jobsite, Gockeler favors the ZipWall system, combined with floor mats and eucalyptus boards.

right for your home, then you’re wasting your money,” he says.

No estimates are given. Rather, he and the designers will bring three sets of plans: One showing what can be done based on the customers’ declared budget, one showing what it would cost to do everything on the customers’ wish list, and one that exceeds the budget by about 20%.

Gockeler takes care at the meeting to walk through the costestimation sheet, estimate how long it takes to accomplish certain tasks, and explain payment terms. For instance, typically it takes two weeks between when the retainer is signed and detailed floor plans are drawn. If the customer says yes, Gockeler and the designer collect the retainer and spend a half hour measuring spaces and taking photos. All documents then are put into Google Docs for storing and sharing.

Gockeler pays as much attention to the end as to the staging at the start. He asks customers to put Post-it notes at places that they think should be on the punch list, and he makes a point of walking through the project with the customer to see what might have been overlooked. “The punch list is something that I hear a

lot about—that contractors never come back to finish,” he says. “It definitely sets you apart when you pay attention to details.”

Those details include getting paid. Most projects call for Kraftmaster to collect on about eight separate occasions, though some contracts call for as many as 17. Aside from the retainer, he asks for a 15% down payment. “I’m always ahead of my numbers,” he says.

“I’m never going to pay you to do your project.” He takes care to designate a place in the where the customer is supposed to leave the check. He will process credit cards, but for those he warns that he’ll charge a 3% processing fee. Hearing that, most customers switch back to a check.

Expect more growth from Kraftmaster. Gockeler has done three additions so far, one worth $550,000, and he’s thinking of getting further into that business. He wants to do videos, find a better model contract, and figure out more ways to keep dust out of his jobs. And despite his attention deficit disorder, he has learned to be patient, do his homework, and plan.

“I bought a motorcycle when I was young, and it was instant gratification,” he says. “In two weeks, I hated it. Now I’d rather wait.”

About the Fred Case Award

award of its kind in that a cash prize is awarded to finalists as well as to the winner. The other finalists this year were: Peter DiStefano, president, DiStefano Brothers Construction, Wakefield, R.I.; Hector Kusnier, president, K&B Home Remodelers, Succasunna, N.J.; and Mike West, owner, West Construction, Avon Lake, Ohio. Each of them plus Gockeler received a plaque and $2,500 prize check. As winner, Gockeler received an additional $10,000.

Judging this year’s award were Bruce Case, president at Case Design/Remodeling and Fred’s son; Kermit Baker, senior research fellow at the Joint Center for Housing Studies of Harvard University; and last year’s Fred Case Award winner Bill Simone.

Bob Gockeler is the ninth winner of the Fred Case Remodeling Entrepreneur of the Year Award, established by Fred Case, the founder of Case Design/Remodeling.

Case founded his company in 1961 with a little money and a lot of ideas, seeking to create a business, not a practice, and to constantly elevate the level of professionalism in the industry. This award reflects his commitment to that idea. Nominees for the award are evaluated for their business acumen, company financial strength, community and industry involvement, and entrepreneurial spirit.

The award is open to all remodeling company leaders and recognizes a specific individual, not a company. This is the only industry

48 REMODELING / SEPTEMBER 2015

Interested in applying for next year’s award? Want to nominate someone?

Contact Darryl Crosby at Case for more details at dcrosby@casedesign.com

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TRENDS: LABOR

Big50 Perspective Remodeling firms across the country are feeling the labor crunch. Through Remodeling’s Big 50 Bites, several executives have spoken about how to address it.

On Developing Young Talent: I think some of our trade schools can focus on shedding a better light on the field guys and really stress how important the skilled trades are to the remodeling industry, because I don’t feel like we have that. It’s very important that we start training [people] younger and getting rid of that stigma. There are not many carpentry classes down here, but there’s business and economics and management and everything else. I really think it starts at the core offering people the option to learn a trade, understand it, and really perfect that trade.—Paul Beattie, Beattie Development, Cape Coral, Fla. On Reaching Women: The biggest thing is, we can set an example and we can be that barrier breakthrough that encourages women to give it a try so that it’s not intimidating to say that you’re in remodeling or a construction-based business. You don’t have to physically do the labor in order to be successful. With remodeling, a huge way that people get into the business is that they grow up in it, so it starts internally with the families teaching their daughters and not just relying on their sons to learn the business.—Abby Binder, Binder Windows, Milwaukee

On Finding the Next Generation: [We] worked with the local community college in Mason City, Iowa, and sat down with the building trades instructor to see if they were going to be using some alternative materials on the new houses they were building and if they were, we would donate tools and some training. As those classes graduated, maybe some of those guys would realize they’re not going to be home builders, they’re going to be tradespeople, and we could maybe pick up a couple installers every year.—Paul Despenas, Midwest Construction, Grimes, Iowa —As told to Erin Ansley 50 REMODELING / SEPTEMBER 2015

Remodeling’s Labors Lost?

To overcome a nationwide labor shortage, remodelers must start getting creative / Insight by Judy Mozen

O

ne of the greatest privileges of serving as 2015-2016 NARI president is the opportunity to travel the country, meeting and speaking to NARI members and industry partners. While our conversations differ, many topics and concerns are repeated nearly everywhere I travel. What I hear about from coast to coast, and see in my own hometown of Atlanta, is a severe shortage of skilled workers in the construction industry.

NARI is not the only organization receiving reports of labor force shortages. The NAHB found in a January 2015 survey that 68% of respondents expected “cost/availability of labor” to be the most significant problem faced by builders during 2015. The Joint Center for Housing Studies (JCHS) of Harvard University reported that skilled trades continue to top the list of the most difficult employment positions to fill in the U.S. Conventional wisdom would say that as the economy continues to improve and homeowners move forward with improvement projects, workers would flock to join our ranks. So where are they? The short answer is many left our industry when the recession hit, and they have not returned.

As NARI president, I am strongly advocating for members of our organization to think outside the box to recruit and train individuals to our workforce. The remodeling industry needs to be inclusive and welcoming to young people, non-traditional workers like legal international residents, and, yes, women. These are the demographics we should seek for workforce growth.

First, we’ve got to change the perceptions that young people and their parents have regarding our industry. We can begin by speaking at high schools about the opportunities and rewards of a career in remodeling.

Also, we need to offer young people attractive educational opportunities by partnering with local schools to create relevant courses designed to help graduates transition to the workforce. It is disconcerting to note that apprenticeship programs, according to the Department of Labor, have steadily fallen from 2001 to 2014.

Next, let’s reach out to legal internationals and welcome them into NARI. How? Local chapters should partner with diverse remodeling and construction associations to build relationships, foster education, and certifications. We need to acknowledge that legal internationals are important to our industry. In 2013, foreign–born workers accounted for approximately 27.9% of the construction industry workforce, according to JCHS. Let us grow this number and increase the ranks of skilled workers in our REMODELINGMAG.COM

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industry. NARI chapters such as Charlotte, N.C., and Atlanta have begun to welcome and partner with diverse associations.

Finally, women are a great untapped resource for our business. Certainly I am biased on the subject, but the fact is women make over 60% of the decisions when a home is remodeled. And yet, women comprise less than 10% of the remodeling industry workforce. Why can’t our clients experience the added value of a woman on every team? Again, I believe it’s because we’ve failed to emphasize recruiting and educating woman to be part of our labor force. We need to seek out opportunities to tell our story to young girls in our communities. It’s not that we are keeping them out; it’s that we are not encouraging them to enter.

