Nation's Building News Online: July 5, 2004Print All Articles Text Version |
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New Online Election Tools Offer NAHB Members Voter Registration and Early VotingNAHB recently launched four months of election activities with the creation of a comprehensive election Web site (www.nahb.org/elections) for its members and their employees. The Web site, which helps users in all 50 states register to vote and vote early, is a unique member service and positions NAHB as a leading source of election information for its members, their families and their employees. “We’re committed to giving home builders a strong voice in choosing their elected officials this November,” said NAHB President Bobby Rayburn. “Our new Web site offers our members the tools they need to make the voting process as easy and uncomplicated as possible.” In addition to the site’s early voting and voter registration features, www.nahb.org/elections contains a variety of election resources, including the latest national poll results, information on NAHB’s activities at the nominating conventions and contribution information. The early voting and voter registration areas of the site, accessible directly at http://Homebuilders.HelpingAmericansVote.org, leverage recent voting law changes to help members and their contacts take advantage of convenient voting methods, such as early voting, absentee voting and voting by mail. Although each state has its own set of election laws, three-fourths of them allow their citizens to vote early — some as early as 43 days before Election Day. For more information on voting laws and requirements in your state or to register to vote or vote early, go to http://homebuilders.helpingamericansvote.org. NAHB members can view the full suite of NAHB’s election resources at www.nahb.org/elections. Or e-mail Ashley Geyer or call her at 800-368-5242 x8126 to learn more.
Building News Coast To CoastNo Sagging in Builder EarningsU.S. home builders largely are shaking off the threat of climbing interest rates, with major players in the market posting double-digit earnings growth in the second quarter. Lennar Corp. and KB Home registered respective gains of 26% and 25% in their fiscal quarters ended May 31, while the fiscal quarter ended April 30 saw Hovnanian Enterprises Inc.'s earnings up 34%. Raymond James & Associates Inc. analyst Paul Puryear projects that most residential builders will log increases of at least 20% for the three-month period, and there is general industry sentiment that the sector will not cool off anytime soon. Jim Wilson of JMP Securities notes, for example, that orders — which add to the bottom line for the following two or three quarters — are slated to rise 15% on average; while Meritage Corp. CFO Larry Seay adds that stronger balance sheets and more skilled management teams will help sustain builder earnings. 'Green' Homes Starting to Flower Despite CostRising energy prices are prompting more and more U.S. home owners to consider green building, which involves the use of recycled materials, non-toxic products and energy-efficient features during the construction process. Sub-flooring made from recycled newspapers, straw-bale walls, bathroom tile comprised of recycled car windshields, and bamboo floors are examples of eco-friendly features. Home owners also can opt for energy-efficient appliances, solar panels, solar water systems, roofs covered in grass and other vegetation, and radiant floor heating; but many balk at the upfront costs involved. Although green materials can cost substantially more than traditional products, builders insist that the expense is offset by long-term energy savings. More affordable green materials include paints and carpeting without volatile organic compounds, cellulose insulation and reflective roofs. Home owners may encounter difficulty in locating builders or contractors willing to undertake green projects because of the higher costs, but the industry will get a boost from NAHB when it issues national green-building guidelines later this year. High-Tech Wiring Puts It All at Your Beck and CallGoehring & Morgan Construction is currently building The New American Home in Baldwin Park, FL, which will be ready for NAHB's 2005 convention slated for Orlando in January. The 6,000-square-foot, estimated $1.8 million property will be positioned around a pool, complete with a waterfall originating above a fireplace. Though impressive, the dwelling's main selling points will be its high-tech features. Technology from Lutron Electronics Inc. will link a dozen televisions positioned throughout the house with telephones, computers, lights and security and audio systems, which can easily be controlled via touch-screen keypads and remotes. The computers and televisions can be used interchangeably. Moreover, home owners will be able to program the lights, control the shades, monitor the front door, activate the sprinkler system, turn on the whole-house vacuum and chlorinate the swimming pool from anywhere in the house. The home also features a combination of Styrofoam and Icynene insulation as well as a multitude of temperature and humidity sensors. Pittsburgh-based Ibacos Inc. will read the sensors for one year to gauge the efficiency of the home's heating and cooling systems. High-Tech Development To Be BuiltThe Corpus Christi, TX, Chamber of Commerce hosted a groundbreaking ceremony this week for a new "smart" community, Virginia Hills on the Bay, where construction is set to begin within the next couple of months. According to Jerry Reeb, co-owner of Mirabal-Reeb Properties, the technology will make the gated community the first of its kind in Corpus Christi. The 42 homes overlooking the Cayo Del Oso preserve will allow home owners to wirelessly control security cameras, thermostats, lighting and other household systems and appliances. Corpus Christi Builders Association President Tony Brady — owner of Third Coast Construction, which is building the homes and installing the wireless automations systems — describes wireless home automation as "a remote control for your house." The wireless automation system is easy to use, even for those who are not technology savvy; and security is a basic component. "I can have it set up where when somebody rings your doorbell, a picture of who is at the door will pop up on your PDA or you laptop or your monitor at work," says Brady. Reeb, the real estate agent for the property, says five home sites — priced from $170,000 to $400,000 — have been sold and two other sales are pending. Experta Financial Group is handling the mortgage lending services. Home View/School's InA new online poll by HomePriceCheck.com shows that home buyers are less preoccupied with size and more focused on buying in an area with quality schools. Queried about how much house they needed, 42% of the 1,304 people who responded quoted space requirements of 2,000-3,000 square feet. Just 8%, meanwhile, said they needed an even larger residence. As far as what elements are most important in a new neighborhood, 52% of the 733 people who answered cited a good school district. Another 17% thought affordability was the most important, while 4% of the poll-takers said that being near to family was the biggest draw. When Ease of Lifestyle Trumps Prestige in a Home ChoiceMany affluent home buyers are opting for convenience over square footage. These buyers would rather live in smaller homes close to their jobs than lavish dwellings with formal living rooms and large yards in faraway locales. Even so, former National Association of Exclusive Buyers Agents President Abraham Tieh says three-car garages and upscale kitchens and bathrooms remain top priorities. Buyers who favor convenience over prestige should consider their need for a large yard and look for multipurpose spaces instead of many large rooms. Modern kitchens ensure appreciation over time, but experts say buyers are more interested in wood cabinets and computer hookups than size. Finally, buyers who do not want to deal with repairs or remodeling projects should have the property examined by an experienced home inspector before the deal is finalized. Home Performance Expands Across CountrySince the New York State Energy Research and Development Authority partnered with the Environmental Protection Agency (EPA) to launch the Home Performance with Energy Star program in 2001, several states have followed suit. The program aims to make existing homes more energy efficient. The Department of Energy (DOE) in 2003 provided grant money to seed programs in Austin, TX; Kansas City and St. Louis, MO; Atlanta; Atlantic City, NJ; and Boise, ID. Similar projects also are underway or under consideration in Vermont, Illinois, Minnesota, Massachusetts and Wisconsin. Meanwhile, HUD has teamed up with EPA and DOE to create a contractor infrastructure, encourage better quality construction and move the program into the multifamily sector. The results of these efforts will be known in the coming years, paving the way for improved business practices, new certification programs and educational and marketing campaigns. A Yard Over Your HeadGreen roofs are gaining popularity in the residential sector, but most home owners are not interested in them as a social space. Rather, Environmental Building News Executive Editor Alex Wilson says modern home owners are employing green roofs to control storm runoff, cool their dwellings during the summer months and create wildlife habitats. These projects are more involved than simply spreading dirt on the roof and planting vegetation, and home owners should keep in mind that they cost significantly more than conventional roofs. In fact, green roofs cost three times more than those comprised of traditional materials at anywhere from $12-$20 per square foot. Since green roof technology is a fairly new concept in the United States, home owners will have to look hard to find knowledgeable engineers, architects and roofers. However, Green Roofs for Healthy Cities currently is working on a certification program for builders and other professionals. Widespread