In a lot of ways selling new homes is the same as selling men’s clothing or any other retail enterprise, says Dennis Webb, vice president of operations for Fulton Homes.
“If the buyer wants it, give it to him,” said Webb.
It’s a concept Ira and Douglas Fulton, founders of the Tempe, Ariz.–based builder, learned well when their business was selling clothes for big and tall men in Los Angeles more than a decade ago, Webb says. And it’s a concept that translates as well to selling houses.
Staying customer-focused is what helped Fulton double its market share and rise to the top of the local market through bankruptcy reorganization and in one of the most dismal home selling markets in the country, company executives said. And business continues to get better. Fulton sold 70 houses in a recent five-week period.
“While [other builders] are using a sticks and bricks approach, we are closer to our customers because we give them what they want, and make it easy to get there,” said Webb.
An important piece of the company’s retail focus is a design center that offers buyers 6,000 different choices that they can preview online before visiting the design center itself. Fulton opened the design center in 2005 and kept it open even as other builders were shuttering theirs to cut costs.
The strategy lead to tripling the number of extras buyers added to their homes, Webb said. “Right now margins are so thin out in the field and we are making such a small margin on homes that the profits we make are from the design center.”
Fulton was able to keep the design center open because it doesn’t have to pay the rent for the building or to staff it. That’s handled by Interior Specialists of San Diego, which provides Fulton with all its flooring, countertops, and cabinets.
ISI decides what cabinets, flooring, and countertops to display, but Fulton chooses the other options.
“The builder doesn’t have the capital outlay [for a design center] and they [ISI] are going to make their money on flooring, cabinets, and countertops because they do 100 percent of our business there,” said Webb. Plus, Fulton pays the company a commission on whatever else it sells.
Fulton uses a sophisticated tracking system called Envision to keep close tabs on what is selling best so it can keep options in place that buyers want, not unlike the way retailers keep tabs on what’s selling best through their outlets.
Fulton already offers a good number of extras in its homes standard and even beefed up its standard offerings in March to include eight-foot-tall doors, 36-inch maple cabinets, granite countertops, ceiling fans in every room, window coverings, covered patios, two-tone interior paint in 12 colors, and 18-inch tile.
“And it really hasn’t had much of an effect on our options sales,” says Webb. “People are still buying better ceiling fans, upgraded granite.”
Webb thinks another reason that the company is successful at selling option upgrades is that it lets customers know the pricing up-front, even before they get to the option center, and it doesn’t gouge buyers on option pricing.
“We look at [the design center] as a store,” says Webb. “You give the buyer a good selection, you don’t take huge markups, and you give a fair price. This isn’t the great old days when you could do a pretty big mark up. We’re realistic.”
Teresa Burney is a senior editor for Builder magazine.
Learn more about markets featured in this article: Phoenix, AZ.