Toe To Toe

NOW FOR WHAT MAY BE the toughest part of your fight in a downward market: Knocking out other small builders on your home turf.

In this arena, your opponents are the guys who also have friends on the local planning boards, are building similar types of homes at similar price points and designs, and may even have been building in your market longer than you have.

In the past, you could beat the other guy on service and quality and develop a business based on referrals, maybe even advertise once in a while. Now, the market is changing, and you have to be in top form. It's time to start looking at target marketing, Web site development, and maybe even taking a chance on some new designs.

Here are some things other small builders do to deflect competition in their local markets.

Builders don't always know how to define their niche, a tactic that makes it easier to find the right buyers. Executives at Bay Homes in Hilton Head, S.C., home in on more-qualified buyers by spending the winter attending real estate seminars for home buyers in the Northeast. The programs are managed by Realty Presentations, a diversified media company that also manages Web sites such as LiveSouth.com and publishes Living Southern Style magazine.

The seminars that Bay Homes chooses to attend are in pricier neighborhoods in the New York, New Jersey, and Boston areas, so most of the buyers there fit the demographic that Bay Homes is looking for: professionals or empty-nesters with money.

“The salesperson for Live South.com told me that the seminars help you do very specific target marketing,” says Jody Easton, president of Bay Homes, who adds that they now get “a higher-quality buyer in terms of someone who's really interested in buying.”

Seeking out local home seminars or expos that target the right buyers is a great idea for small builders pressed for time and typically unable to spend too much money on marketing. Traveling to another region may be beyond the reach of many builders, but there are plenty of opportunities closer to home. The school district in Florida's Broward County, for example, holds a home fair for its teachers, providing a perfect opportunity for small builders who focus on affordable and workforce housing to reach those buyers.

One builder in the Southeast that we talked to says he's been building colonials for years and “doesn't go for that Tuscan stuff.” While it's understandable that he thinks Tuscan has been overdone, it's a mistake to be set in your ways as the market continues to soften. Seek out design ideas from other regions of the country to see if they might attract buyers in your area.

For Atlanta-based Pritchard Brothers, importing the Northern concept of a cellar helped the company solve a thorny construction challenge. Frank Pritchard, who runs the company with his brother Steve, says he builds cellars as an alternative to walk-out basements, a popular feature in the South. Pritchard says that since much of the terrain in Atlanta is rocky and slopes down below grade, he can't always provide a walk-out basement. His buyers like the cellar because it can be turned into a finished basement and air conditioned.

Pritchard also borrows the California concept of the inverted house to offset the challenges caused by slopes in the terrain. In an inverted house, the first floor includes the living room, dining room, and master bedroom. The second floor, which is actually underneath the first floor, serves the role of a traditional upstairs floor, with additional bedrooms and possibly a media room. The third floor down is the basement.

“We tend to work on smaller lots in infill situations,” says Pritchard. “So we have to come up with different ways to build.”

Another builder who took a chance on something different is J. Michael Ruefle, president of Suncrest Homes near Pittsburgh in Murrysville, Pa. Ruefle says he was one of the first builders in his area to embrace the Craftsman country–style communities that are popular in Oregon. “We did it with faux stone and solid mahogany doors,” Ruefle says.

Suncrest Homes also brought traditional neighborhood design (TND) communities to the Pittsburgh area. In one of his projects, Berkeley Square, Ruefle built on smaller, narrower lots, and he mixed single-family homes with duplex carriage homes and two-story condos with four units in each building.

HIDE 'N' SEEK: Bay Homes builds something fun and unique into every new home, such as this built-in bookcase with a hidden closet.

If you want to take your designs up yet another notch, become a design/build company. Jeff Watson Homes in the Austin, Texas, area has a person on staff who's in charge of the design process, estimating, and sales. “A lot of builders will take their customers to an architect, but it could be six months before they walk out with plans,” says Jeff Watson, the company's president. “We control the design process from the time the buyer walks in,” Watson says.

The company's goal is to deliver plans to a buyer within 15 to 30 days of the buyer's initial visit. But the real advantage is that his company's estimates typically don't exceed the customer's budget.

By operating as a design/ build firm, Watson says, his company's designs and estimates are more in tune with the realities of construction. This lets him manage expectations more effectively. Watson says that there's nothing worse than when a buyer's preferred architectural plan would cost $50,000 to $100,000 more to build than the buyer has to spend. That turns buyers off and is sure to send the prospect down the road to your competitor.

Here's where builders can land a solid punch. Many of your competitors simply think of better and more cost-effective ways to build. But Jeff Putney, vice president of Carmel Bay Builders in Carmel by the Sea, Calif., says he goes a step further. His company takes a solid-core birch door and cuts grooves in it to make it look like a solid plank hardwood door. Putney states that solid plank hardwood doors from the factory cost almost $500. His staff can cut the grooves in the birch doors and give them the hardwood plank effect for about $200, noting that the cost savings add up when you're building a house with several doors.

