John Wieland went home to his own bed on Wednesday, April 29, after 52 nights of sleeping on the floors of his empty houses, his vow to sell 101 homes fulfilled at last.
“It took a little longer than I had hoped,” the founder and CEO of Wieland Homes and Neighborhoods said Wednesday afternoon of the 53-day effort, as he headed home in the lime green Winnebago in which he's been traveling since March. “I didn’t really know what to expect. I just knew we would stay there until we did it.”
It was the end of an early 2009 sales marathon. Earlier this year, with sales dwindling, more than 300 spec houses in inventory, and worried that the company would be in default on its loans if it didn't generate some cash, Wieland decided he needed to be out on the front lines of his business.
He got there in the custom-painted RV he dubbed the “Wiebago.”
By day he chatted up customers in his communities across the Southeast. By night he slept where the buyers of his homes do, only without furniture. “It was the most educational two months I have ever had in home building because you get a comprehensive experience of how your purchasers are living,” Wieland said. “I would absolutely not trade the experience for anything, the ability to see our neighborhoods and homes from the customer’s point of view. You are there at 10 o’clock at night. You wake up in the morning, and you see your customers wake up.”
The trip also gave him a deeper understanding of what customers are like today in an extreme buyers’ market. “The sales thing is just tough,” said Wieland who calls himself a “terrible salesman” because he tends to be “too generous.” “I have tremendous respect for everybody who sells homes today because the customers know there are bargains out there, and their definition of a bargain is a lot lower than our definition of a bargain. Finding some sort of middle ground that we can live with is tough.”’
One of the reasons Wieland ended up with so many spec homes in the first place was that he has been reluctant to drastically discount the homes. “Our position has been to drag our feet on lowering prices because it’s so tough on the people who already live [in those developments]. I, like every builder, get a little bit of e-mail from homeowners saying, ‘What are you doing? You are destroying me,’” Wieland said. “My answer is I have to do what I have to do to stay in business, to keep your neighborhood going. The values will come back.”
With prices reduced, homes did sell. And, because the prices were dropped so far, the buyers were given little wiggle room to get out of their contracts. There were only six cancellations during the sale period, according to Wieland.
Several weeks into the tour, Wieland realized that his spec homes weren't all alike in their challenges and started categorizing them into two general categories: necessity homes, which the company needed to sell, even at a loss; and opportunity homes, which might yield a profit with just a few tweaks. “One of the errors that I saw out there was that sometimes we had opportunity homes that we didn’t realize it and were treating them like necessity homes and weren’t asking enough for it," Wieland explained. "And sometimes we had necessity homes, and we were playing hard to get, which definitely was not right.”
Some of the improvements he’s making to the opportunity homes are upgrades that have minimal cost to the builder, but significant appeal to buyers. “We can finish a basement so cost-competitively and add 600 square feet and then dramatically reduce the cost per square foot on the house and then provide something new and fresh that generally isn’t available in the new-home marketplace,” Wieland said.
Staying in these inventory homes also provided Wieland with other insights and ideas. For instance, thanks to his firsthand observations, the company is now paying more attention to which home is built on which site and how it relates to other houses, as well as the position in the neighborhood. “As a builder you look at the pieces of the house. It looks great, [and] the carpet is beautiful,” Wieland said. “Whereas if you are staying there during the night, you get up in the morning and look out the window, and you’re looking into the bedroom of the house next door, and it’s 'Oh my gosh.'”
He summed up the changes as a shift to being "neighborhood-centric rather than home-centric. What we’re doing is putting accountability on the builder in the neighborhood to fit the home into the neighborhood, not just build a great house," Wieland explained. "In the past, we’ve said, 'let’s build X plan on X lot,' and you send him the plan and he goes and does it. Now we’re saying, 'Before you order windows, we want you to walk this house and make sure that all these windows are in the right place, that all these windows are the views you want. You not only own the house, but you own the house in its environment.'”
“I think we’ve got a new way to look at the world,” he said. “It’s all about how you take a lemon and make lemonade.”
Learn more about markets featured in this article: Atlanta, GA.