Love Interest Signature Homes’ designs persuade buyers to leave their old homes for new.
Courtesy Signature Homes Love Interest Signature Homes’ designs persuade buyers to leave their old homes for new.

There’s really only one way to get somebody to go through the psychological and financial pain of leaving their old home for a new one these days, says Signature Homes president Dwight Sandlin.

“You have got to build a home that they fall in love with, and then you have to sell the sex appeal of it,” he declares.

Since Signature sells almost exclusively to move-up or move-down buyers in the Birmingham, Ala., area, almost everybody who walks in Signature’s door has the problem of how to sell their existing home. So the first challenge is to get prospective buyers to accept that the costly divorce will be worthwhile.

“They have got to sell their house at a loss,” Sandlin adds. And the only way they will do that is if they are head-over-heels in love with a new house, he adds. They also need to love the location and neighborhood, too, but the house is the deal clincher.

“It’s like dating,” Sandlin says. “If you are not attracted to someone, you never get to the next level. … We don’t perceive marketing and product as two different things. They are the same thing.”

Designing these new head-turning houses has occupied a lot of Signature’s time over the past few years. “If you build what you want and not what [buyers] want, you don’t have a chance” of surviving in today’s market, says Sandlin. “We redesigned our houses completely because we weren’t building what they wanted.”

Rather than hire a design consultant for the overhauls, the company used its buyers to reveal what they want. In 2009, Signature started allowing buyers to truly customize the company’s floor plans, then it paid close attention to how they changed them.

“They would take [a floor plan] home, and they would spend a month with it and they would tweak it, and turn it, and tweak it and turn it,” says Sandlin. “We told them, ‘We may use your idea if it’s better than ours.’ They like that.”

In that way, and by extensive polling of past buyers, Signature revamped its plans five times in three years. As a result of the new plans (along with sharpened sales skills), it has managed to stay afloat and grab market share even as other builders closed. Birmingham residential permits fell from 7,800 in 2006 to a projected 1,750 in 2011, according to Hanley Wood Market Intelligence data. Signature expects to pull 500 of those permits and sell more than 370 homes in 2011, surpassing its 2010 numbers. Its conversion rate at the beginning of the downturn was 1 in 15. It is 1 in 3 today.

As a result of the buyer-directed design changes, Signature began shrinking or eliminating formal interior spaces, including large entryways and sometimes dining areas, opting for designs that better reflect how people really live in the house and what they personally value rather than their worries about resale.

“That makes our job easier,” says Sandlin, because it makes the purchase more of an emotional decision. “They are buying a home to live in.” Signature’s James Hill community offers an example of the impact of new designs. The community was a top-seller for Signature before the redesign, bringing in three to four sales a month. Afterward, sales jumped to seven a month.

Sharpened sales techniques have been as important to Signature’s survival as alluring new product, Sandlin believes. The company doesn’t discount homes, except for stale inventory models. So it gives its sales agents scripts on how to handle buyers who make low-ball offers, assuming builders will take bargain-basement bids out of desperation. It also does four hours a week of sales training and films agents at work.

“We have been doing good for a while,” says Sandlin. “It’s just that we realized … we had to go from okay to good because if we didn’t get good we would be out of business.”

Learn more about markets featured in this article: Birmingham, AL.