When Justin Spoelstra and his wife were shopping for a house nearly a decade ago, they had different needs. She wanted to be five minutes from a Target store, he wanted a 10-acre spread.
Spoelstra found what he thought was the perfect place in Shakopee; his wife couldn't look beyond the dreadful decorating.
"I wanted the property, but my wife said she hated it," he said. "So I told the agent I would change the wall colors."
Spoelstra, a software expert who was teaching at Brown College, did far more than that. He took pictures of the property and created software that enabled him to wipe away the previous owner's decorating and give the house a complete digital makeover. In a virtual way, he was able to paint the walls, install new flooring and replace the cabinets.
The ploy worked. Spoelstra got the house — and a new business.
Spoelstra and a local programmer, Scott Reynolds, launched Preferred Interactive, a Twin Cities-based company that enables prospective home buyers to digitally customize a home's interior and exterior finishes without ever picking up a paint brush.
"Buyers want more and better tools," he said. "They want to know what selections are available, so they can go to the builder and say, 'This is exactly what I want.' "
Since Spoelstra and Reynolds founded the company, the Web has transformed the way houses are bought and sold. Preferred has had to evolve as well, and a series of recent innovations have helped put it on the cusp of a national expansion. Spoelstra is negotiating a deal that will put his interactive application on websites that will be made available in all 50 states.
In the beginning, however, the company's success wasn't so certain. Spoelstra tried to sell his software to real estate agents in hopes that they'd use it to to help buyers imagine how their colors might look in someone else's house. Agents didn't bite, and sales were far lower than expected, mostly because it took too long to create a new design template for every house that a buyer might consider.
"Realtors said they couldn't see the value in that; they said it cost too much money," he said. "But as we go more online, the decisions are being made on a website and not in front of a salesperson."
Spoelstra and his team refined the software and started going after homebuilders, who generally offer buyers a finite number of floor plans and finishes, reducing the number of possible permutations. By 2008 — the height of the recession — the company was focused exclusively on builders.
For the big production builders who construct a limited number of floor plans, the templates can be quickly adapted to model homes in dozens of subdivisions, keeping the up-front investment relatively low. Spoelstra's team created software for custom builders, as well, enabling them to quickly apply various finishes to simple black-and-white drawings of one-of-a-kind new homes. For example, a builder is charged a one-time $195 fee for a single image with a nearly unlimited number of options for colors, finishes and materials, and they can reuse that image and its many permutations for as long as they'd like.
Initially, the software was designed for people who were planning to buy or build a house, but an increasing number of users weren't serious shoppers. On average, users spent about 11 minutes on the website, but they didn't have a way to save the design and share it with friends and relatives, so the company expanded the capabilities of the software to create individual profile/idea galleries.
Visits to the site soared and Spoelstra and his colleagues quickly realized the site's potential as a sales lead generator. The site now allows builders to collect user information — with permission — that can be used to turn those dabblers into buyers.
"The builder is the one who closes the deal," Spoelstra said. "We're just allowing those people to see the design."
Mark Guenther, president of Twin Cities-based Hans Hagen Homes, said he's sold on the idea. The company recently included several links on its website that enable visitors to completely customize dozens of standard floor plans in subdivisions throughout the metro. Guenther said that today's tech-savvy buyers are accustomed to using such tools to take virtual "test drives" before making big purchases.
"Customers want choices, and we're about providing choices," he said. "This is where the building industry is headed right now."
The software also lets Guenther and other builders track design trends. With every idea gallery that's created, Spoelstra and his team are able to gather information about what people are choosing. The company now has a database loaded with more than 9 million individual "impressions" that help designers understand which finishes are most common on a hyper-local scale.
With few competitors and a highly specialized team of nearly 35 designers, developers and programmers around the country, the company has been the target of several national homebuilders seeking exclusive use of the software. Concerned that by aligning with one company he might limit his market, Spoelstra has resisted those suitors.
Recently, however, he started negotiations with Steve Rider, the California-based founder and CEO of several businesses that cater to the construction industry. Rider is launching a new company, the New Home Ambassador, which sells locally branded sites across the country, and has forged a deal with Spoelstra to include a link to the Personal Designer Home Visualizer. When it launches Jan. 15, the site will also be a centralized database of new houses for sale across the country.
"This could be the best lead-generation tool our industry has seen in last 10 years," said Rider. "I think it's the best thing we've seen in this market for a long time."
Jim Buchta • 612-673-7376
