Builder Success

Hear it straight from the builder’s themselves – who’s having success and why.

Best Practices from Fulton Homes and Other Top Builders from the BDX-Led Panel Discussion at The International Builders’ Show

A recent Panel Discussion at The NAHB International Builders’ Show moderated by Jay McKenzie of Builders Digital Experience (BDX) provided builders with proven best practices to successfully sell new homes versus foreclosures.

Dennis Webb, VP Operations for Fulton Homes in Phoenix, shared with builders how his firm is selling hundreds of new homes annually — in a market where 46% of homes sold last year were foreclosures.

“Our main strategy to sell against foreclosures is to provide features and amenities in our homes and new home communities that foreclosures can’t–and don’t–offer,” Webb said.

“First, we build highly amenitized homes with many premium products and offerings included in our base price. Second, we’ve built to the latest EnergyStar standard—which took effect January 1, 2012—since October 1, 2010, which dramatically lowers energy costs.  Third, in our largest community, we leverage our $100 million investment in infrastructure. We’re building new homes a mile away from the most successful employer in the state, Intel.”

The Fulton Homes website also provides an innovative Foreclosure Calculator consumers and real estate professionals can use to see the true cost to buy and repair a foreclosed home. It provides typical costs to repair or replace expensive items often damaged or missing in foreclosed homes.

Once a home shopper calculates the total cost to buy and repair a foreclosed home, a link in the Foreclosure Calculator shows how much home they can get at the same price- in a brand-new Fulton home plan that they select and personalize, with many upgrades included standard, in a brand-new home that’s under warranty, and that’s built to the latest energy standard.

Fulton Homes’ Foreclosure Calculator was a big reason why real estate expert Kenneth Harney chose to cover this BDX Panel Discussion at IBS in his nationally-syndicated column in The Washington Post, The Los Angeles Times and many other leading newspapers.  To read Kenneth Harney’s column – and to see Fulton Homes Foreclosure Calculator – click here: http://wapo.st/yxBpZP

Other strategies that Fulton Homes is using to sell new homes versus foreclosures include:

  • Build larger homes (from 3,000 to 5,000 square feet) based on the latest energy standards for sizable savings on utilities
  • Build only single-story homes. No stairs to climb is a big benefit for many buyers
  • 4 car garages standard in all homes, 6 car garages available
  • Offer a huge selection of options for buyers to personalize their home. All 5 top executives of Fulton Homes came from retail prior to their years as home builders
  • Fulton uses the Envision Option Selection/Management System from BDX and a state of the art, 13,000 square foot Design Center to make it easy for homebuyers to select –and upgrade—appliances, countertops, flooring, cabinets and more

Prefacing these valuable strategies from Fulton Homes, Charlie Engle of RealtyTrac provided builders with the latest data on foreclosures.

RealtyTrac data covers the key stages in the pre-foreclosure and foreclosure process. Engle provided builders with just-calculated data for 2011 not published before. RealtyTrac’s data covers 92% of American counties and is relied upon by media, governmental agencies and academia.

Since 2007, more than 8.2 million homes have started the foreclosure process and more than 4 million homes have become bank-owned homes. At present absorption rates, RealtyTrac estimates that there is a 16-month supply of bank-owned homes and a 49-month supply of delinquent homes.

While the statistics on foreclosures are sobering, as BDX’s Jay McKenzie pointed out in his segment of the Panel Discussion, The NAHB Wells Fargo Housing Market Index (HMI) has shown five consecutive monthly gains in new home sales and model home traffic. Jobs are returning (although more slowly than desired) and many other builders are successfully competing with foreclosures.

Foreclosed homes are sold “as is,” often with no inspection.  Many foreclosures require major, often hidden repair costs. Financing a foreclosure can be more difficult than a new home. Some foreclosure buyers may also need to pay additional cash at close to catch up on past due taxes, HOA fees.

In sharp contrast, builders BDX spoke to are successfully citing many compelling benefits for buying a new home versus a foreclosure:

  • New homes and the products they contain are brand new and under warranty
  • Many new homes are far more energy-efficient than homes built just 5 years ago
  • New homes reflect the way we live today
    • Open floorplans, higher ceilings, multiple living spaces
    • Larger master bathrooms and closets, media rooms, extensive storage
    • New homes allow you to select the choices you want vs. inheriting someone else’s choices
      • Pick the floorplan, elevation and bonus rooms and spaces you want
      • Personalize your new home with appliances, cabinets, countertops and flooring
      • New home options can be financed at unprecedented low and tax-deductible interest rates
      • Advanced technologies insure year-round comfort and high indoor air quality
      • A new home means many years of enjoyment, with much lower chances of costly repairs

Given the many advantages of new homes, it’s clear that builders can successfully compete with foreclosures. To access the slides from this Panel Discussion, click here:  http://blog.thebdx.com/?p=551

 

Recently I was in Phoenix participating in training on Realtor.com. While most of the meeting focused on listing data, reporting and managing accounts I was really impressed with the Featured Home solution. I’m often asked, “What’s the value of a featured home? And what type of traffic should I expect?”   Those are understandable questions but can be difficult to answer with all of the different market conditions that can affect traffic to a listing. As a result, I wanted to share some of the highlights and why I’m such a fan of this product.

