In the chaos and hysteria that followed the bubble-burst last fall, there was a good deal of panic and a lot of shoulda-woulda-coulda talk. Well there’s no preventing what has already happened. We can, however, begin to do something about, as well as make absolutely sure that we learn from past mistakes. The building industry has a proven cyclical nature; a nature that many builders failed to recognize during the lucrative boom that preceded the equally destructive fall.

In order to help builders avoid another crash, or at least find a way to weather the next drop (assuming an impending rise), Builder Online has compiled a list of lessons for builders to take away from the current recession. Designed to illustrate some rare recession successes and prepare for a smarter boom the next time around, the six lessons are summarized below:

1. Build Smarter. Think energy efficiency, renewable energy, and smaller, lower maintenance homes. These will be key attributes of the recession-era home for the eco-conscious consumer and a government likewise determined.
2. Limit Land Holdings. Some builders were buying up every site in sight during the boom, many of whom have been left holding their hats. On the next go round builders should be thinking twice about purchasing land before its true value is known.
3. Find New Cash Streams. Banks have folded their arms and zipped their books shut in the wake of mass failures. Therefore credit is rather hard to come by these days, so some builders have been searching outside the banking arena, even overseas, or signing deals to finish projects acquired by lenders via foreclosures.
4. Respond Quicker to Market Conditions. The general excuse for recession-weary builders is that they were caught completely by surprise when the housing bubble went bust. Some builders recognized the coming storm early and began downsizing. Others are reacting with inventive programs such as mortgage protection and new marketing schemes, or reenlisting the age old tactic of keeping in close contact with former clients.
5. Value Workers and Trades. Layoffs have been rampant, and those employees remain with builders have had to take on a wider number of tasks and learn new skills in the process. Hence the value of cross-training employees, as well as appreciating subcontractors and suppliers to a much higher extent.
6. Diversify. Some builders get stuck in the stigma of single-family, new home construction during a time when new homes aren’t being built. Those builders who have diversified into multi-family and commercial building, including remodeling, are generally doing better during these hard times.

For the complete article, including more detailed explanations for each of the above lessons, check out 6 Lessons for Builders from the Housing Bust.

But it is work.

While the article in Money Magazine is geared toward homeowners, there are some important lessons for contractors as well. Mainly getting to know the homeowner in today’s market. Even those with the means to put on a new roof or expand the master bedroom are thinking twice about it. For a few reasons:

• the return on investment is at a low point in the current housing market
• the future is incredibly uncertain

Fortunately, however, there are more reasons why homeowners who can, should remodel:

• material costs are falling fast (especially for oil-based products such as vinyl, asphalt)
• smaller, necessary “fix-ups” still need to be done
• increased competition means lower prices, more concessions
• putting money into the home now, while costs are low, will help the home maintain its value

Still, it’s a very touchy game on all sides. Contractors desperately need work, homeowners still need or want upgrades, but the housing market is not finished declining. It is therefore very important that homeowners understand which projects will have the best return on their investment and will likely be meticulous about choosing a project and a contractor, as the Money article itself encourages.

As a contractor, being able to understand and answer homeowner concerns regarding payback, efficiency, and long-term benefits may just be the key to getting hired. The majority of homeowners will be fully aware of their newfound power to persuade. Instead of coming into the conversation resisting this fact — with a salesman’s attitude so to speak — come in understanding it. Show the homeowner that you can save them money, perhaps by encouraging the use of current low-cost materials. Even if your bid is a bit higher than the next guy, if you’re confident, honest, and able to ensure their satisfaction, well that’s a foot in the door right there.

It will also be important to be clear and concise with your bid. Homeowners will want itemized bids and proof of licenses, insurance, and other documents. Interviews will be longer and more detail oriented. Having answers to these questions is vital. Also, if a homeowner is NOT asking these sort of questions, you can volunteer the information and encourage them to be aware of suspiciously low and vague bids from other contractors.

You must also be ready to offer a price break. In a survey, 70% of contractors said they would offer at least a 10% discount on work. The remaining 30% went even further.

These are tough times for the economy and subsequently complex times for bidding remodeling work. Doing the homework is as important as ever. There is a different brand of homeowner now, different from even a year ago. That is how volatile the market is right now. But so far as it goes, remodeling contractors are sitting relatively well right now, if certain forecasters are right. It is a surprisingly good time to remodel. But the ball is in the homeowner’s court and developing trust and a good rapport is as important as ever.