Though some builders are skeptical, consultant Paula Sonkin of J.D. Power & Associates maintains that there is no correlation between the size of the home builder and how well it does on the annual J.D. Power customer satisfaction scores.
“Larger builders say it's harder to score well because they have so many buyers, but they have more resources,” says Sonkin, executive director of J.D. Power's real estate industries group, who points out that the 2005 ratings were released in mid-September.
“Small builders don't have as many resources, but they don't have as many buyers,” Sonkin adds, insisting that since they have less to manage and can exercise tighter control, small builders can do well on the J.D. Power ratings.
Sonkin is partially right about small builders' ability to compete with the big boys on scores. Companies that close about 150 to 300 homes annually do make the list in many markets. However, the reality is that a large majority of the top 10 performers in the local markets J.D. Power covers are BUILDER 100 or BUILDER Next 100 companies.
Certain markets, such as Las Vegas and Baltimore, are totally sewn up by the big builders, so it's tough for small builders to qualify or get enough responses from home buyers. On the other hand, opportunities exist for smaller builders in other markets to do well.
To qualify for a J.D. Power rating, a home builder has to have at least 150 closings in any given year. And there are a number of companies around that size that consistently perform as well as the big builders. The three profiled here—all of which placed in the top three in their markets in the 2004 J.D. Power ratings—have one thing in common: They do a great job at sticking to what they do best.
In fact, Douglas Swallow, president of Las Vegas–based Homebuilders Performance Research, who analyzed the J.D. Power data in a recent report that lets home builders better understand the ratings, says many companies have excellent warranty management and construction processes—but don't always score well.
“The companies that do best are the ones that are more strategic,” Swallow says. “These are the companies where you walk into one of their models and you know exactly what they are.”
The essence of sales and, ultimately, customer satisfaction is matching up the right buyer with the right seller. Here's how Keller Homes of Colorado Springs, Colo., Tucson, Ariz.'s A.F. Sterling Homes, and Venture Homes in Atlanta make that happen.
Learn more about markets featured in this article: Atlanta, GA.