The sales process can be risky, especially as a market softens. Buyers under contract are sometimes just waiting for an excuse to walk away. But at Keystone Homes, a semi-custom builder operating in 15 communities and building about 360 homes a year (nearly all of them presales) throughout central Pennsylvania, that's not a problem.
Simply, the builder selected a single lender (American Home Bank, based in Mountville, Pa.) to handle the majority of its construction-to-permanent (CTP) lending chores. Two years into the partnership, more than 90 percent of Keystone home buyers choose to use the builder's preferred lender. “Most people want to simplify their lives,” says Jeff Rutt, president of Keystone Homes. With a CTP loan focus, the lender understands the building process, helping streamline the financial end. “If that drags out, it leaves the door open for a buyer to lose interest and back out,” says Rutt.
While the buyers benefit from a more simple, surprise-free loan process, Keystone receives draw payments directly from the lender (instead of through the buyer) based on an agreed schedule and inspected progress, keeping cash flow steady and helping retain valued subcontractors. To date, only three buyers have backed out of their contracts (each due to unusual personal circumstances), and Keystone's rate of buyers willing to refer the builder to others is around 90 percent.
CAMPAIGN DETAILS Program: Preferred lender program; Builder: Keystone Homes, Willow Valley, Pa.; Lender: American Home Bank, Mountville, Pa.; Cost: none, partnership between builder and lender; Advertising agency: McGrew Marketing, Waverly, Pa.