A group that has succeeded is the Oregon Tradeswoman Association. On a trip to Portland, I learned that they have experienced more than 400 applications for 100 available positions in skilled trades. We need to accomplish more of the same success.

I hope that this year as I am NARI president, I may speak and write to groups of young women to explain that this is a profession where they can excel.

Women can be naturals in the remodeling industry; after all, it is the home.

Our world has changed, and our industry must change, too. So spread the word, talk to groups, and be an agent of change. By diversifying our workforce, we will bring new talent, expertise, and skills to the remodeling industry, for the benefit of us all.—Judy Mozen, CR, GCP, is president of Handcrafted Homes Inc., Atlanta.

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TRENDS: SOCIAL MEDIA

Getting Social: The View from the Pros Professional remodeler Darryl Rose takes the reins to ask Porch.com CEO Matt Ehrlichman the questions contractors want answered.

As a publication for remodelers, we do our best to identify and explore the issues that matter to you. But we aren’t out in the field every day, actually wading through new regulations or trying to find new leads from online startups. To remedy that, we’ve brought in 2014 Remodeling Big50 recipient Darryl Rose from Get Dwell in Chicago, and asked him to talk to Porch.com founder and CEO Matt Ehrlichman about the issues that matter to remodelers. They chatted for an hour about everything from online startups to who owns an online transaction for a home repair project. Below is a portion of the interview, edited for length and clarity. You can find an extended transcript on our website, www.remodelingmag.com.

a bit different than your business model, isn’t it?

ME: Yeah, there’s all kinds of business models out in the market. Some take percentages from the job, when transactions are processed, others charge on a per lead basis, some charge the consumer a fee to get access to information. There’s one offering a subscription package to professionals to be able to get highlighted and be able to show the things that drive them more business in particular ZIP codes that they want to focus on and to grow in.

And the second, as we roll this product out, in Seattle we have our booking site where transactions are processed through the system and whenever those transactions are processed there’s a transaction fee they’re charged. But the product is free to the consumer; it will always be free to the consumer.

GROWING COMPETITION

Remodeling Magazine (REM): Porch is able to look at everybody that’s going in, and you’ve built Porch from the ground up to hook people up with professionals. What about Google and Amazon? Those guys are starting to look at doing something, maybe not exactly the same as Porch but they’re still kind of looking at this as an area they could potentially expand. What does Porch do, or what is Porch’s advantage in this area—connecting people with professionals—that puts you above and beyond someone like Google or Amazon who’s jumping in here later in the game?

Matt Ehrlichman (ME): At the end of the day we designed the company and really designed our whole strategy to stay ahead for a very long time. And what I mean is that we didn’t start building consumer features that anyone could copy. We went after things that other people can’t replicate. We bring in all this data with our exclusive partnership that only Porch has access to, building this massive network of partners that only Porch has access to.

So therefore we know, for homeowners, who your neighbors have used and which professionals work on homes like yours and who is verified/licensed today in any of the 50 states and their grade that they say they have.

Darryl Rose (DR): Those two competitors he mentioned, Amazon and Google, do they take a percentage of the job? That’s quite 54 REMODELING / SEPTEMBER 2015

Darryl Rose leads Get Dwell, a handyman service based in Chicago.

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TRENDS: SOCIAL MEDIA

OWNING THE JOB

DR: Did you say you’re going to be booking the transaction?

ME: Yeah. We have that live in Seattle today. We’ve found some homeowners, what they’ve told us is that for lots of types of things in their home, if they need a remodel or a roof repair or there’s this big project, they want to talk to multiple professionals and the number one thing that’s most important is trust.

There are other things with very small projects, like “my toilet is plugged.” They don’t want to spend time talking to multiple professionals; they want to be able to see what it costs and push a button and have a great professional that Porch stands behind come over to their home. You know right now that second product is only available in Seattle, but that is something that we’ll make available to homeowners as we go.

DR: OK, so part of your gameplan is to schedule the work, and will you make the financial transaction as well?

ME: Yup. The dollars for those smaller jobs process through the system and go through to the professional’s bank account. What professionals are telling us they really do want is the combination of leads, opportunities to go and do bigger projects that they want, and some of those smaller things they can tuck in and fill in their schedule.

DR: I think when homeowners look at their home, they’re not putting in something that’s cheap and something that they don’t think is quality. They’re looking at quality and value both.

ME: I think that’s right, that’s spot on. More than anything

else that Porch is trying to focus on, from the professionals that we work with, is quality. That’s the stuff we talk about internally, that’s the metrics that we look at. [Our competitors] really don’t stand behind those professionals. The vetting that Porch does and the data we have on professionals is so much deeper and richer than anybody else’s in the market and the reason we make that investment.

REM: You’re putting all of the information out there so the users of your site can make an informed decision. But it sounds like with this quicker thing that there are going to be maybe some Porch-sponsored guys that you’re working with. Is that correct?

ME: Yeah, that’s exactly right. For certain types of projects, like smaller projects, once we are comfortable in the quality of those professionals we’re working with, we will make those quick jobs available to them. For professionals that are premium professionals of Porch, we can give early access to those, but only if they are of quality. Because we are standing behind that work for the consumer. So we need to make sure those are great professionals.

REM: So if I have a quick problem that I need fixed, whatever you guys define as one of those simple problems, am I only going to be able to select those Porch-recommended guys? Am I going to have a selection? How’s that going to work?

ME: Yes, for smaller jobs, for specific jobs, [homeowners can] on their phone hit a button that says, “Hey, I need a plumber to come and unclog my toilet” or whatever that might be for those smaller defined services. In that case it goes out to the thoroughly vetted professionals and it pings them and says, “Hey, here’s this opportunity to come and do this particular job in this particular home.” Then it pings the homeowner and says, “OK great, the professional is on his way at the time you requested, whether that’s now or Saturday morning.” It’s really just a matter of simplifying this process for those smaller projects where the consumer doesn’t want to do research. For the mid-size and big projects, obviously the consumer would always go do their research.

WHAT MAKES A PRO

Matt Ehrlichman is president of Porch.com, a Seattle-based website offering remodeling services.

56 REMODELING / SEPTEMBER 2015

DR: So when you say you’ve got a vetted contractor, what does that mean to you guys?

ME: We take it to the next level, things like background checks, to make sure they’re verified, that they’re licensed. We make sure we’ve done reputation monitoring across the Internet, what kind of negative reviews are out there. It’s part of a number of other things we take in our process to be able to make sure those professionals are great.

DR: Homeowners never ask me this, but we don’t walk into a condo in the city of Chicago without having the three following items: general liability, workers comp insurance, and EPA certification for any building that’s pre-1978. Those things cost us a tremendous amount of money as a general contractor, as a professional business. But I would say over 50% of our competitors, and I think this is part of the slack you were getting at the remodeling conference, don’t have any of those things. And so therefore they’re not really legitimate companies. And it’s real hard for us to look at something as a professional, what we would consider REMODELINGMAG.COM

速

TRENDS: SOCIAL MEDIA

a professional, the standards we’re held to being professionals— which really come out of our pocketbook and really come out of our time for training and investment in our employees and classifications. So when you’re doing something online, I don’t really see any of those safeguards.

ME: An interesting learning for us over time is the vetting and requirements that are needed, particularly what consumers care about, and how different that is by trade. We provide services—it’s not just contracting services, it’s maintenance, repair, design, all these different types of services that homeowners use us to be able to connect with different business around the home.

