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My Builder Filed for Bankruptcy, What Should I Do?
 Your builder has filed for a Chapter 11 bankruptcy, but worse yet, you heard it first from a prospective home buyer and were caught completely off guard.
Let’s hope that a prospective home buyer is not the one who breaks news of this nature to you. It’s extremely important for the company owner to share every detail of these kinds of financial matters firsthand — before going public with such news.
Briefing and educating company staff members is the only way to ensure that everybody can get on board with the strategies that I’m about to discuss. But even if you did hear the news from a prospect first, there’s no reason to panic.
The first thing you must do is gather the facts.
Determine the Damage
After hearing the news, the first thing a salesperson must do is understand exactly what bankruptcy is and which type the company is filing.
There are three types of bankruptcy:
- Chapter 7 Bankruptcy — where a person or company files for total liquidation
With Chapter 7, the court seizes and liquidates all assets in order to make some kind of meaningful monetary distribution to creditors for debts owed. This is the most severe of the three bankruptcies and usually results in the end of the company.
- Chapter 13 Bankruptcy — typically used for personal reorganization
Payments due to creditors are delayed over a period of time and amounts sometimes may be reduced.
- Chapter 11 Bankruptcy — used by companies and resembles Chapter 13
If all a company needs is a reorganization plan to pay off debts, then a Chapter 13 is preferable, rather than a Chapter 7, particularly when the company is trying to reestablish its credit worthiness. Delta Airlines and US Airways have filed for Chapter 11 bankruptcies, reorganized their debts and emerged in stronger positions.
How your builder files will determine what it means for you as a sales professional.
Now the Good News
Unfortunately, in today’s market, some builders will be forced to file for Chapter 7 bankruptcy and total liquidation.
On the other hand, builders who choose to file Chapter 11 make a crystal clear statement to the community that they want to honor all of their debts and existing customers by utilizing this form of reorganization to allow them to manage their debt loads and continue to take care of customers during their temporary financial setbacks.
A builder who files for Chapter 11 says he wants to do the right thing and intends to continue operating as usual.
While it is natural for anyone to be skeptical of buying from a company that is in some form of bankruptcy, it’s equally important that potential customers understand the integrity that the builder is demonstrating at this stage of business.
Delta Airlines continued to sell tickets and fly during its restructuring — providing on-time arrivals and outstanding customer service as usual for its customers. Delta emerged from bankruptcy stronger and better positioned to compete in the market.
Your home builder can do the same.
If You Believe, Get on Board
As a sales professional, you have a tough decision to make. First, do you understand how the reorganization plan works and how this will affect customers now and in the future? Also, are you comfortable with your company’s direction and the fact that it is moving forward?
If you aren’t comfortable with the Chapter 11 filing and what it means, you need to leave the company.
If you understand it and agree with the builder’s intentions, you need to get on board 110% — and bring your best selling skills ever to the table so your company has its best chance at emerging successfully from the reorganization.
Sales are the most important part of the entire reorganization plan because they are the lifeblood of the company. Each sales professional becomes a lifeline for the next few months as the company goes through this restructuring.
Restructuring a company’s business, especially during this downturn, can be a real opportunity for everyone involved. However, sales professionals need to understand how important their role is in securing a positive outcome.
If you are in, get all the way in, and help your company monetize its success in this economic environment.
John A. Palumbo is CEO of The Sales DNA Institute, an idea studio and research laboratory for sales and marketing management. He has given hundreds of speeches and presented at seminars internationally on the science of sales and influence. He has been instrumental in restructuring the Sales DNA for thousands of individuals from small, family-run companies to large-scale developers such as Trump Grande International. For more information, e-mail Palumbo, call him at 904-448-1100 or visit www.SellingOnStage.com.
This column cannot be reprinted without permission from the author.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
 ‘ValueMatch Selling for Home Builders’ Available at BuilderBooks.com
“ValueMatch Selling for Home Builders,” available through BuilderBooks.com, presents a selling process that focuses on selling feelings and appealing to prospective buyers’ emotional need to buy a new home in today’s market rather than product.
Learn how to build rapport with prospective home buyers, meet their needs, make powerful presentations that are focused on their values and go for the close.
To view or purchase this publication online, click here, or call 800-223-2665.
 Subscribe to Sales + Marketing Ideas Magazine for Cutting-Edge Information
For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine (www.smimagazine.com).
Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing.
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