adoption of green roofs is far off, experts say, but the emergence of government incentive programs — like those offered for commercial buildings — will spur consumer acceptance. More Storage Changing Way We Use E-mailSoftware breakthroughs are altering how users use and manage e-mail. Leading the transformation are software leaders Google and Yahoo!, which have developed solutions that are forcing Internet service providers, browser makers and software vendors to change their approach to e-mail. For its part, Google's Gmail services addresses Webmail limitations, allowing every Gmail user a whole gigabyte for storage and an attachment size limit of 10 megabytes. Meanwhile, Yahoo! has raised its storage to 100MB and attachments to 10MB. MSN Hotmail expects to follow suit, raising its storage to 250MB to 10 MB next month. Pollsters and Architects Crack the Code on Housing Wants of Aging Baby BoomersThe 78 million post-World War II baby boomers who are approaching their retirement years will be opening up a range of opportunities for home builders and remodelers who understand the unique and changing dynamics of this group, according to panelists at PCBC in San Francisco during a June 18 presentation on where today’s consumers want to live. Baby boomers are taking the concept of retirement where it has never gone before, according to J. Walker Smith, president of Yankelovich, and they will have more wealth and more income than previous generations to achieve their housing goals. Consumer research by Smith’s company suggests that baby boomers will be looking for much more than square footage and are in the mood for adventure, fun and something new. “In the last seven to eight years, there has been a shift away from a priority in tangibles and a move to intangibles,” he said, as boomers look at the years ahead as “a time to have better and better experiences, not accumulating more and more.” Smith cited a poll by AARP finding that 80% of boomers expect to work in retirement, and he said that research by Yankelovich has found that 53% of the aging members in this demographic like the idea of starting a new job or career if, and when, they “retire.” Three-fourths of those polled in February said they expect to live in their current town or community, and 50% expect to continue living in their current home, Smith said. In that same poll, 27% said they would be doing some major remodeling over the next 10-15 years; 21% said they would be moving to a larger home and 15% said they would be downsizing. At the top of the list of features considered as important were: lots of storage (96%), a home that’s easy to care for and maintain (95%), a big kitchen (95%), a master bedroom with attached suite (89%) and a large living room (88%). Households in this group are not always empty-nesters, because they have had children later in life and their parents are living longer. Eighteen percent reported that they currently help take care of a parent or elderly relative, and for 17% of those respondents the elderly person is living in their home. When looking for a neighborhood, 41% of the boomers polled in February want a location where all the houses don’t look alike, and 14% are in the market for a prestigious community. Research from 2001 found that 63% of boomers feel the need to satisfy their hunger for new experiences and 44% said they often felt something was missing from their lives. Rich Experiences and Homes That Are Special “The American Dream is no longer suburban and people are looking for experiences that are rich and want to live in places that are special,” according to Barry Berkus of B3 Design Studio. Berkus offered a number of insights into how to gear new housing to the proclivities of baby boomers:
Housing Back in Style Rebelling against trends that “have stripped every sense of style out of housing,” boomers are looking for a new sense of artisanship in their housing, said Brent Harrington of DMB Associates. While significant numbers of boomers are expected to downsize, there are many more who are aspiring to build their best house ever, Harrington said. Boomers are not “simplifying,” he said, and they are emphasizing quality over size. Features that Harrington said will attract baby boomers at the time in their lives when they hope to realize “long-awaited pleasures” include:
'Boomers on the Horizon' Available at BuilderBooks.com Capitalize on the niches, needs and opportunities of the rapidly growing 55+ market by learning their preferences in "Boomers on the Horizon: Housing Preferences of the 55+ Market", available at BuilderBooks.com. This book reflects the fact that boomers are on the verge of drastically changing the building industry. To view or purchase this publication online, click here, or call 800-223-2665 to order. Housing SnapshotLast week's decision by the Federal Reserve to increase its federal funds rate from 1% to 1.25% had been widely anticipated, and it had no immediate impact on the cost of long-term mortgage financing. The cost of a 30-year, fixed-rate loan averaged 6.21% last week, according to Freddie Mac's index, which was slightly below the rate of the previous week. Adjustable rate financing, on the other hand, rose marginally. The Fed appears to be on a course of gradual interest rate hikes that are expected to bring its overnight lending rate to banks to 2% by the end of this year and the 3.5%-4.5% range by late 2005. Following the Fed's decision to increase rates, its first in four years, the prime interest rate generally climbed accordingly, to 4.25%. Casting some doubts about the current pace of economic growth, the Labor Department announced non-farm payroll growth of 112,000 in June, significantly slower than preceding months and below expectations. The significance of the downturn should become clearer when statistics are released for the next month or two. On the lumber front, the news remained positive. Framing lumber declined a modest $4 to $405 per 1,000 board feet, according to Random Lengths. The price of 15/32-inch 3-ply CDX southern west-east plywood dropped $20 to $295 per 1,000 square feet and oriented strand board remained unchanged at $300. The costs of both plywood and OSB were lower last week than they were a year earlier. Mortgage Interest Rates30 Year Fixed Rate: 6.21\% Housing Starts: May 2004Total: 1.97 million\% New Home Sales: May 2004 *1.369 million Existing Home Sales: May 2004 *6.80 million * Seasonally Adjusted Annual Rate Please Take the Time to Help Us Solve the GLI CrisisFellow builders, it’s time for action. It’s time for us to fill out our general liability insurance (GLI) surveys and send in our consent letters. It’s time for each of us to do our part to help solve the home building industry’s GLI crisis. Recent surveys show that GLI is our members’ number one concern. It’s easy to see why. GLI premiums have risen 10-fold in some areas. Many policies have so many exclusions that the coverage is ineffective. And in some states, it’s almost impossible to get any GLI coverage at all. NAHB members have made it clear that they want the federation to do something to solve this GLI problem. In response, NAHB has entered into a strategic partnership with Marsh, the insurance and consulting firm, to gather loss information about the residential construction industry, to analyze that data to better understand the industry’s risk management needs and to use that analysis to develop new, cost-effective GLI products. Last month NAHB and Marsh sent an eight-page mail piece to 55,000 builder, remodeler and trade contractor members. The mailer included a survey, a model consent letter giving insurance carriers permission to share a builder’s loss information with Marsh, and information about NAHB’s GLI initiative. If you didn’t receive the mailing, you can find the survey, model consent letter and other information at www.nahb.org/gli. It seems to me that anyone who recognizes that our industry is experiencing a GLI crisis ought to take half an hour to fill out the survey and send in the consent letter. If you need help with the survey, ask your insurance agent for assistance. You can find additional information about this initiative at www.nahb.org/gli. If you want to speak to someone at NAHB, please contact Clayton Traylor at 800-368-5242 x8490 or Brett Diggs at x8453. If you need a copy of the survey and the model consent letter, you can find them on NAHB’s web site or you can call Blake Smith at x8583. If GLI costs are eating into your profits, then please participate in this effort. If you’re “flying solo” — doing business without any GLI coverage — then please participate in this effort. If you’re worried about how much your premiums will rise the next time you have to renew your coverage, then please participate in this effort. Please don’t put this off. For many builders, we’re talking about thousands of dollars per year. We’re talking about the stability of your business. We’re talking about the long-term strength of our industry. Take an hour and make a difference for your business and the home building industry. It’s time for action. Eye on the EconomyBy David F. Seiders, NAHB Chief Economist The U.S. economy has been posting above-trend growth in real GDP since mid-2003 (first-quarter growth now stands at 3.9% and the second quarter figures to be in that range). This growth pattern, in turn, has been generating systematic increases in payroll employment since the cyclical low last August, and job growth has been quite good in recent months. The sustained pickup in economic growth and job creation is putting persistent upward pressure on both labor compensation and core inflation (excluding prices of food and energy). Indeed, we’re now faced with an issue typical of most economic expansions in the past, i.e., rising inflation that could take a serious toll on the economy over time. Most inflation measures have been picking up since late 2003, and recent news has added to inflation concerns. Recent revisions to the first-quarter GDP accounts raised most inflation readings in the accounts and reinforced other evidence of a broad-based upturn in core