They get a cleaner or a lawn service, there are no license requirements for these companies. There’s very different expectations of the certifications that they would get when you’re dealing with a roofer or a handyman or an electrician. These types of folks, we understand at the state level what the license requirements are, and what kind of insurance they’d have to have in order to be able to get a license, and all these different rules that apply. It’s been a massive amount of work for us to be able to understand and have all these feeds of data coming in across every single state. When they took a job through us in Seattle, they have to be licensed for us to be able to recommend and push that job to that professional. It varies by type of trade, type of professional, because consumers care about different things depending on what they’re trying to get done.

SEARCH ENGINE OPTIMIZED

DR: [Another remodeler] was saying [that] if a consumer clicked on Porch, since you’ve got a higher ranking than his website when somebody searched his company name, that if they came to your site and he didn’t have a profile on there, you guys would direct him to one of your professionals. If you get a first-page ranking and the client contacts you, that client who’s looking for ABC Remodeling, do you refer them to your paid subscribers?

How does that work?

ME: No, it always goes to their profile. It always goes to ABC Remodeling profile.

DR: These guys were saying if they didn’t have a profile, there’s not enough information present to verify the profile, if he’s a “click here and call this number.”

ME: So, certainly like every website out there, when people come to our website, we present consumers the ability to call us.

We have a support team that people can call, homeowners can call. We help those homeowners. When the homeowner is on the professional’s website, [i.e.] their profile on Porch and they call the professional, that rings right to the professional. That’s a call directly to that professional. If the homeowner comes to the professional’s site and there’s no information on there, we know the homeowner will leave and so we would want them to see other possible professionals before they close their browser. The last thing is we include links back to the professional’s website. We have no problem helping those professionals improve their SEO ranking. So that is something that we do.

DR: OK. I was called by Porch a while ago to do my site, to align with Porch. And they wanted to have my database. We’ve got 58 REMODELING / SEPTEMBER 2015

4,000-5,000 clients and 20,000 projects. If I downloaded that data to you, you essentially own that data, don’t you?

ME: No, you can cancel your profile at any time in the future and have the information removed, we would totally respect that.

DR: So that would all be off the site and that would come back to me and you wouldn’t have the projects that were done at those particular homes any longer?

ME: Yeah, if you ask to have those removed, we would totally remove them. The only exception I suppose is if the homeowner has their account and they want the information in their account. You know, it’s equally the homeowners’ information that they can put in the system. At the end of the day, thinking about it like LinkedIn might be a good corollary. Whether it’s the homeowner’s profile or the professional’s profile and they’re populating it out, just like a person populates out their resume.

DR: I think years ago the consumer used to ask their family, friend or neighbor, I still think they do, when it comes to remodeling or handymen, important things in their house. They turn to some trusted resource to see who they’d advise. I guess there’s a different watershed today where people go online and look at anonymous people, really, and see their reviews and that’s probably where a majority of people are finding tradespeople today. Is that correct?

ME: Yeah I think that’s right. I think that what we realized early on with Porch as we were out there looking at the market, people want to have word of mouth with a review, which is kind of hard to get. It’s hard to know, when you’re getting word of mouth, it’s really random. It might not be somebody that’s worked on the home at all. We’re bringing word of mouth online.

The way Porch has kind of thought about it, you can get these reviews, recommendations, and see who your neighbor has used.

The people that they’ve trusted. People with homes just like yours. Who they’ve used and who they really have liked. And that creates a different trust than what other people are able to do because of the information that we have. There’s a reason we’ve grown as quickly as we have. We’re solving a gap for consumers that are out there that they’re gravitating toward.

People want to have word of mouth with a review, which is kind of hard to get. ... We’re bringing word of mouth online.” - Matt Ehrlichman

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TRENDS: REGS

Caution: Uncle Sam at Work

Updates to a slew of federal programs could force big changes in how you do business. Here’s a roundup / by Charles Wardell and Craig Webb

INDEPENDENT SUBS VS. EMPLOYEES Remodelers who take pride in how they keep an army of independent subcontractors working for them virtually full time should take note: Washington increasingly views that relationship as cause for making you treat those subs as employees.

The toughening stance at DOL on the issue is best exemplified by an administrator’s interpretation issued July 15. Stripped of its legalese, the key message is that DOL is putting more weight on a subcontractor’s economic independence when it decides whether that sub really ought to be regarded as an independent enterprise, Suzanne Beall, federal legislative director at the National Association of Home Builders, told Remodeling.

That appears to be a shift from past practice, when government reviews appeared to focus on whether a company controlled a supposedly independent contractor by setting that person’s hours, providing tools, and requiring the contractor wear the 60 REMODELING / SEPTEMBER 2015

Photo by Jeniffer Boomer

HIGHER LIMITS ON OVERTIME EXEMPTIONS In July, the Department of Labor (DOL) proposed a rule that basically would double, to $47,892 a year from the current $23,660, the minimum salary a worker would have to earn to qualify for the so-called white-collar exemption, known as EAP, in the Fair Labor Standards Act. The exemption lets employers avoid paying time-and-a-half for working more than 40 hours a week.

Ostensibly, the exempt employee status is supposed to apply to people who are supervisors or have a large amount of leeway in how they manage their day. Non-exempt employees, by contrast, work under supervision and under set constraints. But because it’s so hard to discern exactly when a position qualifies under EAP, the Labor Department says it “has long recognized the salary level test as ‘the best single test’ of exempt status.”

The trouble is that the salary level hasn’t been updated since 2004. Its increase would reset the salary level to a point equal to the 40th percentile of earnings for full-time salaried workers today, and from here on out the number would be adjusted automatically to remain at that 40th percentile level.

The matter is far from settled: letters protesting the proposed rule had already been sent to DOL well before the Sept. 4 deadline for comments, and industry organizations have joined a new group called the Partnership to Protect Workplace Opportunity to battle the idea, calling the 113% increase too dramatic for businesses to absorb.

company’s uniform. “[N]o single factor, including control, should be over-emphasized,” David Weil, administrator of DOL’s Wage and Hour Division, wrote in a memo, known as an administrator’s interpretation. “Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee).”

Among factors to be considered in an economic realities test: • Is the work an integral part of the employer’s business?

• Does the workers’ managerial skill affect the workers’ opportunity for profits or loss?

• How does the worker’s relative investment compare to the employer’s investment?

REMODELINGMAG.COM

TRENDS: REGS

• Does the work performed require special skill and initiative?

• Is the relationship between the worker and the employer permanent or indefinite?

• What is the nature and degree of the employer’s control?

Weil’s use of construction as examples—and a commentary Beall sent to NAHB members on what Weil said—indicate construction companies could find themselves slicing the English language finely if they seek to keep treating subs as independents. For instance, Weil said a contractor who frames residential houses should regard carpenters as integral to an employer’s business because carpentry is an integral part of framing homes.

Beall’s response: “Notably, this example references a construction company that frames residential homes. [Emphasis hers.] Arguably, a company that builds homes is distinguishable from a company that frames homes. It is hard to argue that carpenters are not integral to a framing company. Consequently, this example does not imply that a framing subcontractor is integral to the home builder’s business. Framing is a necessary component to constructing a house, but it could be argued that it is not integral to the builder’s business.”

In elaborating on how the need for “special skill and initiative” can help identify an independent contractor, Weil said that while a highly skilled carpenter might provide carpentry services for a construction firm, in general he doesn’t operate independently because he does not determine the sequence of work, order additional materials, or think about bidding the next job. In other words, Weil said, he’s not showing the managerial and business skills that are part of being an independent contractor, but rather is just providing skilled labor.

