On Tuesday, Nov. 27, four leading home builder executives spoke to attendees of the Big Builder '07 Conference at the Mandalay Bay in Las Vegas regarding the steps they took to outperform their peers and exceed expectations, even in a tough market.
One such strategy involves fostering a positive customer experience. Chuck Fuhr, president of Ryland Homes' Atlanta division, said a series of company-hosted pizza parties when sales had droped from 1,200 to 600 "really generated leads and traffic."
However, with the dour state of the market, "We don't have the seniority [in our sales staff] that we used to have," said Fuhr, who has since implemented a weekly sales training program.
Ted McKibbin, president of Standard Pacific's Orange County, Calif., division, spoke about MISSION: POSSIBLE, a 10-day sales blitz across 34 communities that generated 224 new-home sales. McKibbin points to MISSION: POSSIBLE as a "very energizing program," resulting in doubled and even tripled foot traffic among Standard Pacific's projects in the area.
Kim Ence, owner of Ence Homes, shared a sales success story of his own: the company's Homes for the Holidays event, which allowed the builder to sell half of its standing inventory. Ence told the builders in attendance that they should try anything they could to get a sale, stressing the importance of turning prospects into commitments.
"We're getting pretty good traffic; we just aren't converting," said Steve Davis of Meritage Homes. He pointed out the importance of signage and that the right information to convey has changed.
McKibbin noted that home builders in today's market should be prepared to deal with backlog and the adjustment of value, pointing to the fine line of returning deposits. In a similar vein, Fuhr recommended getting as much of a deposit as possible in order to secure each sale, while noting that this requires a "really delicate balance." Fuhr further advised the discounting of spec homes.
With respect to contingency sales, Fuhr said one should look at comparable appraisals in the area to ensure that the buyer's existing home is priced appropriately for the market. While Ryland used to convert 70% of its contingency sales, that number is down to 30% today, according to Fuhr. Ence said his company partnered with Prudential re-sale agents, which "helped a little bit."
Davis's advice to the builders in the room was not to make assumptions. "Common sense, in my opinion, isn't all that common," he said. The tendency in the industry is to load spec homes with features that salespeople like themselves and assume will sell–which, if it pushes the value outside of conforming loan limits, will render the home particularly difficult to sell.