inflation. The core Consumer Price Index rose at a year-over-year rate of 1.7% in May, and the core price index for personal consumption expenditures (a favorite of the Greenspan Fed) rose at a 1.6% pace in both April and May. While these inflation rates still are low by most historical standards, the patterns of increase are perfectly clear. Housing demand surges in anticipation of rising interest rates … The emerging inflation picture and strengthening prospects for action by our central bank to limit the inflation process have put significant upward pressure on long-term interest rates since March. These rates still are historically low, however, and the evolving upswing in job creation and income growth certainly has been supporting housing demand. Furthermore, the broad-based perception in financial markets and the real estate community that interest rates are likely to move higher beyond mid-year apparently has spurred home buying substantially. Sales of both new and existing homes easily hit new records in May, totaling a mind-boggling 8.17 million units, and the second quarter is sure to set records as well. The strength of demand also is evident in the prices of homes sold; indeed, the median price of existing homes sold in May was 10.3% above a year earlier. And NAHB surveys of single-family builders, as well as surveys of mortgage lenders conducted by the Mortgage Bankers Association, show that the demand for homes remained robust in June. Consumer confidence/sentiment shift up as job markets improve … Measures of consumer confidence (Conference Board series) and consumer sentiment (University of Michigan) both moved up nicely in June. Consumer assessments of both current economic conditions and the near-term economic outlook have been on the upswing for several months. The marked improvement in the job market presumably has been the major factor behind the upswing in consumer attitudes. It’s also likely that the ongoing increases in house values have buoyed the mood of consumers; after all, a record proportion of America’s households own their own homes (68.6% in the first quarter ). Finally, a retreat in energy prices, albeit modest, probably had a positive impact on consumer attitudes in June. The Fed starts moving toward monetary neutrality at a ‘measured’ pace … As widely expected, the Federal Reserve hiked short-term interest rates at the conclusion of the meeting of the Federal Open Market Committee (FOMC) on June 30, raising the federal funds rate target from 1% to 1.25%. This was the first rate increase since May 16, 2000 when an inflation-wary Fed moved the funds rate up to 6.5%. The June 30 rate increase is only the first step in what is likely to be a persistent march by the Fed back to a position of monetary “neutrality” — where monetary policy neither stimulates nor impedes growth of the economy. Neutrality probably involves a real (inflation-adjusted) funds rate of 2%-2.5%, and that will mean a nominal rate of at least 4%. The June 30 FOMC statement described the upside and downside risks to both economic growth and price stability as “roughly equal” for the next few quarters and suggested that some of the recent pickup in inflation was associated with “transitory factors.” The statement also stressed that the new monetary policy position still is “accommodative.” There was no firm commitment regarding the speed of adjustment back to monetary neutrality, although the statement once again referred to “a pace that is likely to be measured.” Despite the rather “dovish" tone to the FOMC statement, the markets seem to be expecting quarter-point hikes at most FOMC meetings between now and the end of 2005. NAHB’s forecast is broadly consistent with this view, showing the funds rate at 2% and 4% at the ends of 2004 and 2005, respectively. Further increases in long-term interest rates should be moderate … Unlike some past periods (like 1994), the Fed has given a lot of advance notice about its monetary policy intentions. As a result, long-term interest rates moved up by nearly a percentage point in advance of the June 30 FOMC meeting, and the upward adjustment to the federal funds rate (and the FOMC statement) seemed to have little net effect on the bond and mortgage markets. The process of monetary tightening that lies ahead presumably will involve some further upward pressure on long-term interest rates even though the monetary policy process has been widely anticipated. After all, monetary tightening is implemented by withdrawing liquidity from the financial system at the same time that an expanding economy is generating stronger credit demands. While further increases in long-term rates are inevitable, these increases will be moderate as long as the Fed is able to keep a lid on core inflation with the monetary policy process we are anticipating. NAHB’s forecast currently shows increases of about 125 basis points in long-term rates between mid-2004 and late 2005, less than half the projected increase in the federal funds rate. The housing sector will come off recent highs but maintain near-record levels of activity … The robust second-quarter rates of home sales and single-family housing starts, and the strong rate of acceleration in house prices, are not likely to be sustainable. However, the economic and financial market environment should continue to be friendly to housing. Furthermore, the supply-demand balance in the single-family market currently is excellent and inventories are quite low, paving the way for the future. NAHB’s forecast currently shows declines of roughly 10% in single-family starts and home sales over the next year and a half. This pattern still shows records for sales and starts for 2004 as a whole, reflecting the extremely strong first half of the year. It’s also noteworthy that our projection for total new housing units in 2005 (including multifamily structures and manufactured homes) is close to 2 million units, consistent with NAHB’s recent long-term forecast of average annual production rates for the 2004-2013 period. NAHB Chief Economist David Seiders analyzes the economy from the point of view of the housing market every other week in the free e-newsletter, “Eye on the Economy.” The preceding is a reissue of his June 30 edition. To subcribe to “Eye on the Economy,” click here.
Want more economic information? Find it in our publications. Find more in-depth information in our three economics publications, Home Builders Forecast, Housing Market Statistics and Housing Economics. All are available by subscription.
To learn more or to order any of these three NAHB economic publications, visit the Economics Publications Information section of the NAHB Web site or call 800-223-2665. Mark Your Calendar for NAHB's Fall Construction Forecast Conference Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry at NAHB's Fall Construction Forecast Conference at the National Housing Center in Washington, D.C. on Oct. 27. Click here for more information. St. Louis Study Adds Credibility to 'Housing Pays for Itself'While the argument of whether housing pays for itself has been going on for years, a study recently conducted by the Home Builders Association of Greater St. Louis gives solid arguments to bolster builder claims that new housing is good for the local economy. "The Fiscal Impact of Five New Residential Subdivisions in the Greater St. Louis Area" looked at five new home communities in 30 different taxing districts, all 30 of which made an annual net profit as the result of the new home construction.
Impact Data Source in Austin, TX, conducted the study, which was funded by the HBA working through the Urban Choice Coalition. To view the study and an executive summary online, or to download it, click here. 2004 SLGA Conference: Everything You Need to Reserve Your Spot in BiloxiPreparations are well underway for the 21st annual State & Local Government Affairs Conference. We hope to see many of you Biloxi this November. Here are the event basics: When: On-site registration begins at 4 p.m. on Thursday, Nov. 4, and the conference will end by 5 p.m. on Saturday, Nov. 6. Where: The Beau Rivage Resort and Casino in Biloxi, MS, will play host to this year's conference. This is a four-star hotel located right on the Gulf, with something for everyone — including restaurants, shopping, history and, of course, gambling. How much: Early bird registration, which is available until Oct. 20, is $275 for NAHB members and HBA staff and $375 for non members. Spouses or guests can join you at meals and social functions for $125. You can register online or download the registration form and fax it to 202-266-8135. Deluxe rooms at the Beau Rivage are available at a specially discounted rate of $139 per night, plus tax. Book online or by phone (888-383-7037) by Oct. 12 to receive the special conference rate. Questions? Go to www.nahb.org/slgaconference to learn more, or contact Marie Zenner at 800-368-5242 x8279. Protecting Yourself From Fraud: Watch for Warnings Signs From OthersThe next in a continuing series about preventing fraud from affecting your business. Being personally vigilant around your office can help prevent fraud. But it’s just not possible to see everything and be everywhere at once. Maximize your watchfulness by keeping your ears open, too. Employees, vendors and customers may give you clues that someone may be stealing from your business. They might be looking out for your best interests; simply following procedures; or resolving questions, issues or complaints from their side of the table. Regardless of their motives, it pays to listen. Warnings From Others Do not ignore these kinds of “trouble on the home front” warnings:
Tell the reporting employee that you appreciate his or her confidence in coming to you and that you regard the information seriously. Ask the employee to keep the information confidential until you decide how to best handle the situation. Then, to protect everyone involved, seek professional assistance quickly. (Read "Good Self-Defense Strategies Will Help Protect Your Business From Fraud," for some tips on getting professional assistance.)
