Flickr by wenzday01

I did a couple of quick internet searches the other day. The least expensive pair of new shoes I could find ran about $7.99 (and I’m sure I could have done much better!). And a Google search on cheap new cars uncovered a brand new Hyundai Accent for $10,690. So why was I in search of these things? Well, I wanted to get a sense of just how many people I ran into that were wearing the least expensive shoes or driving the cheapest new car on the road. Either will get you where you are going – either by foot or by motorized vehicle. But everywhere I turned, I saw almost everything but the very least expensive in shoes and cars. And I started to wonder…

Let’s start with a quick self-evaluation. Are you wearing flip-flops today, or perhaps a nice pair of Nine West pumps? Are you driving a Hyundai, or perhaps tooling around in an Acura or Mercedes? Think back about the choices you made when you plunked down your hard earned dollars. I’m guessing you were really thinking about things like durability, lifespan, repair costs and perhaps even social status. As we often heard from our parents, “you only pay for quality once.”

So why has housing seemingly spiraled into nothing more than a quest to secure the cheapest home on the market? These days, it seems it’s all about price. Don’t get me wrong, I understand the function of price as one of the components of value. But it seems to me that we have lost sight of the real meaning behind the word value. It’s probably tempting to believe that we serve our customers best by using price as the most compelling search parameter and demonstrating our expertise by then trying to drive the seller into an even lower price point. We can then rant and rail against those sellers who have the arrogance to suggest there may be more to their home than just the cheapest price.

…but as I said, I wonder. Wonder if we don’t need to step back and help our customers approach their home search with the same criteria we would use ourselves. Without dismissing the importance of price, I’d hope the real value in a home lies in areas both tangible and intangible. Are the materials, systems and components being used by the builder capable of rendering a more comfortable, durable and less-expensive-to-operate home than perhaps that short sale down the street? Is there a chance that the investment the developer made in creative land planning and stunning architecture will result in stronger appreciation than a more poorly-executed competitor, once the market returns to normal?  Can more costly, lower-maintenance materials pay dividends beyond the paltry few dollars of mortgage expense in these times of sub 5% fixed rate financing? Is the enjoyment of walking trails or active amenities worth a few dollars more than the cheaper home that offered neither?

Certainly investing in these things costs more, and results in a higher price. But few people these days are purchasing with the notion of flipping their house in the next year or two. We’re probably back to the days of staying in a home 5-7 years. So my plea is a simple one. Treat your customers as you would treat yourself. Look beyond pure price to things like life-cycle costs, maintenance repercussions, and the impact on design and even ownership styles (read: condominium) on long-term value sustainability. You’d do it for yourself, wouldn’t you?

Builders have always had that reputation…you know…I probably don’t have to explain. But time after time, we see evidence of their humanity.

The Crumley Group, Inc. Charity House In Progress

The other side of that “cigar-smoking, Cadillac-driving profiteers” as I once heard us described. I mean, come on, who doesn’t tear up at Extreme Home Makeover? Who hasn’t put a few hours behind a paintbrush at a Habitat for Humanity home?  Deep down, I think most people probably don’t think quite so badly about builders. But it’s still fun party talk.

But somewhere deep down, there’s a special connection to “home”. While housing has occasionally become the investment du jour, more times than not when we’re thinking of plopping down our hard-earned dollars for a piece of the real estate pie, it’s with thoughts of Thanksgiving dinners crammed around a too-small table or the look of a child’s face as they come downstairs on Christmas morning, and not the ROI we anticipate on the flip. Housing does that to us. It touches us in a very deep and personal way, all the way down to where our fond memories lie.

The word “home” certainly means something different to everyone. But there’s a special home that I think deserves some recognition. It’s the St. Mary’s Home for Disabled Children in Norfolk, VA. The work they do there is probably not work you or I could do. And they do it with such a deep level of caring and compassion that you can’t help but be moved when you witness it. That’s what happened to Scott Crumley of the Crumley Group. After laboring for many years as one of the region’s top custom builders, one who rarely sought the limelight or public eye, Scott decided it was time to do something different. He was moved by seeing the great work done at St. Mary’s and he wanted to help. So he did something he hadn’t done before – he dove in and committed to HOMEARAMA 2010 at East Beach. And then he went a step further – he committed to building the Charity House, with proceeds to benefit St. Mary’s Home for Disabled Children. And I’ve never seen him more excited about a building project!