CONFINED SPACES: NEED FOR CLARITY The Occupational Safety and Health Administration (OSHA) put its Confined Spaces in Construction standard into effect on Aug. 3. Now, anyone working in attics or crawlspaces must follow safety protocols similar to those that have long been required for utility workers in manholes.

In a webinar by the Building Performance Institute, OSHA Compliance Assistant Specialist Ron Williams said possible hazards range from open attic floor joists, to carbon monoxide from HVAC equipment, to fumes generated while blowing foam insulation. The safety protocols depend on the hazards but could include posting someone outside the space, written safety plans, and atmospheric testing.

“Small employers will have to put some effort into understanding the standard, because there are layers of requirements that can make it seem less than straightforward,” says Tressi L. Cordaro, a Washington, D.C.-based attorney with Jackson Lewis who advises employers on OSHA-related issues.

One possible problem on subcontracted jobs, she says, stems from the differing requirements for general contractors (GCs) and subcontractors. The GC has to brief the sub about hazards and required permits, while the sub must ensure that workers follow the relevant protocols. However, the GC’s liability in the event of an injury is unclear.

“It may be problematic because the GC may not be on the site 62 REMODELING / SEPTEMBER 2015

to see who is going into the space,” says Cordaro. “We’re hoping that the agency will issue some guidance in the near future on what they expect.”

SILICA: FENCED IN The Environmental Protection Agency’s proposed Silica Dust rule would cut workers’ permissible exposure to airborne silica dust generated by activities like cutting concrete tile and fiber cement. It would also include recordkeeping and medical monitoring requirements. OSHA administrator David Michaels wants the rule implemented before the end of 2018, at the latest. But that timetable has hit a roadblock.

Congress added “fencing language” to the most recent DOL appropriations bill that basically defunds implementation until additional studies are completed. These include studies by a review panel on how the rule will impact small business, as well as by the National Academy of Sciences on the rule’s epidemiological justification, the efficacy of sampling technologies, and the ability of regulated industries to comply.

RRP: RELIEF ON TESTING? The EPA’s Renovation Repair and Painting (RRP) rule requires lead-safe work practices when paint has a lead concentration of more than 0.5% by weight. It also requires that an inexpensive field test kit be developed to measure that lead concentration.

We’re still waiting.

Current kits merely identify whether lead is present. Industry pros say that costs money, because many remodelers use leadsafe practices by default to avoid more expensive and time-consuming XRF or lab testing. “If there were a field test that accurately measured the amount of lead in a paint sample, thousands of homes wouldn’t need RRP that now do,” says Mark Paskell, a Massachusetts-based RRP trainer.

The EPA held a hearing in June to discuss the issue. Randi Hutchinson, lobbyist for the National Association of the Remodeling Industry, says the meeting was in response to a rider Congress added to the EPA’s FY15 budget appropriation, directing the agency to either develop a kit or revisit its testing criteria.

The NAHB wants the latter. If no testing is done, the current rule mandates lead-safe practices on homes built before 1978. Bob Hanbury, a Newington, Conn., builder/remodeler who represented NAHB at the meeting says the association wants the EPA to roll that back to pre-1960 homes. “Homes built between 1960 and 1978 have a low probability of lead paint,” he says. “Even fewer have lead at a problem level.” No word yet on EPA’s next move.

Layers of requirements can make it seem less than straightforward,” a lawyer says of OSHA’s confined space rule.

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Your building practices could look very different in the next five to 10 years /

by Craig Webb and Erin Ansley

NATURAL DISASTERS Who will have the greatest influence on products and processes expected to emerge over the next decade? We’re betting on Mother Nature.

This year is far from over and yet the 5.5 million acres that have burned through August makes 2015 the second-worst year for fires in the past quarter-century, according to the National Interagency Fire Center. “We are seeing fire season in California become a year-round event,” says David Shew, staff chief at CalFire, the California Department of Forestry and Fire Protection.

Meanwhile, rising sea levels and stronger storms suggest the likelihood of more catastrophic flooding to occur at greater rates in the near future. And the incidents are expected to take place more often in regions once not considered hazardous, much like what happened during Superstorm Sandy.

Such destruction is sure to prompt changes in building materials, processes, and regulations. “The silver lining of disasters and building failures is change, to build back better and more resilient,” notes Claudette Reichel, Louisiana State University professor and extension housing specialist.

“We’ve seen that in a big way in Florida following Andrew, and in Louisiana after Katrina and Rita.”

Techniques are well under way to make buildings more resilient in the face of fire and flooding. “I suspect there will be changes to materials depending on outcomes of 66 REMODELING / SEPTEMBER 2015

N

early a decade ago, an executive at a big production builder described the American construction industry as “200 years of history and zero years of innovation.”

He’d have more trouble making that claim today.

Technological innovations and changes in the construction process—driven by both demographic and philosophical reasons—are reshaping the residential construction industry. As technology continue to advance and homeowners continue to demand higher performance from their houses and the systems in them, building professionals must respond by becoming more efficient and knowledgeable than ever before.

From more durable, disaster-resistant construction products and processes, to the speed and precision offered by advanced 3D printing technology, to the potential for robotics to open the industry to a new field of workers, these three trends could change the way you operate in five to 10 years, and help you face major industry challenges head-on.

certain testing,” says Steve Quarles, a senior scientist with the Insurance Institute for Business & Home Safety. “It’s likely that the research results would be transferred to the standards and codes, and codes will adjust to the increased knowledge, so you will be seeing changes in codes over next several years.”

Although some products to deal with flooding haven’t gone mainstream, in many cases because of the cost associated with them, Reichel envisions them becoming more widespread.

Expect flood-insurance rules and rates to influence that trend, she says.

CalFire

Over the Horizon

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3D PRINTING The rapidly-evolving field of 3D printing technology could change the way you build in less than a decade. With the technology continuing to improve, some proponents see potential for it to create (or renovate) rooms or even entire homes in less time—and with fewer opportunities for on-the-job injuries—than the traditional building process.

In January, a Chinese enterprise called the Winsun Decoration Design Engineering Co. showed off a multistory villa it created using a 3D printer that spits out a construction material made from cement and construction waste. Winsun told reporters it took eight people one month to build the 12,000-square-foot structure.

Don’t expect 3D printers to replace the nail gun anytime soon, but ventures such as the University of Southern California’s CRAFT—the Center for Rapid Automated Fabrication Technologies—see lots of possibilities in emergency housing for disaster victims, affordable homes for the poor, and new styles of houses that incorporate curves.

So far, the idea has mainly involved concrete. But this summer, scientists at Sweden’s Chalmers Institute of Technology announced they had found a way to take nanocellulose from wood pulp and combine it with a mainly water-based gel so that the nanocellulose could be used in a 3D printer. While you’re unlikely to see 3D printers create a 2x4, theoretically, every new use for wood should deliver extra stability to a timber industry that has seen hard times this past decade.

68 REMODELING / SEPTEMBER 2015

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ROBOTS AND EXOSKELETONS A home renovation site can be a dangerously messy place to work. And as the remodeling industry seeks to add more women to its ranks, lifting and manipulating heavy equipment and materials persists as a roadblock.

That’s why research and development of robots and exoskeletons matter. The U.S. Navy is testing an exoskeleton called Fortis that increases the wearer’s endurance by transferring the weight of heavy loads to the device’s frame. Operators can hold objects weighing up to 36 pounds with virtually no effort. That not only could help reduce fatigue-related injuries, it also could make it easier for women to take on tasks requiring significant upper-body strength.