Builders can also make points with customers by looking for opportunities to exceed local code regulations. Instead of using 2x10 joists for the roof, which meets local code, Mike Reynolds, general partner of Melrose Building & Remodeling in Nacogdoches, Texas, says he uses 2x12 joists. The extra space extends the storage area, giving home buyers the room they need to extend the garage out into an apartment.

Another way to jab at the local competition is to do a better job of sealing off your homes from the elements. Look into insulating all your homes with an open-cell spray foam. Steve Kendrick of Structures Building Co. says the foam provides an airtight seal around the entire envelope of the house. Structures also encapsulates and insulates all the crawl spaces to keep the humidity out. Kendrick says enclosing the crawl space keeps the relative humidity at lower levels than using a traditional vented crawl space.

Bay Homes has a few tricks of its own. Easton says 50 percent of the company's new homes are built with metal framing. She explains that since the metal framing is more durable and less likely to be attacked by termites, building with metal can save home buyers 30 percent on their homeowners insurance.

Saving money is great, but home buyers also like it when builders show that they can have fun. Bay Homes injects some whimsy into the building process by designing a unique feature into every new home. Examples include hidden closets and hidden stairwells. One of Easton's favorites is a combination: a built-in bookcase that opens up to a stairwell that leads to the other end of the house.

“As people look at our homes, they see these things and want something neat,” she says, adding that it was a tradition her father started years ago when he ran the business.

The best way to draw visitors into your Web site is to do something dramatic on the home page. One builder in Austin, Texas, posts a picture of his most extravagant dining room, a classic French provincial room that is a takeoff of one of the Vanderbilt rooms at The Breakers in Newport, R.I.

The image does attract prospects. Geoff Meiteen, president of Geoff Meiteen—Master Builder, says that about half of his sales leads come in via the Web site, but he warns that builders need to balance out an attention-grabbing photo with text that makes it clear that the high-end room prospects see on the site represents only the top of the line of what the builders offer.

“I try to balance the French provincial photo with text that says we build homes from $300,000 on up,” says Meiteen. “We don't want to scare people away.”

Of course, some builders may simply want to draw in a certain kind of client.

“When people browse our Web site, they see homes that are clearly not first-time production homes,” says Kendrick. “I think by posting a gallery that shows the quality of what we build, we get more qualified traffic,” he states. About one-third of the company's sales leads come in via the Web, he adds.

One example of a really good small builder Web site is the one run by Welte Construction of San Leandro, Calif. Welte's site offers links to a photo gallery, information about the company's repair service, and information about its landscaping business. The site also has a map, a snail mail address, phone and fax numbers, and an e-mail address. While this information might seem like standard fare, many builder sites lack the basics, such as an easy-to-find phone number.

Builders should also find the time and money to refresh the site every couple of years.

“If you think you are building better stuff, you want to be sure that your clients are seeing it up on the site,” remarks Bill Welte. “We've had dozens of calls from people who took the time to view our Web site,” he concludes.

Most builders are too small to have model homes, and unless they build spec homes, one of the only other ways to show buyers what they have to offer is by participating in a local parade of homes.

A lot of small builders complain that too many of the shoppers at the HBA events are just browsing, but Carmen Dominguez, president of Homes by Carmen Dominguez in Orlando, Fla., says builders should look at the parade of homes as a long-term investment.

“I don't always get immediate results,” admits Dominguez, who chaired the spring parade of homes for the Orlando HBA. “But people think about building a home several years in advance,” she says. “When people see the quality I offer and leave with the right information, they do call back.”

PEOPLE LOVE PARADES: In response to builders who complain that parades of homes don't generate business, Orlando, Fla., builder Carmen Dominguez says she gets calls from people who see the high quality of her homes, such as the one shown here.

Builders can and do sell homes at these HBA events. Paul Kumar, president of Cyras Homes in Charlotte, N.C., says his company took part in the Charlotte HBA's HomeArama this year. He notes that the company showcased a $3.48 million home that sold just before Memorial Day weekend.

Participating in a parade of homes may not make sense every year, but it might be a good strategy to enter every second or third year. It's an excellent way to show your homes to large groups of people and to let them know the kind of product you offer.

Ten construction tips that Gabriel Builders uses to stay one step ahead.

All business experience is valuable; it's just a matter of how you apply it. Take Gus Rubio, president of Gabriel Builders in Greer, S.C., a company he founded in 1984. Before Rubio started his company, he worked as a quality control person for a plastic injection molding business. In that position, he developed an eye for the little details that let companies build quality products. He applied the quality control techniques he learned in manufacturing to his building company and developed a series of construction-oriented processes that help keep quality high. Finally, about three years ago, Rubio decided to put the list down on paper and now uses it as part of the company's marketing materials. He also plans to post the list on his company's Web site. His advice to builders: You are probably doing something unique with your own building processes. Just take the time to write them down and use them as marketing opportunities.