I know Scott well enough to know that not only will this be one of the premier craftsman homes in the show, but it will be a home built with love and commitment. Because he knows what’s at the end of the line. Not just a very happy future homeowner, but some more lives enhanced, and changed, at St. Mary’s. I’m hoping you’ll take just a minute to go to the St. Mary’s website to get a feel for the good work they do there. Then I hope you’ll ask yourself, “How can I help?”. Well, I have an idea for you. Help us spread the word. If you are on Facebook, search for Crumley Group’s 2010 Charity House at East Beach. Become a Fan. And spread the word to everyone you know to do the same. I’d like to see us hit our goal of 1,000 Fans by the time the show opens.

There’s an old adage in this business that rings truer today than ever: nothing happens until something gets sold. My meager contribution to this worthy endeavor is to see if I can expose enough people to Scott’s creation that a buyer will come forth. Not only will they get their dream home in one of our area’s most impressive neighborhoods, but they’ll go to sleep at night knowing they’ve helped beyond measure. The kind of night’s sleep we should all get to experience now and then. So come on, lend a hand – with that mouse sitting there to your right – and spread the word. Thanks!

Flickr by Sash's Kitchen-Studio Photography

This topic holds a lot of fascination for me, as I see it play out every day. Where I live in Virginia Beach there have been three tragic deaths in the last year from people coming out of bars at 2:00 a.m. and crossing Shore Drive, where they met their demise.  As I said, tragic. But I’m guessing alcohol was involved and I know these folks weren’t crossing at a marked cross-walk or traffic signal. An unfortunate game of human dodgeball and we all know who wins that. So how did the City respond to the outcry for “Shore Drive Safety!”. Well, of course, by punishing the 50,000 drivers who travels this road daily by lowering the speed limit from 45 mph to 35 mph. Was it a popular move for grieving families and all who are concerned about safety? Sure. Was it the right move where even a modicum of investigation would have failed to show a link between the 45 mph speed limit and drunk people being killed at 2:00 when trying to cross in the wrong spot? I think not. But more times than not, this is what we have come to expect of our elected officials.

But I’m not here on a political rant. This is, after all, a blog about housing and things related. So what’s the connection? Too often I see this very concept played out in my industry. On a micro level, we are all trying to find the key to generating traffic and attracting more qualified buyers to our sites. Too often what is popular is to beg the builder for another ad, a bigger ad or some other “creative” play that has little real connection to solving the challenges we face. But let’s face it, it’s easier to scream to the builder, “We need traffic – run an ad!” than to do the hard work of digging deep to understand our buyers, what problems they were solving that led them to our sites and what methods they used to get them there. It requires research, analysis and, yes, a lot of gut. But I’ve rarely seen a problem in the last four years of this difficult downturn that could be solved by just running the right ad.

Difficult challenges require people, and thinking, up to that challenge. A lot of doing what’s right, and not what’s popular. The examples are countless. But Linchpins are up to the task. Are you one?

Flickr by LOST_kitty_k's photostream

I guess after awhile, you get used to it. Or maybe that’s just what they’re hoping for.

Just as nearly everyone was sensing a leveling off of the housing market decline…dare I even say…perhaps enjoying a modest recovery, the government steps in with their, “We giveth (tax credit) and we taketh away (read on!).” Their favorite whipping boy again? Condominium. Somehow the root of all evil.

On May 17th, the Veteran’s Administration issued a circular – not widely distributed, as we just found out about it on June 2nd and the majority of lenders and REALTORS haven’t heard about it even today – stating that effective immediately no more VA condominium loans could be closed until the builder had submitted for separate VA Condominium Project Approval. Just this past December, they reaffirmed their long-standing position of accepting with reciprocity HUD’s Condominium Project approval. But then a short four and a half months later, apparently with great introspection, the VA now claims, “We’ll still accept your HUD Condominium Project approval, but only if you don’t plan to add any units to the condominium by Amendment after December 29, 2009 (read: additional phases).” Really? Sorry, but that’s how condominium works. You record an initial phase and then as you create sales you expand the condominium with Phase Amendments until you hit build-out. So with only a handful of exceptions state-wide, this new ruling affects all condominium developers/builders.