Fortis is unpowered; a company called Ekso Bionics, which helps produce exoskeletons augmented with power motors for use at rehabilitation clinics to help people with lower-body injuries relearn how to walk, has begun development on a version for construction workers.

Meanwhile, the Defense Advanced Research Projects Agency (DARPA) gave $3.5 million this summer to the top three teams in its Robotics Challenge, designed to spur development of robots capable of assisting humans in disaster response. The contest challenged the robots to do things like drive through an obstacle course, turn a handle, cut a hole in a wall, climb a set of stairs, and maneuver through debris. Notably, the robot that dominated the initial trials was bought by Google. And at the University of Buffalo, State University of New York, the multidisciplinary Rust Belt Robotics Group is developing robots that can assist humans by carrying heavy materials, even up stairs.

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FINANCING Special Section

Take It to the Bank A fast-growing group of financial services firms are looking to capture a piece of the remodeling market through home improvement financing. By Gary Thill

T

he way Ger Ronan sees it, a remodeler’s job is to make customers comfortable enough to take the plunge into a home improvement project that’s often a significant chunk of change. For him, one of the most effective ways to do that is a sales tool that a growing number of banks and financial institutions are offering in a variety of forms: home improvement financing.

“When the average ticket for a home improvement project is $10,000, if you don’t offer financing, you’re not in the game,” says Ronan, owner of Yankee Home Improvement. “It will consummate the sale and make customers much more comfortable.”

The good news for remodelers is that more banks and financial institutions are now offering that type of home improvement financing; it seems institutions big and small are launching such programs daily. One of the nation’s biggest banks, Wells Fargo, recently announced a new push into home improvement financing. And dozens of other smaller lenders, including EnerBankUSA, AMS Financial Solutions and DealNet Capital, have also started actively courting the home improvement market and even remodelers themselves.

“There are many new entrants into the market,” says Bill Tree, Wells Fargo national renovation program manager vice president. “That’s because the home improvement market is growing and it has been for the last several years.” Tree is particularly excited about renovation mortgages, which allow homeowners to refinance based on the projected added value of large renovation projects such as room additions. “For those consumers who don’t have a lot of equity or cash, but know they can improve their value with a renovation, it’s a good option,” he says.

It’s still too early to tell how the financing push is affecting remodeling, but the reasons for it are clear—and evidence that it could be bolstering an already strong market is mounting. Steve Melman, director of economic services at the National Association of Home Builders (NAHB), points to home equity figures that more than doubled from their low point in 2009-

Home Improvement Financing 101 Home improvement financing comes in two main varieties: Secured Loans and Unsecured Loans.

Understanding the difference is crucial for customers—and remodelers—to make wise decisions.

Secured Loans, such as home equity lines of credit, are typically offered by traditional banks. The interest rates for these loans are based on mortgage rates. Remodelers don’t typically pay fees on these loans.

Unsecured Loans, such as zero down, zero interest for 12 months, are typically offered by nontraditional banks or financial institutions.

The interest rates for these loans are based on credit card rates.

Remodelers who offer this type of financing may pay processing fees similar to credit card fees.

This special section was produced by the Hanley Wood editorial team without input from advertisers.

72 REMODELING / SEPTEMBER 2015

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FINANCING Special Section

Energy Incentive Financing

10. With home prices (and thus equity) rising, more people are feeling comfortable pressing the play button on remodeling jobs that have been paused for years, whether they’re staying in their home or planning to move. “That’s a reason for banks to feel comfortable lending,” he says.

Remodelers are also more optimistic. In the second quarter, six out of 10 reported seeing improving business, according to NAHB’s Remodeling Index. “It’s all going in the right direction,” Melman says.

A report from Harvard University’s Joint Center for Housing Studies jibes with that sentiment: It projects nationwide home improvement spending in 2015 easily eclipsing the $325 billion during the peak of the last housing boom. And home improvement is faring much better than the overall housing market, the JCHS report says.

Meanwhile, recent consumer protection regulations have made home improvement loans much less “scary” than in the past, says Brandon Perry, president of AMS Financial Solutions. “A lot of things have come together to make it a better experience for everyone,” he says.

The Role of Remodelers The question remains: Do remodelers need to offer financing themselves to capitalize on this market? Pros like Ronan say the answer is a definite “yes.” And institutions such as EnerBankUSA are aggressively courting remodelers with simple apps and programs that make the approval process quick and painless. But whether remodelers decide to offer financing or not, experts agree that understanding the options, and educating your customers about them, is a smart move.

Currently, just 9% of remodelers actually offer or arrange financing, according to a NARI survey showing the myriad ways customers pay for jobs.

That poll found 96% of remodelers had been paid by check, 31% by credit card, 26% via home equity loan, 22% through a bank home improvement loan, 21% with cash, and 11% with money borrowed by the homeowner.

Many remodelers don’t offer financing because they have enough business simply accepting cash or checks. Others worry that they’ll insult their customers by offering financing, that it will make the sale too complicated, or that a customer who gets denied will be put off from the sale.

Recent studies show that homeowners are more interested in energy efficiency than ever. And thanks to government incentives, a growing number of energy upgrade programs offer special financing for these improvements.

Remodelers who offer such financing say it offers several advantages. Phil Isaacs, owner of California Energy Consultant Services, says his firm is listed on the websites of the banks he’s associated with, which yields good leads.

He adds that even small rebates can make customers spend more. Rather than $8,000 to $12,000, Isaacs’ jobs now average $25,000 to $30,000. “Our sales guys are just killing it,” he says.

Besides, he says, with demand growing every year, it’s only a matter of time before energy efficiency expertise is expected from remodelers. “Five to 10 years down the road, you’re not going to be a player unless you’re into it,” Isaacs says.

Energy Star: An overview of the EPA program. energystar.gov/ homeperformance Offers and Rebates from Energy Star Partners: A rundown on special offers. energystar.gov/rebate-finder Available Federal Tax Credits for Energy Efficiency and Renewable Energy: A list of tax credits for various products. energystar.gov/about/federal_ tax_credits Database of State Incentives for Renewables and Energy Efficiency: The most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency. dsireusa.org

This special section was produced by the Hanley Wood editorial team without input from advertisers.

74 REMODELING / SEPTEMBER 2015

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Credit is extended by Synchrony Bank. © 2015 Synchrony Financial. All rights reserved.

FINANCING Special Section

But those are all misperceptions, says John Harris, executive vice president of sales and marketing for EnerBank USA. He says that when given a choice, many customers prefer to finance large home improvement projects, and eight or nine out of every 10 homeowners get approved.

What’s more, many of his clients who offer financing report 30% increases in the size of jobs sold because it allows remodelers to more easily upsell customers. “You could take a check for $10,000, but wouldn’t you be a lot happier if you got a payment for $15,000, and the customer got exactly what they wanted?” Harris says. “It’s increasing the sales without having to add additional salespeople.”

Perry says today’s customer expects financing, and remodelers who offer it have another “value added” selling point. “Many people who look for financing don’t necessarily need it,” Perry says. “But they see it as a part of the equation and a way to leverage what they’re trying to do.”

Harris says the two most popular financing options are 12 months same-ascash interest-free financing and more traditional financing over a period of months or years. This typically comes at a higher interest rate, similar to credit card rates, Tree says. And just as when they accept credit cards, remodelers often must pay fees for some of this type of financing, usually around 6%, though Harris notes those fees can be built into the cost of the job.

