Constant Contact

Not too long ago, First American Title, one of the industry's largest title companies, found itself on the defensive when some of its large builder-clients complained that its service wasn't cutting it with their customers. “Builders said to us, ‘You guys have to change,' ” recalls Mike Hinkle, a vice president who oversees national builder accounts for First American. Hinkle admits that his reps rarely even heard from buyers until the day their homes closed. So First American's response was a pilot program, initiated two years ago with John Laing Homes and Capital Pacific Homes, that has its employees contacting buyers monthly, from the time they are approved for their mortgages to the day they sit down to sign the closing papers. Forty-five days before that closing date, First American's reps connect with buyers to make sure that no paperwork is missing and to answer lingering questions.

In February, the Santa Ana, Calif.–based title company started training its 170 “customer satisfaction” reps to prepare them for the roll out of the program this year to other builders in California and other states such as Texas.

On their way to what they hope will be uneventful closings and glowing customer postmortems, builders are relying more than ever on mortgage and title partners to relieve buyers' anxieties. For small builders selling completed houses, this is less of an issue because the time between contract and closing usually isn't more than a few weeks. But for large production builders selling homes that they haven't started, customer service means staying connected to buyers and their paperwork over much longer stretches.

“The biggest complaint we hear from buyers is, ‘What's going on with my loan?' which is exacerbated by escrows that can take anywhere from six to nine months and a market that's constantly changing,” says Todd White, division manager for Irvine, Calif.–based William Lyon Financial, a wholly owned subsidiary of William Lyon Homes, which captures 70 percent of William Lyon Homes' buyers. “It's important that our loan officers call back buyers immediately; no one goes home until all calls are made for the day.”

However, maintaining contact with buyers through elongated settlement periods is easier said than done. “With 10 loan officers handling 500 to 600 customers, answering phones is the most expensive thing we do,” says Roger Cavender, president of Classic Mortgage in Colorado Springs, Colo., which gets two-fifths of its business from Classic Homes. Classic Mortgage is investing in a technology platform, scheduled to go live this June, that will automate much of this contact.

West Palm Beach, Fla.–based K. Hovnanian American Mortgage, a wholly owned subsidiary of Hovnanian Enterprises, which captures 70 percent of Hovnanian Enterprises' buyers nationwide, is also investing in an automated contact management system. By spring, it should start prompting loan officers to call buyers when, for example, it's their birthday or construction reaches the drywall stage. “We want to contact buyers every two or three weeks, even if it's just small talk,” says Dan Klinger, the mortgage subsidiary's president.

Hollywood, Fla.–based Technical Olympic USA (TOUSA) once resisted sending buyers to its Preferred Home Mortgage subsidiary, which wasn't large enough to handle the size company TOUSA had become. So when Preferred relocated to Tampa, Fla., in April 2004, it hired an entirely new staff, assigned its 65 loan officers to TOUSA's builder divisions, and captured 65 percent of TOUSA's buyers in 2005 (from 55 percent before the move). Its president, Pete Strawser, attributes the gains to “integrating processes, cultures, and data.”

At Fort Mitchell, Ky.–based The Drees Co., every employee, including those working for its First Equity Mortgage operations, is compensated based on customer satisfaction ratings derived from questionnaires that ask buyers to assess Drees' follow-up, the accuracy of its information, and whether it treated them professionally. Most important, buyers are asked if they'd recommend Drees to a friend. “If the percentage of customers who are satisfied falls below a certain level, compensation goes away,” says CFO Mark Williams, whose comment, while probably hyperbolic, nevertheless indicates how Drees links the incentive carrot it holds out and customer service its associates deliver.

Once they've reached the closing table, builders should know that they and their partners have done all they could to prevent what Hinkle at First American calls “the inevitable fire drill.”

The team at Classic Mortgage is convinced that just hearing a friendly, attentive voice on a regular basis helps ease customers through the financing ordeal. When Classic's home building division proposed contacting customers every week through the settlement period, Cavender was skeptical. But buyers reacted positively, and Cavender says he learned a valuable lesson about customer service. “Buyers want to be led through transactions,” he says, “by someone they trust.”

CLOSER CONTACT: Myle Phan (left), a sales counselor for The Olson Co., discusses financing options with home buyers at Olson's Fountain Walk community in Fountain Valley, Calif. Olson recently updated its closing “protocol,” which encompasses buyer orientations and jobsite walk-throughs.

Because buying a home is among the most stressful things a person will do, builders can help meet buyers' comfort levels by refining the art of financing and closing.