And with no notice, no phase-in period. Oh, and did I mention…VA admits they only have one person for the Commonwealth who does the cumbersome job of reading through about 300 pages of documentation that represent such a submission.

I don’t know about you, but I have nineteen VA loans set to close in the coming 40 days. The majority are veterans who are expecting their $8,000 tax credit check if they close by June 30th. Not to mention that they are also looking for a place to live. With utilities set up. Movers scheduled and hopes and dreams high. So assuming we shut down our company for any other function (like, say, building these nineteen homes) than focusing on getting these packages put together and FedEx’d to Roanoke (which will take about 5 days of solid work), perhaps we can save about 1/2 of these closings. I would think my four community submissions alone would tie up this poor lone wolf at VA for the balance of the month (the VA has promised us “expedited review”, but normal HUD turnaround on Condo Project approval is 90 days). But I’m guessing I’m not the only builder in the Commonwealth who is doing condominium.

Do you want to be the one to tell your very excited buyer (and many are first time buyers) that, oh yea, the VA determined you shouldn’t get your home after all as they decided to change their rules with no notice only 45 days before the deadline for closing these homes. I’m hoping the VA can add some staffing at their phone center to make those calls for us. But I’m not holding my breath. I’m afraid this is going to get ugly.

Flickr by Mr. Anderson

And now the “rest of the story”. I had previously talked about my frustrating experience in recently purchasing a big-ticket item: my new car. But here’s the coup-de-grace: at the end of the process, the “hospitality” girl reminds me that I’ll be surveyed soon by Kia and that anything less than a perfect “10″ on any question represents failure for them. In fact, she told me that anything less than a “10″ actually costs them money. The dealership takes money back from their commission.

Now…what am I supposed to do with that information? I liked my saleperson just fine. So now I’m going to take money out of his pocket as I rant about the dealership’s bad processes (including survey baiting)? Probably not. So they’ll get their “10’s” and think they are genuinely pleasing their customers and will continue on.

I’m not sure I’ve experienced anything this disturbing in the arena of customer satisfaction. Sure, I’ve been told, “We strive for a “10″ and hope you’ll let us know if somehow we failed to meet that goal”. Fair enough. But this survey baiting takes this to a whole new level. And what does it accomplish for the dealership? Virtually nothing as it stymies all constructive feedback. I left that day with my new car and already a clear picture that the dealership really didn’t care all that much about me to begin with. So I’m not sure this final blow was that unexpected either. Just bold beyond reason.

Regardless of what business you may think you’re in, you’re in the customer satisfaction business. At least if you want to remain in that business. A small piece of advice. Solicit honest feedback. Listen. Improve where you need to. And pay attention to how your customers want to consume your product. There’s gold there.  But only rusted metal in the process I experienced.

Flickr by Kaptain Kobold

There is a difference in how people buy an expensive product versus how they buy an inexpensive product. And the difference is risk. Buy a $20.00 Veg-o-matic and it doesn’t live up to the hype…you toss it and move on. But when there is huge risk involved (such as the risk that surrounds an expensive purchase like a car or home), you tend to slow things down. Evaluate the risk of the wrong decision. Seek more counsel from parents, friends and co-workers. You engage in the pursuit of the “perfect decision”, or at least as close as you can come to it. And therefore the processes we use to sell big-ticket items have to be, by their nature, different processes than the ones we would use to sell small-ticket, virtually risk-free items. One of those things we have to do differently is to set expectations for the customer as the how the process will move forward, since it’s a more complicated purchase than, say, buying a pizza. Customers hate surprises and by eliminating them, we gain a lot of credibility and respect that might just turn into a sale.

I experienced much of this last Saturday as I threw in the towel and went out to buy a new car. Now, having done this before, I had a pretty good idea of the less than pleasant experience I might have. To his credit, the salesman I worked with did a pretty good job. While I didn’t particularly need a test drive (don’t all new cars drive wonderfully on your 5 mile test drive), the salesman was smart enough to get me into the car, point out some benefits and let me soak in that new car smell. But after I agreed that this particular vehicle would suit my very basic needs for transportation, the game was on. And maybe because I had bought a car before, the salesman didn’t figure he needed to tell me what to expect over the next two-and-a-half++ hours. But I would have liked to have known as maybe I could have saved us both some time and grief.