But not all financing comes with fees. Ronan, who works with six different banks, has started working with credit unions, many of which offer

“When the average ticket for a home improvement project is $10,000, if you don’t offer financing, you’re not in the game.” no-fee financing and lower-interest financing that’s more along the lines of mortgage rates. “We’re constantly looking for a better rate,” he says.

“You have a highly educated consumer now with access to the Internet, and they’re going to shop rates. Money is money. If they can get a lower rate, they will, and you don’t want to lose a deal by charging 18%.”

Offering financing doesn’t mean remodelers are the ones putting packages together and handling the billing. Often, it’s as simple as mentioning that financing is available, providing a toll-free number, or going to a website.

Most customers can find out how much credit they can get in minutes while they’re sitting with their contract. That way, Harris says, remodelers can close the sale and get it on the books before they leave the home.

In contrast, Ronan says, many remodelers tell prospective clients to find their own financing and get back to them once they’ve secured it. “Now you’re losing control of the whole process,” he says. “They don’t necessarily have guaranteed money at the end of the job because they’re taking the word of the homeowner.”

As more financing options become available, remodelers who don’t offer it may be missing out on a key competitive advantage. “If remodelers aren’t offering financing, they’re missing the boat in their local market because someone [else] always is,” Perry says. “The better the financing they can offer, the more attractive it is for the customer.”

The Financers Here’s a short list of financial institutions offering home improvement financing: Amerifirst Home Improvement, trustamerifirst.com AMS Financial Solutions, homeimprovementloanpros.com Aqua Finance, aquafinance.com Bento for Business bentoforbusiness.com DealNet Capital Corp. dealnetcapital.com EnerBank USA, enerbank.com Foundation Finance Company, foundationfinance.com Goldman Sachs, goldmansachs.com GreenSky, greenskycredit.com The HELPcard, helpcard.com Kilowatt Financial, kilowattfinancial.com Synchrony Financial, synchronyfinancial.com Wells Fargo, wellsfargo.com

This special section was produced by the Hanley Wood editorial team without input from advertisers.

76 REMODELING / SEPTEMBER 2015

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Products 1

TRUCKS

Hit the Road Running

BY R E N A G O L D M AN

The recession forced many business owners to find ways to streamline operations in order to stay afloat. For remodelers, that included getting the most out of the vehicles used to carry workers and materials to jobsites. Even as business is getting back on track, people are looking for ways to keep transportation costs down and manufacturers are offering a range to options to improve functionality.

When it comes to selecting and outfitting work vehicles, there’s no one-size-fits-all. Remodelers have many different needs depending on the company size and the jobs they do.

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Ron Labbe, owner and president of Naples Lumber in Florida took a bold approach to increasing transportation efficiency: he commissioned his own custom-made trucks. Labbe worked with manufacturer Wallace International to engineer trucks with a lower chassis, smaller wheels, taller trailers, and sliding curtains. The new design allows lumber, windows, doors, and trim to be loaded and unloaded in any order.

For firms not ready to make the plunge to a custom fleet, here are the latest offerings in vehicle accessories and addons, from technological advancements to storage solutions.

SEPTEMBER 2015 / REMODELING 81

Products /

1. NO FEATHERWEIGHT

2

Knapheide’s new EC-Series Service Body is specifically designed for half-ton or compact trucks. To produce a lighter service body made of galvannealed steel, Knapheide reduced the gauge on some of the non-structural metal pieces and incorporated aluminum to make the shelving system lighter.

This gives smaller vehicles the ability to hold a 2,000-pound payload. The 36-inch CA single rear wheel EC-Series comes in a 36-inch height, and the 56-inch CA single rear wheel EC-Series is available in a standard 40-inch height or a low-profile 36-inch height. All Knapheide service bodies include adjustable shelving units. knapheide.com 2. STAY IN SYNC

3

4

SYNC 3, Ford’s latest communications and entertainment system, boasts faster performance and improved voice recognition that understands more conversational language, according to the firm. The display gives the user a choice between three sections—navigation, audio, and phone—and is designed to be used like a smartphone or tablet, with features such as swipe and pinch-to-zoom. Drivers can connect their mobile devices using AppLink, which will allow them to be controlled through the vehicle. SYNC 3 is available on the 2016 Ford F-150. ford.com 3. DIAMOND PLATED

A.R.E. introduced a Diamond Edition Deluxe Commercial Unit (DCU) truck cap made of 0.063 diamond plate aluminum, a heavier-duty material than A.R.E.’s standard DCU. Available in 20-, 23-, 26-, and 29-inch heights, it can be customized for a variety of door sizes, window options, tool box configurations, and roof racks. Side doors feature a folding T-handle with an automotive-style lock. Rear doors can be configured as a halflift door, double full doors, or a single full door. The cap can be ordered to fit any domestic or import truck. 4are.com 4. NEXT-GEN EXTENSION 5

Built using powder-coated aluminum, EZGlide2 is Weather Guard’s second-generation drop-down ladder rack. Its lighter weight maximizes roof weight capacity and allows for improved fuel economy. The racks can hold up to 100 pounds per side and fit extension ladders up to 40 feet and step or podium ladders from 3 feet to 12 feet. An optional third cross-member fits a conduit carrier. EZGlide2 features modular design and is offered with a variety of mounting kits to fit several different van models. weatherguard.com 5. STAY CONNECTED

Chevy now offers built-in 4G LTE Wi-Fi in the 2015 Silverado, turning the truck into a high-speed hotspot that supports up to seven devices. Users can connect to the Internet from outside the vehicle as long as the truck is on. In 2016, Chevy will add the ability to use Android Auto and Apple CarPlay to project information from a mobile device to the vehicle’s screen.

The capability will be a standard feature in a lineup of 2016 models, except for the most basic. chevrolet.com 82 REMODELING / SEPTEMBER 2015

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Products

Kohler swept the bath/ shower surround/shower door category, emerging as the brand leader in all four measures

Brand Recognition Remodeling’s 2015 Brand Use Study sheds light on which products pros use most often and hold in highest regard

BY LAU R A M C N U LTY

When it comes time to spec products for a job, there are many factors that remodelers need to consider, ranging from their client’s budget and personal style to their own experience with a brand’s performance and quality or the ease of delivery and installation.

To figure out what criteria matters most in the product selection, Remodeling’s Brand Use Study (research conducted

by The Farnsworth Group) polled nearly 1,000 professionals classified as remodelers, general contractors, or replacement contractors and asked them about their familiarity and opinions on brands in 54 product categories and four tool categories. Respondents were also asked to evaluate the importance

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of different criteria, such as price, performance, and dealer availability, for each category.

On average, remodelers put the most emphasis on product quality, followed by correct and undamaged deliveries. And generally speaking, money is of little object: price was consistently one of the lowest-ranking factors for consideration.

The table on the following pages shows which manufacturer came out as the brand leader in four areas: familiarity, brands used in the past two years, brands used most, and highest quality. We’ve also included the percentage point lead each top brand had over the second-place finisher to provide further context for the numbers.