While investigating circumstances surrounding embezzlement, many fraud victims realize that they overlooked, ignored or downplayed warning signals from others. Paying attention to and immediately following up on tips and warnings can help expose fraud and prevent additional damage. Putting asset-protection controls in place gives you more time to heed warnings from others and stop fraud in its tracks. Designing a System to Protect Your Assets Work closely with your accountant to help implement a solid set of internal controls for your company. Because you know your business better than anyone else, you bring invaluable insights to this process. However, you probably have business “blind spots” too; that’s why it’s so important to seek a professional’s advice. In the next “Protecting Yourself From Fraud” articles we’ll address the specifics of building an asset-protection system. In the meantime, here’s a diagram that illustrates the basics of fraud prevention. Think of the three boxes (incoming funds, assets “at rest,” and outgoing funds) as assets sitting on rafts in a dry swimming pool. Your goal is to make the pool of controls (general control environment, preventive controls and detective controls) deep enough to keep others from swimming away with your assets, but not so deep that you drown in it. The first step in designing a pool of properly balanced controls is to identify the assets you have sitting on those rafts. To do that, make a list of all of your assets and valuable information. Assets held by most businesses include:
If you begin to think of all the ways these assets could be “diverted” to improper use by embezzlers or disgruntled employees and the havoc that would create, it makes “Nightmare on Elm Street” look like child’s play, doesn’t it?
Diane C.O. Gilson, CPA, CIA, is a Certified QuickBooks ProAdvisor and MasterBuilder ProAdvisor, author, trainer and construction accounting coach, as well as a frequent speaker at The International Builders’ Show and The Remodeling Show. Her firm, Info Plus Accounting PC/CPA, offers bookkeeping and support services to help construction companies do more accurate and timely job costing and run better management reports. Contact Gilson via e-mail, or call her at 734-544-7620. Earlier Articles in this Series
'Accounting with QuickBooks Pro®' Available at BuilderBooks.com "Accounting with QuickBooks Pro® for Home Builders and Remodelers," including a CD-ROM with a trial version of QuickBooks Pro®, is available through BuilderBooks.com. From writing payroll checks to generating up-to-date income statements, this book will help you get the maximum benefit from your accounting system. To view or purchase it online, click here or call 800-223-2665 to order. Other Business Management Publications Available at BuilderBooks.com BuilderBooks.com also offers a variety of other publications about business management. To view or purchase these publications online, click here. Run Your Business Better and More Profitably Click www.nahb.org/biztools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources … to name just a few. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Judge Punts Pygmy Owl De-listing Decision to Fish & Wildlife ServiceOn June 25, Arizona Federal District Court Judge Susan Bolton punted the decision to remove the pygmy owl from the Endangered Species list to the U.S. Fish and Wildlife Service (FWS), leaving the substantially flawed listing in place until the agency revisits it. “NAHB is disappointed that Judge Bolton failed to follow the letter of the law,” said NAHB President Bobby Rayburn. “The judge is required to set aside any listing that is unlawful, and in this case, leaving the owl’s listing in place was clearly wrong.” Judge Bolton failed to act on a ruling by the Ninth Circuit Court of Appeals last August that found the listing “arbitrary and capricious,” which means that it should have been set aside under the federal Administrative Procedure Act when the circuit court returned the matter to Bolton for an appropriate legal remedy. Responding to the Ninth Circuit’s decision, NAHB filed papers in October requesting the owl’s de-listing. The Fish and Wildlife Service made a similar request. The agency’s own data show that there is a well-established owl population in Mexico and that the owls in Arizona, which is at the northern edge of the bird’s range, are not significant for the survival of the species. FWS must now report back to the court on the status of pygmy owl by Jan. 30, according to Bolton’s decision. “We will aggressively pursue this case to ensure that the judge follows the directive of the appeals court and vacates the owl’s listing,” said Rayburn. For further information, e-mail Duane Desiderio at NAHB, or call him at 800-368-5242 x8146. Builders in Southern Nevada Find Protecting Species and Building Housing Not Mutually ExclusiveAveraging 4,000-7,000 new residents a month since 1988, Las Vegas’ Clark County is one of the fastest growing in the nation, and keeping up with its infrastructure and housing needs has presented a challenge to its species conservation efforts. The county has been working with the Southern Nevada Home Builders Association and others to develop a Multi-Species Habitat Conservation Plan (MSHCP) to protect dozens of species in the region, including the endangered desert tortoise and southwestern willow flycatcher. Established under the Endangered Species Act, the Habitat Conservation Plan program allows property owners to preserve essential habitat for endangered or threatened species as part of the land development process. “The MSHCP ensures that smarter and more managed growth can occur in the Las Vegas valley, while protecting the multitude of species in the area and their habitats at the same time,” said Irene Porter, executive director of the Nevada association. Approved by the U.S. Fish & Wildlife Service (FWS) in 2001, the MSHCP covers a total of 418,200 acres of developable land. The plan caps development at 145,000 additional acres and protects two endangered species and 77 additional species in the region, which includes Clark County, Las Vegas, North Las Vegas, Boulder City, Mesquite and Henderson. Implementing the MSHCP has cost more than $2 million per year. “At the time the plan was instituted, the MSHCP was unique. No other HCP across the country identified and protected as many species as the Clark County MSHCP,” said Porter. As with most Habitat Conservation Plans (HCPs), the No Surprises Rule has provided a key incentive for the members of the partnership in Nevada to make this enormously expensive effort. The rule provides property owners with the certainty that the FWS will not renege on the conditions of a Habitat Conservation Plan after it has been agreed upon. In the case of the Clark County MSHCP, No Surprises gave the county, the home builders association and the other partners the financial and regulatory certainty that they could continue their species conservation efforts while providing housing for a growing population. Paul Selzer, an HCP consultant for Selzer, Ealy, Hemphill & Blasdel of Palm Springs, CA, helped develop the plan in Nevada. “No Surprises was certainly a factor in the MSHCP’s development and in response to possible future species listings under the Endangered Species Act,” said Selzer. Efforts of Southern Nevada’s home building industry to protect species through the HCP program have recently been clouded by a federal court decision. On June 10, U.S. District Court Judge Sullivan ordered the FWS to stop issuing Section 10 Incidental Take Permits (ITPs) with No Surprises assurances until the agency completes its work on its Permit Revocation Rule (PRR). That rule allows the agency to revoke take permits only if it finds that the permitted development activities would reduce the likelihood of the survival and recovery of a species in the wild. (To read more detailed coverage of the June 10 decision in a previous issue of NBN Online, click here.) FWS reproposed the Permit Revocation on May 25, opening it up for public comment. NAHB is determined to preserve the No Surprises Rule and the PRR and plans to submit comments before the agency’s July 26 deadline. Click here to visit NAHB’s new HCP Web section and read more about Clark County’s MSHCP. For more information about Habitat Conservation Plans, e-mail Christopher Galik or call him at 800-368-5242 x8663. For more information on Judge Sullivan’s decision, contact Duane Desiderio, x8146. U.S., Mexico Sign Historic Agreement to Increase Cross-Border Home Building OpportunitiesHome builders from the U.S. and Mexico will work together to create more accessible trade channels and exchange technology and skills aimed at improving the quality, affordability and efficiency of the home building process, according to a landmark agreement signed on June 28. “This agreement is the latest positive offshoot of the historic Partnership for Prosperity alliance established by President George W. Bush and Mexico President Vicente Fox in February of 2001, and it establishes a powerful precedent for international cooperation,” said NAHB President Bobby Rayburn. “It will increase cross-border ties between home builders and provide greater opportunities for businesses on both sides to expand to the international marketplace.” Signatories of the