OVERVIEW
First, Featured Homes are ad positions prominently displayed at the top of the Search Result pages on Realtor.com.  These placements display ‘Featured’ listings and provide significantly more exposure than the standard listings.  There are 8 available placements for each zip code and an advertiser can select to have all homes or a single home displayed. In addition to the listing, Featured Homes also allow the inclusion of a headline like “New Home” and for builders with Realtor.com Enhanced Listings they also receive builder branding with a prominent logo.

INTELLIGENT DESIGN
During our training I learned that the Featured Homes dynamically determines an advertisers’ most relevant listing and matches that to the consumer’s search. I think this has huge benefits for builders with multiple listings and range of community prices.  If you have 50 listings on the MLS but maybe only 5 match the consumer’s query of price, location, bed, bath, wouldn’t you want to display those 5 homes first?

REACH & VISIBILITY
Advertisers also have the ability to purchase neighboring zip codes where their listings may not naturally display. For example, if your community feeds into a popular high school that’s in a neighboring zip code Featured Homes is the only way to provide that visibility for your listings.

In markets with a large populations of relo, it makes sense to purchase city center zip codes since it’s fair to assume those consumer may not be as familiar with the suburbs and surrounding neighborhoods.

TRAFFIC
Featured Homes is a great traffic driver to the builder’s listings and a great way to capture home shoppers who may not have considered new construction.   I’ve run reports for builders across the country and on average Featured Homes represent a 30% incremental lift in traffic to their listings.  The chart below is an example of some of the different reports we’ve seen for homebuilders.  For the builder in Minnesota you can see visits to their LDP (Listing Detail Pages) were 1,426 this month 334 (23%) of those visits came from click originating from Featured Homes.  And with Featured Home placements as low as $11/mo. a 30% lift in prospective homebuyers is a tremendous value.

AFFORDABILITY
Rates are based on a tiered pricing and for many zips is as low as $11/mo.  BDX offers reporting that identifies all zips and rates for where a builder has listings. In many instance we’ve found a builder can cover a majority of their listings by targeting just the most affordable markets. Ask us for a complete report on your MLS listings to determine which zip codes will drive the most value for your budget.  Many builder use the report to target zip codes with the greatest reach or for hyper targeted advertising to move spec inventory.

FEATURED HOMES AND ENHANCED LISTINGS
As much as I’ve become and advocate for Featured Homes I wouldn’t recommend this product for non- enhanced listings.  Advertisers simply won’t receive the same value since you’re effectively driving incremental consumers to your listings and they’re not able to fully engage with your brand or submit a lead.  Contact me or your local sales representative to see if your MLS Listings are enhanced on Realtor.com.

For more information regarding Featured Homes or other Advertising Products contact Thane Tennison, Advertising Manager for BDX or contact your local Sales Representative.

Click to download the BDX Advertising Flip Book.

Green BuildingBlog Post From Tim Costello: CEO, Builders Digital Experience

Several weeks ago I found myself visiting Jeff Mezger, the CEO of KB Home in Los Angeles. I have been to their corporate office many times. It is housed in a glorious skyscraper on Wilshire Blvd. with magnificent views in nearly every direction.

Killing time before the meeting, I popped into the men’s room and there hanging on the wall in front of me was the future of green home building: the waterless urinal. Well, perhaps it was not the urinal itself that is the future of green home building but what it stood for.

OK, first I have to admit I am and always have been a huge fan of all things green! I have solar PV on my home, I own a Prius, I have tankless water heaters, my 8th grade science fair project nearly 40 years ago was a scale model of a net zero home. So this kind of stuff excites me.

Now back to those urinals. I had seen them before at trade shows and in high volume stadium settings but never in an office environment and more importantly never in a builder’s office. While my meeting with Jeff was not remotely related to KB’s green building practices, I could not help but comment about the urinal later during our meeting. That is when I actually saw or perhaps heard the future of green building.