SEPTEMBER 2015 / REMODELING 87

Products /

PRODUCT CATEGORY

FAMILIARITY (TOP)

Bath/Shower Surrounds/Shower Doors

Kohler, 88.1%

% POINT LEAD 11.9 10.7

USED IN PAST TWO YEARS Kohler, 75.6%

Bathroom Ventilation/Fans

NuTone, 90.2%

Tubs: Jetted and Non-Jetted

American Standard, 92.1%

Cabinets: Semi-Custom and Custom

KraftMaid, 77.7%

44.6

KraftMaid, 41.2%

Cabinets: Stock

KraftMaid, 80.2%

25.5

KraftMaid, 40.5%

Caulks/Sealants

DAP, 97.9%

11.6

DAP, 82.1%

Closet/Organization Systems

Rubbermaid, 81.4%

4.7

Closet Maid, 38.1%

Decking: Wood

Wolmanized Wood, EraWood (Lonza), 41.1%

1.1

Wolmanized Wood, EraWood & YellaWood (Great Southern Wood Preserving), 31%

2.6

NuTone, 63.1% Kohler, 66.7%

Decking: Composite and Vinyl

Trex (Trex Co) & AZEK Deck, 84.3%

17.3

Trex (Trex Co), 57.6%

Decking: Aluminum

LockDry, NextDeck (Nexan Building Products), 36.1%

19.2

LockDry, NextDeck, 36.1%

Deck Railings

Trex Railing, 62.9%

15.7

Trex Railing, 41.3%

Decorative Mouldings/Trim/Columns

AZEK Trimboards, 69.3%

27.3

AZEK Trimboards, 47.5%

Dishwashers

GE Appliances, 95.3%

2.3

GE Appliances, 67.1%

Doors: Entry

JELD-WEN, 87.8%

8.2

JELD-WEN, 53.6%

Doors: Garage

Overhead Door, 68.2%

2.3

Clopay, 41%

Doors: Patio

JELD-WEN, 94.2%

4.7

Anderson, 46.5%

Exterior Trim

HardieTrim (James Hardie), 73.1%

3.7

HardieTrim (James Hardie), 49.4%

Faucets

Kohler, 94.4%

3.4

Kohler, 69.9%

Fireplaces/Wood Stoves

Heatilator, 72.6%

9.5

Heatilator, 32.1%

Flooring: Laminate

Pergo, 91.9%

2.4

Pergo, 51.8%

Flooring: Ceramic Tile

Dal-Tile, 79.5%

Flooring: Wood

Lumber Liquidators, 80.2%

5.8

Bruce, 41.7%

Foundation Waterproofing

CertainTeed, 57.8%

3.6

CertainTeed, 32.9%

Housewrap

DuPont (Tyvek), 96.5%

36

DuPont (Tyvek), 81.2%

HVAC

Carrier, 91.6%

3.6

Insulation

Owens Corning, 89.7%

Laundry Appliances

Maytag, 94.6%

Lighting

Halo, 76.5%

22.7

11.5 0.9 22.4

Dal-Tile, 69%

Carrier, 32.5% Owens Corning, 65.5% Whirlpool, 61.4% Halo, 51.9%

Lighting Controls/Switches

Leviton, 86.9%

8.3

Leviton, 75.3%

Locksets/Hardware

Kwikset, 97.7%

1.2

Schlage, 76.5%

Paints/Stains

Sherwin-Williams, 96.5%

2.4

Sherwin-Williams, 63.5%

Portable Generators

Generac, 81%

1.2

American Honda, 40.2%

Ranges/Cooktops

GE Appliances, 91.7%

1.2

GE Appliances, 57.1%

Refrigerators

GE Appliances, 95.2%

3.5

GE Appliances, 52.4%

Ridge Vent Systems

Ridge-Vent (GAF), 69%

4.7

Ridge-Vent (GAF), 45.7%

Roofing: Asphalt/Fiberglass Shingles

CertainTeed, 94.2%

3.5

CertainTeed, 50.5%

Roofing: Clay/Concrete/Synthetic Tiles

CertainTeed, 63%

1.3

CertainTeed, 44.3%

Roofing: Metal

American Building Components (ABC), 37.3%

8.4

Metal Sales Manufacturing, 22.4%

Siding: Engineered Wood

Georgia-Pacific, 88%

Siding: Manufactured Stone

Eldorado Stone, 52.3%

Siding: Fiber Cement

James Hardie, 95.2%

16.6

James Hardie, 86.6%

Siding: Vinyl

CertainTeed, 80.7%

19.3

CertainTeed, 52.5%

Sinks: Kitchen/Bath

American Standard, 95.2%

1.2

Standby Generators

Generac, 87.7%

6.6

Generac, 37.5%

Surfacing: Laminate

Formica, 92.8%

1.2

Wilsonart, 67.9%

Surfacing: Quartz

Silestone, 89.5%

18.4

Silestone, 46.7%

Surfacing: Solid

Corian (DuPont), 93.7%

22.8

Toilets

American Standard, 98.8%

10.9 5.7

1.2

Georgia-Pacific, 62.5% Cultured Stone, 21%

Kohler, 70.7%

Corian (DuPont), 45.5% Kohler, 75.9%

Water Heaters: Tank, Tankless, Solar, Heat Pump

Rheem, 81.8%

18.2

Rheem & AO Smith, 31.1%

Windows: Skylights/Roof Windows/Tubular Skylights

Velux, 90.1%

17.3

Velux, 64.6%

Windows: Fiberglass

Integrity from Marvin Windows & Doors, 73.3%

Windows: Vinyl

JELD-WEN, 85.7%

4

Windows: Wood/Clad-Wood

Anderson, 91.5%

3.7

Anderson, 47.5%

Wood Finishes, Preservatives, & Repellents

Sherwin-Williams, 89.9%

2.6

Sherwin-Williams, 62.3%

42.8

Integrity from Marvin, 35.2% JELD-WEN, 35.4%

% POINT LEAD 29.3

USED THE MOST Kohler, 44%

% POINT LEAD 26.7

HIGHEST QUALITY Kohler, 58.5%

51.2

1.2

Broan, 32.4%

2.8

1.4

Kohler, 37.5%

12.5

Kohler, 41.9%

30.6

KraftMaid, 36.9%

32.3

KraftMaid, 22.4%

11.8

21.5

KraftMaid, 38.6%

24.3

Merillat & KraftMaid, 22.6%

13.1

18.9

DAP, 35.1%

21.1

OSI Sealants, 24.2%

10.7

Closet Maid, 43.6%

21.8

California Closets, 48.6%

4.8

YellaWood, 33.3%

9.2

Panasonic, 38.1%

% POINT LEAD

YellaWood & Wolmanized Wood, EraWood, 31%

14.1

Trex (Trex Co), 45.5%

24.7

Trex (Trex Co), 39.1%

33.3

LockDry, NextDeck, 92.9%

85.8

LockDry, NextDeck, 75%

16

3.6 27

3.1 31.9 8.4 5.4 52.8

Trex Railing, 29%

11.3

Trex Railing, 24%

33.7

AZEK Trimboards, 38.8%

26.9

AZEK Trimboards, 36.2%

27.4

15.3

GE Appliances, 28.6%

11.9

Bosch, 31.8%

18.9

13.4

JELD-WEN, 32.6%

13.7

Pella, 26.8%

10

14.5

Clopay, 30.7%

12.