agreement included Rayburn and Héctor Aguirre, president of CANADEVI, (the Cámara Nacional de la Industria de Desarrollo y Promoción de Vivienda), which is also known as the National Industry Chamber for Development and Promotion of Housing and is NAHB’s sister organization in Mexico. International Housing Conference Set for Mexico City An immediate result of the alliance will be joint NAHB-CANADEVI participation and promotion efforts for the 2nd International Housing Conference of the Americas, scheduled for Nov. 7-10 at the Four Seasons hotel in Mexico City. This conference is geared to meeting the needs of American and Mexican builders who want to learn how each other’s housing markets work and what it takes to get involved in them. The U.S. Commerce Department provided a $398,000 seed grant to NAHB last year to support such endeavors through the association’s Access Mexico project. On hand for the signing ceremony in June were the top housing officials of both countries, including HUD Secretary Alphonso Jackson and Comisión Nacional de Fomento a la Vivienda (CONAFOVI) Commissioner Carlos Gutiérrez. Also attending were U.S. Commerce Secretary Don Evans and Economic Secretary Fernando Canales for Mexico. Both the United States and Mexico have substantial demand for affordable, workforce housing in high-growth areas. In addition, both governments have established ambitious housing goals that the newly signed agreement could help achieve. At his inauguration, President Vicente Fox established housing as a national priority in Mexico and promised to ramp up production of new homes across the board. Meanwhile, President Bush has established the goal of increasing U.S. minority homeownership by 5.5 million families this decade, an effort that would generate $256 billion for the domestic economy. “Looking to build more than one million new homes annually for low- and moderate-income households over the next three years and with an anticipated annual growth rate of 4.5% in housing production, Mexico is a great place for NAHB members to explore their opportunities for bringing goods and services to the international forum,” said Rayburn. “On the flip side of the coin, our colleagues from south of the border will have a chance to tap into the booming U.S. housing marketplace and all it has to offer. Any way you cut it, it’s a win-win situation.” NAHB’s “Access Mexico” project is aimed at promoting a bilateral forum to enhance trade, exchange information and share technologies between the U.S. and Mexican housing industries. To find out more about the Access Mexico initiative, click here. This fall’s housing conference in Mexico City will feature educational panels, housing tours, exhibits, networking opportunities and presentations by industry leaders and government officials. NAHB and CANADEVI members can receive a discount on the attendance fee. Find out more about the conference from NAHB’s Web site at www.nahb.org/mexicoconference, or e-mail Rita Feinberg or call her at 800-368-5242 x8415. (To read an assessment of the Mexican housing market found elswhere in this issue, read the interview of Héctor Aguirre, president of CANADEVI (the Cámara Nacional de la Industria de Desarrollo y Promoción de Vivienda), NAHB’s sister organization in Mexico by clicking here.) Higher End, Retirement Housing Markets Growing in MexicoNAHB International recently talked with Héctor Aguirre, president of CANADEVI, (the Cámara Nacional de la Industria de Desarrollo y Promoción de Vivienda), also known as the National Industry Chamber for Development and Promotion of Housing and NAHB’s sister organization in Mexico, about the housing market and opportunities in Mexico. The following are his obeservations: NAHB International: Why is Mexico an increasingly attractive market for the U.S. home builder and supplier? Héctor Aguirre: The state of Mexico’s housing continues to be a major focus of the Mexican government as well as an attractive market for U.S. builders and suppliers. With the combined synergies of the Fox administration, NAFTA and the Bush-Fox Partnership for Prosperity initiative, entry into the Mexican housing market has never been more inviting. In fact, many U.S. companies such as Dow, Pulte Homes, Kohler and Owens Corning, to name a few, are already established and important players in the Mexican market. NAHB International: Until recently, financial institutions have been wary of the Mexican market. What has happened to change that? Aguirre: The Mexican housing and mortgage markets have dramatically improved. Last year mortgage lending was well over $8 billion and it continues to grow with the help of institutions such as Infonavit — the Mexican government’s housing finance arm. Together, banks and lending institutions now make up a third of Mexico’s lending market. In December 2003, Su Casita — a leading Mexican mortgage finance group — and GMAC made history by placing the first ever mortgage backed security worth $54 million, and this past March, Infonavit marked the second sale by placing a mortgage backed security of approximately $70 million. Citibank’s Banamex, ABN Amro and Bancomer have recently targeted the mortgage lending market as an area for key growth. Their entrance signifies an opportunity to consolidate the system and offer consumers a more diversified and competitive product mix. NAHB International: What types of builders are doing business in Mexico today? Aguirre: In Mexico, large integrated home builders that focus on the affordable and entry level homes have the most sales volume. The 10 largest builders in Mexico account for about $3 billion of the almost $13 billion housing market. However, the middle market is returning, and with it are smaller builders and developers focusing on the high-end and retirement homes. They will probably be important players in the near future. NAHB International: Describe Mexico’s low, middle and high markets for our members. Aguirre: The housing market in Mexico actually is divided into six classifications according to price. From lowest to highest they are:
Two-thirds of Mexico’s housing stock consists of homes that are at the lowest price ranges; however, half of the housing stock value is concentrated in the higher-end housing segments in the residential and residential plus markets. Interestingly, these are the market segments that are growing most rapidly. About half of all new housing (close to 300,000 units per year) is self-built. Another 300,000 homes are built by developers, and most of these homes are in the economic or low market segment. The middle, residential and higher-end market (residential plus) are all smaller segments of the market. Most developer-built construction occurs in the cities. Typically, the homes in the economic segment range from $20,000-$40,000. For the middle and residential markets, homes prices are in the $40,000-$220,000 range, and homes in the residential plus market are $220,000 and up. NAHB International: What types of homes do Mexican consumers prefer? Aguirre: Typically, the traditional Mexican home is made of brick, block and mortar. Mexican consumers prefer a very durable and permanent structure. Little wood is used, and when it is, it is in high-end homes and only as a decorative element. Stick-built homes are rare in Mexico. NAHB International: Why did NAHB and CANADEVI sign a partnership agreement at the Partnership for Prosperity meeting in Guadalajara, Mexico? Aguirre: Both Bobby Rayburn and I recognize that our established housing associations share common goals and objectives in the service of our members. The NAHB/CANADEVI agreement reflects our associations’ intentions to work together to exchange ideas, information and innovations in the housing sector. NAHB International: What steps should our NAHB builder-members take before entering into the Mexican housing market? Aguirre: Become informed, get to know the players, find a partner and establish a successful business relationship. An excellent first step would be to attend The 2nd International Housing Conference of the Americas in Mexico City on Nov. 7-10. The NAHB/CANADEVI conference brings U.S. and Mexican builders and suppliers together where they will have the opportunity to participate in a variety of activities including: educational panels, property tours to four of Mexico’s largest developers and one-on-one networking meetings. Editor’s note: NAHB and CANADEVI members can receive a discounted rate for The 2nd International Housing Conference of the Americas. To learn more about the conference, download a brochure or register online, visit www.nahb.org/mexicoconference or contact Matt Monjan at 800 368-5242 x8419. Active Adults Drive New Trends in Community and Home DesignAs the active adult market continues to grow, we are seeing a number of trends that prevail no matter what region of the country you are in or what product type you are offering. You will need to adapt the concepts to meet the needs of your market, but the underlying themes remain the same. Community First, Product Secondary When creating projects for active adults, think community first. We’ve heard that buyers in this market make “lifestyle” choices when deciding where to live. But what exactly does that mean? Lifestyle is more than just a way of life or a style of living that reflects the values of adults ages 