Survival Instinct

Lebbin is one of several panelists who voiced dismay about the decline in their companies' salesmanship over the past several years. “So many salespeople never get to the point where they are asking for the order,” observes Mitchell, who is reinvigorating his sales staff with younger people he can train. Lev points out that just having its own salesforce puts Belgravia Group “miles ahead” of most other Chicago developers that don't. And with so much unsold inventory on the market, builders see selling as the one skill, above all others, they must do well to survive.

“Selling is a verb, so we are emphasizing training and are letting people go who aren't [making sales],” says Coleman. Kennedy adds that he considers every home he builds a spec house until it closes, so his company needs salespeople to stay in contact with buyers “from when it's sold to when it closes.”

Moss of Mosaic Homes empathizes with salespeople who invariably take the rap when business is bad and are disparaged as “order takers” when business is good. He says the best salespeople “can take you out of your problems” and sees a bigger deficiency in the way builders approach buyers. “We've got to change the way we talk to our customers, how we track and sell them.” The rash of incentives and deep discounting that builders have engaged in over the past year hasn't helped matters, say builders, because such tactics disconnect the buyer from the salesperson.

While the effectiveness of incentives to stimulate sales might be waning, builders still believe these are the wrong messages to be sending to reluctant buyers, especially when prices for new homes are sometimes less than those of competing existing houses. “When you put in an ad that offers $75,000 off this weekend, that's a negative,” says Hall, “instead of taking the approach that it's a good time to buy, a positive.”

As they reintroduce salesmanship into their customer relations, builders are also turning to the Internet to reach more buyers. This seems especially true in the D.C. market, where Alloy calls the Internet “the great leveler” and Lebbin adds that “it makes a smaller builder look like a larger builder.” Mitchell says the Internet “is bringing in more people to our sales offices than anything else.”

Most of the builders at the roundtables said that while sales have been sluggish, their customer traffic has been acceptable, which gives them hope that, by late this year, business could return to some semblance of normal.

By then, the industry's power structure could look a lot different. Already, Wardell says his company is “picking through the bones” left by national builders that walked away from land or entire markets. And the general consensus is that the weight of the housing recession will crush a certain number of builders and force others to merge with or sell to competitors. “There are some people in this business who need to be out of this business,” says Coleman. Alloy anticipates some disruption, too. “The industry will become more efficient, but there will be winners and losers.” Stanley Martin is already rebanking land until market conditions improve and is shifting resources to complete in-town infrastructure.

GETTING REACQUAINTED: California builders say the industry must re-establish its relationships with buyers.

Alloy says that surviving any housing downturn hinges on his company's ability to keep its core management team together. “This is when leaders lead, and you have to be confident and tell your people, ‘We have a plan and we need your help.' ” But Kennedy—whose company expects to build 200 homes in 2008, from 800 units in 2006—thinks too many builders come up short because they only look inward for answers. “Don't put your head in the sand. A lot of builders won't admit that they are having problems, but there are people out there who can help you. Plan for the worst.”

Builders and developers with reliable financing sources could be better positioned to take competitive advantage of an industry in flux. Lev of Belgravia Group foresees opportunities in the second half of this year for some, “when the cream rises to the top.” Webb says John Laing Homes, owned by Dubai-based developer Emaar Properties, wants to become the largest private builder in the U.S. and expects to add three or four divisions in 2008, either as start-ups or through acquisition. “There's going to be a vacuum” to be filled, predicts Moss of Mosaic Homes, whose four divisions expect to start building in June. “We're going to be cautious in some markets, more aggressive in others.”