That one comment opened the door to witnessing a personal and corporate conversion to the adoption of sustainability and green practices as a responsible business imperative. Jeff effortlessly glided his way through an hour long story of his and the company’s integration of “green thinking” into everything KB Home does. While I have heard many builders talk green, this was different, this was not necessary window dressing nor an individual’s lifelong passion. This was a pragmatic, thorough, well thought out business performance driven strategy that was infiltrating everything the company does.

I felt as though I had witnessed the first days of Adam Warbach as he lead Wal-Mart on their journey to discover the virtues of a holistic sustainable approach to business. While small builders across the country have been pushing the green building envelope for decades, the vast majority of new homes have been unaffected. For green building to have a meaningful impact on the energy intensity of the built infrastructure of the US, the large national builders will have to adopt green principles. In the weeks following that meeting I have seen real, meaningful movement from other large national builders to build greener more sustainable housing. While this is good for the country it is also undoubtedly good for builders as well.

So be careful next time you step into the men’s room, you may just discover the future of an entire industry.

It’s a common question and I’m sure there are some people that would say, “All of them!”  Just like with print advertising, too few impressions won’t give you the impact you need. One business card ad in your local paper won’t give you the same bang as a full page spread.  Conversely too many impressions can be overkill. Do you really need a full spread, every month to be noticed and convey your message? Probably not.
At BDX we won’t sell a builder more than 30% Share of Voice (SOV) or 30% of total impressions per market. At that level a builder is guaranteed to appear on every page above and below the fold and from the data we’ve seen even at this volume campaigns still perform well. Meaning that performance at 15% is the same as at 30% but with just fewer clicks…

Shortening the Ad Window To Improve Performance

However, we have seen performance suffer on campaigns with too small a SOV if not properly managed. For the BDX that means shortening the window on our smaller buys. We’ve found that we can drive more clicks for our smaller buys by reducing the advertising window to  15-20 days instead of a full 30. It equates to more impressions per user and stronger performance overall.

The Impact of Good Creative

I’ve consistently seen that creative is the strongest driver of performance and even a small campaign can perform well. Once you’ve established the right site and the right message it’s easy to scale.

In Summary – Focus On Frequency

With the right site, high frequency appears to be the right move. We’ve seen a similar trend in our retargeting and the performance of our VAN advertisers (who advertise across a network of vetted real estate websites).  Our retargeting audience is self-qualified and we’ve seen high frequency against narrow windows have very positive results. Builder advertisers on the VAN are successful because in addition to a large SOV these ads reinforce the builder’s listings on those websites which also improves conversion.

For me when testing new sites I think you can learn a lot in a one month flight and a strong SOV. In the end you’ll know where you stand or if you need to tweak your message.  I recently heard of a builder who will cut the number of websites they advertise on by 70% in 2012 choosing to focus on those few that drive the greatest value.

If you have questions about marketing strategies or advertising with BDX contact Thane Tennison, Advertising Manager for the BDX Network.

Blog Post From Tim Costello: CEO, Builders Digital Experience

I was visiting Summit County, Colorado a few weeks ago. While it may not be Las Vegas or Riverside, CA, the market is in a slump none-the-less. It is plagued by the same components of housing malaise as the rest of the nation — too many homes for sale, foreclosures, short sales and just not enough well-heeled buyers to keep things going. Prices have declined dramatically and inventories remain relatively high.

Yet as I rounded the corner of yet another high-end community with For Sale signs on what seemed to be a quarter of the properties, a new home under construction came into plain view. It was so shocking; I had trouble comprehending what I was seeing, kind of like seeing an elephant in the middle of a highway. But there it was a bustling site of activity reminiscent of the pre bubble economy.

At first, I wondered if it was some builder’s final desperate folly. But then as I stared at it and studied the home, the genius of it all began to sink in. This was not just another house, this was a “new home”, highly differentiated and with features that are completely unavailable on the current market. This was not only the only home of its type in the neighborhood but one of only a few such homes in the entire county. This home was “green” from the ground up, with solar PV and hot water to boot. This builder was not building another house; he was building the first house of its kind.

And therein lies the genius of it all, if your market is saturated and demand is slack then change your offering to create your own “blue ocean” strategy, where you compete alone and harbor all demand. The building industry has a unique and compelling advantage to other industries, in that we do not build standard products. Of all the industries I have studied over the years, homebuilding has the most latitude to course correct and change its offering year to year and even month to month.

If the home building industry wants to regain its momentum without waiting for “absorption economics” to play out, then it had better change the game. Go back to the drawing board and build a product that does not compete with the current market. Borrow a card from the auto industry and create planned obsolescence to drive demand and create profound differentiation. The future of the housing market may depend on it and the country as well as consumers will certainly benefit from it.