55 and older. A lifestyle is created by the community and reinforced by the product. In essence, the community is all of the things that aren’t product. It is important to create a finished community — with mature landscaping, details that count and amenities that make sense — that looks as though it’s always been there. Many active adults consider a community’s “locational value” to be more important than floor plans. It’s not just about the location itself; rather, it’s the sense of value that’s conveyed by the location. The entry sets the tone for what buyers can expect from a community. However, it’s a common mistake to “overshoot” the market with elaborate entry features. You need to be sure that your entry design appeals to target buyers’ wallets as well as their eyes. Some less affluent active adults may be scared off by ostentatious entries, even if the product is within their price range. Even though most active adults appreciate nice entry monuments and amenities, less is more because they prefer not to feel like all their money is being eaten up by home owners’ association dues. Amenity packages provide an incentive for active adults when choosing a new community but what you provide should be site- and market-specific. What seems nontraditional in one area may be the norm in others. A developer in St. Augustine, FL, soon will offer residents the opportunity to play croquet. Some active adult communities feature simple lap pools, while others have lagoon-style pools that allow residents to gradually walk into the water without having to manage steps. Hard (instead of dirt or gravel) trails are the single most important amenity for active adults because they provide a place to walk, hike, bike and socialize while letting residents enjoy the outdoors. Efficiency and Flexibility Are Key Most active adults enjoy being outside, yet they don’t want the responsibility of taking care of their yards. Lots up to 60 feet wide usually work best for creating a “maintenance-free” home. It’s usually too expensive for a home owners' association to maintain the landscaping for larger lots, although it really depends on the number of lots in a community. Incorporating thoughtful outdoor living spaces into each home, as well as sunrooms or other indoor/outdoor spaces — especially in cooler climates — adds to the enjoyment without adding to the work. Inside, give them options; for example, the dining room can be a den or the den can be a bedroom. Always include a guest suite option. The more opportunities available, the more likely your prospects can envision themselves living there. Diversity of Buyers Means Diversity of Product A mix of product ensures that there’s something to appeal to everyone in an active adult community. Even though most buyers are downsizing, they don’t necessarily see themselves as moving down. Instead, they want to move up in terms of quality and design features. Whether for sale or for rent, single-level and Cape plans (with the master bedroom on the first floor) are favored, but you’ll want to carefully research your market to ensure that you are offering the correct product mix. Elevations help “sell the message,” so the character of the architecture should complement the community theme to convey the lifestyle message. Focus on Function, Not Drama The inside of active adult housing should reflect the change in residents’ lifestyles. The trend in the active adult market is for fewer rooms and bigger spaces — with the formal living room usually the first room to go. Active adults want more casual living space in the form of a great room or perhaps a home office. His-and-her offices have become popular because active adults want their “own” space. These personal spaces don’t have to be separate rooms — a designated corner, alcove or small nook works just as well. By creating and merchandising special spaces, you’re portraying the active adult lifestyle for people who want to pursue all the hobbies and interests that they didn’t have time for when they were younger. With thoughtful up-front planning and follow-through on the details, you can create a community that has active adults clamoring to get in. Doug Sharp, AIA, is the managing partner for Des Moines, IA-based Bloodgood Sharp Buster Architects and Planners, Inc. Sharp’s work has been recognized in many publications and design competitions, while his firm has won numerous awards in NAHB’s Best of Seniors Housing Awards, Best in American Living Awards and The Nationals. Sharp speaks frequently at regional and national events, including the Urban Land Institute, The Seaside Institute and NAHB. He can be reached by e-mail or at 515-273-3020.
Mark Your Calendar for NAHB's Seniors Housing Symposium 2005 "Building for Boomers & Beyond": NAHB Seniors Housing Symposium 2005 is scheduled for May 16-18, 2005, in Chantilly, VA. Mark your calendars. Learn More About Seniors Housing Through the Seniors Housing Council To learn more about seniors housing, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, e-mail Jeff Jenkins or call him at 800-368-5242 x8292. 'Analyzing Seniors' Housing Markets' Available at BuilderBooks.com "Analyzing Seniors' Housing Markets," available at BuilderBooks.com, examines the complexities of seniors' housing markets and explains what developers, investors and other professionals need to know to understand and operate in these specialized niches. The publication familiarizes readers with the various product types and how they relate to the needs of seniors. It also explains market analysis, consumer research, market segmentation, financial analysis, market maturation versus market saturation and gauging performance of seniors' housing. Three case studies of regional markets comparing the development trends of both independent and assisted living within each market are also included. To view or purchase this publication online, click here, or call 800-223-2665 to order. Forum to Examine Future of Affordable Tax-Credit PropertiesThe future of affordable low-income housing tax credit (LIHTC) properties will be examined by NAHB’s Housing Credit Group at its annual Issues Forum, which will be held on Sept. 29 in Columbus, OH, just prior to the association’s fall board of directors meeting. When the tax-credit program was started in 1987, participants were required to keep their properties affordable for 15 years in order to reap the tax benefits. For the earliest tax credit properties, that 15-year period is about to expire, and the credit group will examine the possibility that some, perhaps many, of these properties will be moved out of the affordable housing stock. One of the presenters at the forum this fall — Beth Mullen, of the accounting firm of Reznick, Fedder and Silverman in Sacramento, CA — says she sees three options for owners of LIHTC properties. “First, you can do nothing — just continue to hold the property with the original investors,” says Mullen. “If your company has an affiliate that manages the property, you’ll continue to make money that way. But it will be easier, because you are no longer bound by the federal program’s mandates.” But some investors may want out, so the general partner might opt to buy them out, she said, which is the second option. Or, if there’s a demand for rentals, and if the property isn’t burdened by debt, the owner or general partner may decide to renovate and convert the property to market-rate rental. “And,” says Mullen, “if no one wants to stay as an owner, the property can be sold.” “It’s not a one-size-fits-all sort of question,” she says, when deciding what’s the right course. Tax credit developers who attend the forum will receive the information they need to evaluate their own situation and make appropriate decisions about how to proceed after year 15. To register for the forum or to learn more, click here.
Mark You Calendar for NAHB's 2005 Pillars Conference The 2005 Multifamily Pillars of the Industry Conference & Awards Gala is scheduled for April 4-6 at the Doral Golf Resort & Spa in Miami. For more information, click here. What Do Your Walls Say About You?While we often talk about how much to charge for our valued work, we rarely talk about how to represent ourselves to the consumer. We throw the term “professionalism” around rather easily, but what does it really mean to be a professional remodeler? To get to the heart of professionalism, think about when you first visit a doctor’s office. What do you look for? Pictures of past patients? The size of the office staff? How well dressed they are? (Are they all wearing a company shirt?) No, none of those things really speaks to the doctor’s qualifications or professionalism, or tells you enough about the person that you plan on trusting with your health and well-being. Like most of you, what I look for when I first interview new doctors is the credentials that they have hanging on the wall. I am seeking assurances that they actually graduated from an accredited school of medicine. Next, I look for advanced degrees and training. Do they belong to any medical associations or organizations? Only after having become more comfortable with this person's professional background, am I ready to sit down and talk business. Now let’s see how this translates to your remodeling business. What do prospective clients see when they first visit your office?
