During the last six months of 2006, builders in the Orange County, Calif., market were seeing cancellation rates of between 30 percent and 50 percent, according to Jared Miller, director of sales for John Laing Homes South Coast division. So far this year, this division's number is closer to 20 percent.
"Our goal is to be a lot closer to 10 percent, but we are still excited," Miller says. "It largely comes down to understanding the financing. What is it really going to cost to get into the home? What mortgage programs are available for buyers? And helping [buyers] be comfortable with that up front. It really gives them confidence moving forward so they don't end up canceling."
The last place you might expect to find a mortgage counselor is on the sales floor of a new-home community. But that's where Giovanni Mejia currently plies his trade. He greets potential buyers, explains the community's benefits, and answers questions about the available home sites. He is selling.
Meantime, Gail Ringwald, a senior home counselor at Belle Cliff, whips out a mortgage calculator and walks a potential buyer through the Laing financial "pre-qual" form aptly titled "Homeward Bound." It's clear that she has more on her mind than just nailing a sale. She is qualifying.
Mejia and Ringwald are, in a sense, that modern-day version of the Odd Couple. Much like the show's characters Felix Unger and Oscar Madison, the two John Laing Home team members find themselves sharing the same space despite the fact that they possess skill sets and job objectives that might, in a traditional structure, be at odds with each other.
But sales management at Laing is determined to bring down the walls of these historically specialized job silos.
By cross-training the front line to understand the basics of each other's job, Laing aims to offer a seamless experience to home buyers and to proactively address the issues arising in an unstable mortgageenvironment–all with the goal of reducing cancellations.
"In a difficult market, the success of a neighborhood is dependent upon every single cylinder working. One of the cylinders certainly is the finance piece," says Patrick Higgins, senior vice president of sales and marketing. "In a tough market, you've got a lot of friendly people, they'll spend a lot of time with folks, but if they don't know how to get them qualified, you've lost them to the neighborhood down the road."
Focus on Finances
Though JLH Mortgage, a joint venture with Countrywide Financial Corp., has always been run in close connection with the home building operation, it became apparent in the middle of 2006 that tough times called for new tactics.
That's when the South Coast division put a renewed emphasis on finance training for its 12 home counselors. While a corporate training program dubbed "Mortgages DeMystified" was rolling out, the division sales management team wanted to better prepare the staff. So Linda Mamet, vice president of sales and marketing, and Miller called upon the knowledge of the division's mortgage counselors to supplement the basics with a specialized forum.
With the guidance of Debbie Alvarez, joint venture manager for JLH Mortgage, Mejia created a program that "provides the tools needed to ensure a good, solid, sell." At least twice a month, as a part of the weekly sales meetings held at the division office, he educates home counselors on areas like credit score training–not just what it is, but how to interpret it.
"Salespeople now have to tools to see if folks really fit into the range of a home they say they want to buy," Mejia says. "With more broad-based knowledge, they can say with confidence, 'Yes, it looks like you do qualify!,' even before they get to a mortgage counselor or sign a contract."
The order of that process distinguishes Laing from the others. Before contract, a buyer must speak to a JLH mortgage counselor. That proactive versus reactive approach is what Mejia says lured him to Laing from his previous loan officer position at Lennar Corp.'s Orange County division.
"At Lennar, it would be, 'Hey we got a sale. Take a look at this contract and figure out a way to make it work,'" Mejia recalls. "That's a lot of pressure. Especially now, with the market the way it is, loan officers are being pinpointed. They are on the line."
True to his title, Mejia now strives to provide counsel to a potential buyer. "It's more of a challenge up front, but it's worth it because we have a backlog of people that we know are qualified. Once you really take people through the steps, they appreciate all the effort. It's clear that the process is in their best interest–we don't want them to default on a program they didn't completely understand."