Overhead Door, 25.3%

4.1

3.3

Anderson, 26.7%

9.3

5.8

JELD-WEN, 26.1%

7

HardieTrim (James Hardie), 35.1%

1

Moen, 29.9%

5.8

Kohler, 28.1%

3.9

Heatilator, 32.2%

8.5

Vermont Castings, 26.6%

7.1

Pergo, 21.8%

5.1

Pergo & Bruce, 21.2%

32.1

Dal-Tile, 57.9%

42.1

Dal-Tile, 38.1%

26.2

7.2

Bruce, 27.4%

2.7

Bruce, 33.3%

17.8

4.1

CertainTeed, 29.5%

3.9

Grace, 25.7%

55.3 4.8 26.2 2.4

DuPont (Tyvek), 70.6% Carrier, 19.5% Owens Corning, 47% Whirlpool, 18.3%

10.4

62.4 5.2 28.9

DuPont (Tyvek), 61.2% Trane, 21.7% Owens Corning, 38.1%

4.7 10.1 2.5 7.1

6.8 50.6 4.8 20.2

Bosch, 31.3%

15.6

29.7

Halo, 37.5%

26.4

Halo, 23.5%

12.4

12.3

Leviton, 42.7%

12.2

Leviton, 41.5%

13.5

Schlage & Baldwin, 35.8%

28.4

8.3

Schlage, 45.2%

5.9

Sherwin-Williams, 32.5%

7.3

American Honda, 33.8%

1.2

AZEK Trimboards, 32.9%

6.7

9.5 14.4

Benjamin Moore, 30.4%

1.1

4.4

American Honda, 36.6%

14.6

23.8

GE Appliances, 29.3%

20.8

14.3

GE Appliances, 19.5%

6.1

16.1

Wolf Range, 20.8% Sub-Zero, 38.1%

3 29.8

Cobra Ventilation (GAF), 23.6%

2.8

Cobra Ventilation (GAF) & Ridge-Vent (GAF), 23%

2.1

CertainTeed, 36.5%

7.1

CertainTeed, 33.7%

7

10

CertainTeed, 36.2%

13.8

CertainTeed, 31.4%

4.3

1.5

ABC, 27.1%

Metal Sales Manufacturing & ABC, 16.7%

6.3

6.3

9.2

22.5

Georgia Pacific, 48.6%

17.2

Georgia-Pacific, 53.8%

25

1.2

Cultured Stone, 26.2%

9.5

Eldorado Stone, 23.4%

3.1

61

James Hardie, 82.1%

70.6

James Hardie, 81.9%

71.1

CertainTeed, 36.5%

20.3

CertainTeed, 31.2%

16.2

27.5 17

Kohler, 44.3%

24

Kohler, 41.5%

28.1

6.9

Generac, 48%

10

Kohler, 41.7%

5.6

8.6

Wilsonart, 50.7%

13

Wilsonart, 48.1%

6.1

8

Silestone, 37.1%

4.8

Cambria, 35.1%

9.4

23.4

Corian (DuPont), 46.4%

28.5

Corian (DuPont), 41.6%

13

7.2

Kohler & American Standard, 40%

29.4

Toto, 43.4%

4.8

1.4

AO Smith, 21.2%

Rheem, 21.6%

1.3

1.5

45.6

Velux, 65.6%

56.2

Velux, 62%

12.7

Integrity from Marvin, 38.2%

10.9

Integrity from Marvin, 46.5%

15.9

JELD-WEN, 22.7%

JELD-WEN, 22%

6.1

12.5

Anderson, 31%

12.7

Pella & Marvin, 28%

1.2

18.1

Sherwin-Williams, 47.3%

35.1

Sherwin-Williams, 37.7%

6.7

43 18.3

27.3

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Special Advertising Section | Remodeler’s Best Resources - Classifieds

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RainSoft ..................................................................................... 83

Diablo ......................................................................................... 80

RAM Commercial Trucks.......................................................38-39

DuPont Building Innovations ..............................................26, 27

Remodelers Advantage ...............................................................17

Feeney, Inc............................................................................. 12, 40

Remodeling Show ...................................................................... 64

Ferguson .....................................................................................13

Rinnai .........................................................................................25

Ford Motor Company ................................................................. 49

RotoZip by BOSCH ......................................................................14

Fortress Railing Products .......................................................... 85

Scotsman Ice Systems ............................................................... 84

GEICO Commercial Insurance * ........................................... 32a-b

Sikkens ........................................................................................45

Glen Raven Custom Fabrics ................................................. 28, 29

Sterling A Kohler Company ....................................................... 20

Grace Construction Products..................................................... 86

Synchrony Financial...................................................................75

Great Southern Wood Preserving * ....................................... 16a-b

The HELPcard ............................................................................. 77

Greenbuild ................................................................................. 93

The Home Depot ...............................................................55, 67, C3

Home for Life * ........................................................................... 90

Thermo-Tech Vinyl Windows * ................................................. 90

Huber Engineered Woods, ZIP *.........................................Outsert

Titebond .................................................................................30-31

IRWIN Tools............................................................................... 65

Tony Hoty................................................................................... 95

James Hardie Building Products ...............................................15

Trex .............................................................................................. 4

JELD-WEN Windows & Doors ....................................................47

Velux ...........................................................................................53

KILZ .............................................................................................. 1

Whirlpool Corporation .............................................................. 69

Kohler........................................................................................... 9

Wilsonart ...................................................................................23

Lumber Liquidators ....................................................................32

ZipWall ........................................................................................51

Marvin Windows and Doors.......................................................71

94 REMODELING / SEPTEMBER 2015

* Issue mailed in regional editions

REMODELINGMAG.COM

Joshua Curry

You Built It /

BATHROOM

Sea Change

BY LAU R E N SH ANE SY

While many homeowners opt to remove tubs in modern baths, the feature was critical for these coastal residents in Wilmington, N.C. In the home’s only bathroom with a tub, remodeler Nick Balding was faced the challenge to seamlessly blend functionality with open space and nautical style. Balding replaced the existing corner tub with a shower, which is surrounded by glass walls and transom windows to let in natural light. The rearrangement opened up space for the most important feature 96 REMODELING / SEPTEMBER 2015

for the family with small children: a 6-foot tub. Additional light filters in through the glass pocket doors that separate the bath from the master bedroom and closet. Porthole medicine cabinets and mirrors and white wood paneling lend to the subtle maritime vibe in this master bath that overlooks the family’s dock.

There’s more where this came from. See more of our award-winning projects and get fresh ideas for design details at remodelingmag.com.

REMODELINGMAG.COM

andersenhomedepot.com

ANDERSEN® 400 SERIES TILT-WASH DOUBLE-HUNG INSERT WINDOWS CUSTOM SIZING TO 1/8" FOR QUICK AND EASY INSTALL

© 2015, HOMER TLC, Inc. All rights reserved.

INTERIOR OR EXTERIOR INSTALL FOR MINIMAL DISRUPTION

THREE SILL ANGLE OPTIONS TO ENSURE THE BEST FIT

The 2016 Sprinter Crew Van

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With room for five, the 2016 Mercedes-Benz Sprinter Crew Van has room for everything and everyone — featuring Best-In-Class cargo room, payload, and interior standing height,1 as well as a 5'x8' load floor that offers abundant room for plywood, sheetrock, and other materials.

The Sprinter’s standard turbo diesel engine delivers up to 18%2 greater fuel efficiency, while standard Crosswind Assist3 helps keep your vehicle on course in strong winds. To discover better ways to build your business, visit MBVans.com

© 2015 Mercedes-Benz USA, LLC *Excludes all options, taxes, title, registration, transportation charge and dealer prep fee.

1 Based on a comparison of the Automotive News classification of full-size commercial vans at time of print. 2 Fuel savings estimate of up to 18% according to FTP75 testing of engine OM651 (4-Cylinder) versus MY13 OM642 (V6). Individual mileage will vary, based on factors including vehicle load, driving style, road conditions and fuel quality. 3 Crosswind Assist engages automatically when sensing dangerous wind gusts at highway speeds exceeding 50 mph. Performance is limited by wind severity and available traction, which snow, ice, and other conditions can affect. Always drive carefully, consistent with conditions. Feature not available on 3500 models.

Options shown. Not all options available in the U.S.