Remember, you only have one shot at making a first impression: so what do prospective clients see when they walk into your office? Display Your Credentials, Show You Are a Qualified Professional If you visited our office, one of the first things you would see is my state contractor’s license, which indicates that I am licensed to perform the work you want done. I would point out to you that this license requires me to receive 14 hours of continuing education every two years. Second, you would see my “advanced degrees” framed on the wall: one indicating I met the requirements to become a Certified Graduate Remodelor (CGR) and another certificate recognizing me as a Certified Aging-in-Place Specialist (CAPS). As a CGR, I am pledged to “conduct business affairs with professionalism and skill.” I am further pledged to “strive to meet all of their financial obligations in a responsible manner” and will “comply with the rules and regulations prescribed by law and government agencies for the health, safety and welfare of the community.” As a CAPS professional, I “have been taught the strategies and techniques for designing and building aesthetically enriching, barrier-free living environments.” I am also required to attend continuing education programs and participate in community service in order to maintain this designation. Scanning my office, you also would see that I am active in the industry and a member of my local, state and national trade associations. We have several quality awards on display in the office, too, but what we really want prospects and clients to see are our credentials. They signify that we are industry professionals and that, as professionals, we adhere to a particular code of ethics and devote a significant amount of time to our industry and to our community. Knowing all of this, if you were a home owner about to begin a remodeling project, wouldn’t you feel better about handing over your home to a professional contactor with credentials like mine? The NAHB Remodelors™ Council publication “Remodeling Your Home” (available through BuilderBooks.com) recommends that home owners who interview two or more remodeling contractors for their project “make a decision based on professionalism, not price.” Have you noticed a common theme here? License, education, ethics, job skills and industry involvement equals professionalism. The NAHB University of Housing offers CAPS, CGR and other professional designation courses. To search for current offerings, click here. The first impression you want to make with clients is one that shows you are a professional, qualified remodeler who can handle the project. Larry Murr, CGR, CAPS, is president of Lawrence Murr, Inc. in Jacksonville, FL. He has won numerous awards during his 30-plus years in construction and realty, including the 1999 Chrysalis Award as Florida Remodelor™ of the Year, 15 local quality awards and five Chrysalis awards for excellence in remodeling. For more information, contact e-mail Murr.
Nominate the Best of the Best for Remodelor™ of the Year Applications for the Remodelors™ Council’s most prestigious awards program, the Remodelor™ of the Year Award, are now available online at www.nahb.org/remodelors under the Awards section. The Remodelor™ of the Year Award recognizes exemplary NAHB involvement at any level, superior business management and an outstanding contribution to the remodeling industry. Councils should nominate individual remodelers, but the nominee must write his or her own entry essay. The winner will be announced at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago (Oct. 8). Local Councils Honored With CADRE Awards The Council Awards for Demonstrating Remodeling Excellence (CADRE) is awarded to local Remodelors™ Councils for superior member service in the categories of:
For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. Who Will Be Inducted to National Remodeling Hall of Fame? The Remodelors™ Council is searching for the best of the best for induction into America’s Best National Remodeling Hall of Fame. This award honors those individuals who have made a significant and lasting impact on the remodeling industry on a state or national basis. Induction into America’s Best National Remodeling Hall of Fame is open to individuals in any public or private sector entity or institution. Areas of contribution may include industry image, governmental affairs, education, business management or any other effort that has helped advance the remodeling profession. Please nominate individuals who have made a positive impact on the remodeling industry. Self nominations are not permitted. Completed applications must be received by Monday, July 12. The induction ceremony will take place at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago (Oct. 8). Click here to download an application or contact Barbara Drobins at 800-368-5242 x8217 for more information. Ask for the Sale — 100% of the TimeAs a salesperson, it is imperative that you ask your prospects for the sale. And that you ask this of all your prospects all the time, even if they have paid just one visit to your community. Below is a series of closing questions to ask after the completion of every sales demonstration. The questions are simple and straightforward. The first four establish a path that leads up to the final question — the call to action that is the pivotal point of the sales process. 1. How do you like our community? Few salespeople have a difficult time with the first four questions. Inquiring into a prospect’s preferences is hardly ever daunting. But most salespeople have a deep, natural hesitancy to taking that last, essential step. Seven Excuses Salespeople Must Overcome There’s an entire range of excuses salespeople will come up with to avoid asking for the sale:
Focus your sales effort on the prospect and not on yourself, and you won't have to worry about lame excuses. Ask the Question During Their First Visit and You’ll Get Results Beat into your mind that there is no good excuse for poor closing skills or motivation, and you are halfway there to reversing the cycle of ineffectiveness and failure. And you will be all the way home once you adopt one cardinal principle: Ask your prospects, “What do you think about going ahead with this today?” every time, all the time, 100% of the time — no exceptions. When you ask that question, three things can happen and there's considerably more to be gained than to be lost:
Charles J. Clarke, III, MIRM, is president of Charles Clarke Consulting, Inc., a full-service sales and marketing consulting firm providing consulting services and sales training to home builders nationwide. For more information, contact Clarke at 770-287-7808 or through his Web site. Originally published in NAHB’s Sales & Marketing Ideas magazine ©2004.
Subscribe to 'Sales & Marketing Ideas' Magazine for Cutting-Edges Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s "Sales & Marketing Ideas" magazine. Call 800-368-5242 x8192 or visit www.smimagazine.com to subscribe or order a copy. Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. BuilderBooks.com Offers Sales and Marketing Publications Online BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here. Safety and Health Training Sessions Offered in IdahoHome builders in Idaho this summer have the opportunity to attend training sessions on “Safety and Health Training in the Residential Construction Industry." Co-sponsored by the Occupational Safety and Health Administration (OSHA) and the Idaho Associated General Contractors (AGC) and the Idaho Building Contractors Association (IBCA), the sessions teach company owners, managers, supervisors and foremen about OSHA standards for residential construction, criteria for fall protection systems and equipment and how to prepare safety inspections. Two training sessions will be held this month and next:
The cost for each training session is $10 for AGC and IBCA members and $15 for others. To register, or for more information, e-mail Lisa Losness, Idaho AGC safety program manager, or call her at 208-344-2531. Women’s Council Awards First Annual ‘Strategies for Success’ ScholarshipsThe first recipients of the NAHB Women’s Council/National Housing Endowment “Strategies for Success” Scholarship have been announced. Designed to encourage young people to further their education in housing-related programs, the scholarships are awarded annually to deserving students pursuing study in programs such as construction management, building, construction technology, civil engineering, architecture, design or a construction trade at a two- or four-year college or university or vocational program. Students receive up to $2,000, which they can use to pay for tuition, fees and books. The scholarships were awarded to Kristine Phelps, an architecture student at the University of Utah; Scott Templeton, a construction management major at Indiana State University; and Mihaela Zagoni, a construction management student at the University of Washington. “Although we had many excellent entries, Kristine, Scott and Mihaela truly stood out thanks to their exceptional commitment to both the home building industry and their academic careers,” said NAHB Women’s Council Chair Joanne Theunissen, a builder from Mount Pleasant, MI. “We’re pleased to be able to help these three outstanding individuals further their education, and are confident that each of them will make significant contributions to the field of residential construction.” The NAHB Women’s Council represents women in the home building industry. The council’s services include publications, networking and scholarships. The “Strategies for Success” Scholarship Fund is supported through the generosity of Women’s Council members and individuals and corporations who wish to contribute, and administered in partnership with the National Housing Endowment. Tankless Water Heaters Contribute to Residential Energy EfficiencyPropane-powered tankless water heaters that heat water only as it is used can yield a substantial reduction in residential energy costs, according to the Propane Education & Research Council. Headquartered in Washington, D.C., the council is a network of regional and state propane gas associations across the country and it is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. Tankless water heaters eliminate “standby losses” from traditional storage tank-type heaters that operate by raising and maintaining the water temperature within the tank, the council says. Even when no hot water is drawn from the tank, the heater maintains the standing water’s temperature — typically between 120 and 140 degrees. The amount of energy wasted to heat standing water can equal 10%-20% of a household’s annual water heating expense, according to the propane council. Overall, hot water accounts for 20% or more of a home owner’s annual energy costs. Commonplace in Japan and Europe, tankless water heaters are now available throughout the United States. “Propane tankless water heaters are another great way for builders to offer home owners innovative new technology that increases energy efficiency and customer comfort,” said Jim Hitzemann, chairman of the Propane Education & Research Council’s Home Builder Subcommittee, Huntersville, NC. “Just as importantly, they are versatile and easy to install.” Tankless water heaters also save space. At the 2004 International Builders’ Show, Rinnai tankless propane water heaters installed in the 5,300-square-foot Ultimate Family Home required 16 fewer square feet of space than a comparable conventional tank heater. Another space-efficient model by Takagi Industrial Co. USA provides 240 gallons of hot water per hour and occupies only 2.2 cubic feet of space. Installation is easy for builders, the council says. Manufacturers now produce energy-efficient propane-fueled direct-vent models, requiring no chimney or vertical venting. And most tankless water heaters have a life expectancy of more than 20 years, compared to 10-15 years for storage tank water heaters, which are also labor-intensive to replace. Most propane-powered tankless water heaters provide three to five gallons per minute of hot water, allowing for custom installation as a whole-house water heater, a hot water source for a remote bathroom or hot tub, or even as a boiler to provide hot water for a home heating system. Tankless water heaters are also versatile enough to be used in separate structures — indoor or outdoor — such as greenhouses or garages. “Propane retailers across the country can help builders learn more about models of tankless water heaters, as well as installation options,” said Hitzemann. “Plus, propane retailers can help builders throughout planning and construction.” To learn more about propane tankless water heaters, or to find a local propane retailer, click here. This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.Plumbers vs. Framers — The Battle Rages OnI was walking a construction site the other day and came upon a fracas. A plumber and a framer had come to fisticuffs. In between body blows and blood letting, I caught enough of their heated conversation to figure out the issue. The plumber had cored a 3-1/2-inch hole through one of the framer’s glue-lam beams for a drain pipe. With the help of a few men and a crow bar, we pried the assailants apart. I asked Joe the Framer to show me the violated glue-lam. Into the basement we went, and sure enough, there, center-span of a 24-foot long, 5x21 glue-lam, was a neat, clean 3-1/2-inch diameter hole with a black plastic drain pipe snugly inserted. The house was completely framed, so to remove and replace this beam would be a major job. After a few seconds of thought I said, “Well Joe, it looks to me like Hank the Plumber did more damage to your face than this beam.” “What!” he exclaimed. “Don’t you see that giant hole?! Are you telling me it’s okay to hog out that much meat and not kill the beam?” “Yes and no,” I said. “There are locations in every beam where stresses are very low. Those are the places to core and notch for plumbing, electrical and HVAC. Of course the trick is knowing exactly where. It looks to me like your pal Hank, understood this concept well. His 3-1/2-inch hole is exactly in a place of zero stress. On the other hand, if a hole is placed in the wrong spot, disaster is sure to follow.” Hank, who had tagged along, looked over his crossed arms smugly and grinned. “Blind luck,” Joe retorted. “How can I learn where these zero-stress places are?” “By attending a ConstructionCalc seminar, or reading my Basic Structural Concepts book,” I answered. “If that’s too much trouble, get any plan set by an engineered I-joist manufacturer and look them over carefully. Usually there are diagrams showing typical places where joists can be cored or drilled. Beware, however; funny things can happen if you’re dealing with cantilevers or multi-span joists. Also, beams with complicated loading don’t always follow the rules. It’s best if you really understand the concepts before you core. Of course, if in doubt, ask your friendly, neighborhood engineer.” “How is it Hank lucked out on this beam here?”Joe growled. “Explain to me why this beam isn’t ruined.” “Sure,” I replied. “This beam is simply supported, meaning it doesn’t have a cantilevered end, and it doesn’t have any middle supports. Also, the loading is coming from floor joists only — there are no other beams or columns bringing concentrated, or point loads. So, this means that shear stress is very low in the middle third of the span — where the hole got cored. However, it also means that bending stress is very high in that same region. Had the hole been cored at the bottom of the beam, or at the top, it would have been a gigantic problem. But Hank, wisely, cored the hole at mid-depth, and at mid-span, the exact location where all stresses approach zero.” Joe shot a glare at Hank, who beamed.“Yep,” Hank said. “Jes’ like I planned.” “Yeah, right,” Joe retorted. “You put that hole there only because that’s where the toilet above came out, and the fall in that drain line wound up hitting the beam at that particular depth. Pure luck.” Hank just smiled and turned away. “I got work to do,” he said. “Luck or not, what’s important here is you two understand there are places it’s okay to core and notch, and there are places where you can’t,” I said to Joe. “Don’t guess, though. The consequences can be very dangerous, expensive, or both.” Tim K. Garrison P.E. of ConstructionCalc.com has authored books and short courses and lectures on topics relevant to builders. Got a technical or management issue? E-mail buildersengineer@constructioncalc.com. Tim reads every one. This column cannot be reprinted without permission from the author. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article. Help NAHB Solve the GLI Crisis: Complete the SurveyMore than 50,000 NAHB members have received a “call to action” to fill out a survey about their general liability insurance (GLI). The survey is part of a GLI initiative to get an accurate national picture of the loss experiences of the residential construction industry and to develop new GLI products exclusively for the NAHB membership. “NAHB members who receive the mailing should sit down and complete the survey and provide the materials needed to make this project a success,” said NAHB President Bobby Rayburn. “With insurance costs rising and exemptions making coverage less effective, it’s in everyone’s interest to participate in this effort.” Builders, remodelers and trade contractors who did not receive the mailing are strongly encouraged to participate in the initiative. The materials are available online at www.nahb.org/gli. NAHB is partnering with Marsh, a global insurance and consulting firm, to develop new GLI products that will meet members’ needs. Marsh and NAHB are working on a timetable that would bring new GLI products to the market by January 2005. Member Advantage: Preferred Pricing with DHL ExpressNAHB has teamed with DHL to bring members a full suite of domestic and international shipping services, covering over 220 countries and territories around the globe. NAHB members can take advantage of the complete menu of DHL services, including: DHL Next Day, DHL 2nd Day, DHL Ground, International Document Express, Worldwide Priority Express, Import Express and more. Members are also eligible for preferred DHL association member pricing, and members previously participating in NAHB’s Airborne program will be automatically transferred to the DHL program. For more information, to set up your DHL account, or for questions about your current account, contact the dedicated association hotline at 800-MEMBERS (800-636-2377) from 8 a.m.-7 p.m. ET) or log onto www.membersales.com/NAHB. For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to http://memberadvantage.nahb.org. Or visit www.nahb.org to explore the full range of benefits associated with membership in your local, state and national home builders associations.
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Sign Up for 2005 Committees and Councils by July 9NAHB is looking for members who would like to serve on any of the association’s various committees and councils for the 2005 term. Members will be able to provide leadership, expertise and experience on the issues and challenges facing the industry. The term begins immediately following the 2005 International Builders’ Show (IBS) in Orlando and continues through the completion of the 2006 IBS. The deadline for applying for an appointment is July 9. Members are limited to serving on no more than two standing committees or councils. Members can apply online by filling out the 2005 appointment sign-up form, indicating their interests. The form can be accessed on the NAHB Web site by clicking www.nahb.org/2005appointmentform, then return the completed form by e-mail, fax or mail to NAHB as indicated. Forms also can be found within the individual sections for the various committees and councils on the “members only" side of the NAHB Web site. Final appointments will be made following the fall NAHB board of directors meeting and members will be notified by mail. For more information, e-mail Cynthia McKinley or call her at 800-368-5242 x8346. Awards Programs Deadlines
Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. Calendar of Events
To view more meetings & events information on the NAHB Web site, click here. Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. |