First came the expected back and forth and the inevitable, “My manager would like to move this car today, but can only come to this number. Can you get there with us?” dance. Expected. And, yes, we got there. Frankly, I don’t like to haggle and especially in this process. So I probably was an “easy sale” in the scheme of things. But it’s what came next, with my impatient nine-year old running out of battery life on the sixteen game apps he had just downloaded to my smart phone, that would have been nice to have known about. To have had the proper expectation set of the “remainder” of the sales process and the time involved.

First came the hospitality girl with the up-sell on the undercoating, paint sealant, acid rain protection and some other malarky. Sorry, not interested. I know it’s her job, but I had already told the salesperson I was looking for basic transportation with no bells and whistles. My time wasted. My agenda ignored. And more waiting. More paperwork (all manual – didn’t these folks hear about computers?). Then, as I really thought I was getting to the end and just had to sign the financing paperwork and would be off to feed my now fed-up child, came the next sales pitch. Added car protection. Life insurance. Gap protection. No, no, no. Just let me get my new car and get out of here. And I finally did…at 8:00 p.m. in a process that had started closer to 4:00 p.m. Exhausting. Unnecessary at least in my view. And probably not my salesman’s fault. He was nice enough and apologized frequently. It wasn’t in his control. But I think it was just a bad process designed to milk the most out of the customer as possible.

Was my expectation met? Probably so – in an unfortunate sense. But was it an experience that thrilled me? Turned me into a Raving Fan? Not so much.

If you’re reading this, you’re likely in the real estate business. See any lessons here?

Flickr by kit

We’ve long known that information is now ubiquitous. It’s out there in large quantities, always just a few clicks away and, best of all, free. Selling information is no longer such a good way to make a living. It’s dime a dozen stuff. But taking that information and mixing in a healthy dose of expertise…I believe people will still beat a path to your door.

After a seminar the other day, I spoke with a long-time friend of mine, David. An expert in matters of real estate and someone in whose opinion I place stock. I put the question to him: “When you think about the great experiences you’ve had in selling new construction…what made the difference?”

His answer was pretty simple. The site agent had a high level of expertise in the product, and the processes, surrounding the new home purchase. There were little to no surprises.The myriad decisions to be made were organized and not run like a fire drill. Communications were proactive and predictable. And when something went south, as it almost always will in this business, the information was delivered truthfully and in a timely manner.

If you take our rambling ten-minute conversation and distill it down, it came to this: he already understood how new construction worked (he had knowledge), but his expectation was that the new home agent still knew more about his/her product and processes then he did and could skillful apply that knowledge (expertise) to make it a wonderful experience for his buyer.

Seems simple enough. Yet in this brief dialogue lay so much insight into those characteristics and traits that separate the new home superstars from the also ran. Having a headful of information simply isn’t enough. You have to overlay that with a healthy dose of “expertise”, which is an entirely different skill set. So…are you peddling information or expertise on your site??

Flickr by :/'s

We spend a lot of time in this business trying to analyze and make sense of both our successes and our failures. On the face of it, that’s certainly not a bad thing. But here’s how it usually goes:

Wow – we’ve had a quite a string of bad weeks in a row. Must be: 1.) Our site agent; 2.) The economy; 3.) The weather; 4.) The time of year/holidays…and so on.

Or, Wow – we’ve just had a couple of great weeks! Must be: 1.) The tax credit; 2.) Our great land planning and architecture; 3.) Buyers responding to our current incentives; 4.) The economy; 5.) The weather…and so on.

It’s hard to understand. What makes one two – week period great and a two-week period just a month later terrible? We don’t know, so we slice and dice and speculate away. Sometimes we even take action. But the reality is, far too often, that buyers (read: the market) are irrational. They react emotionally to what they read and hear on the news (good or bad), to  what their friends and colleagues (read: consultants) tell them. And they react to the simply everyday pressures that they face in their current home. It’s not predictable – at least on a week to week basis. And that’s frustrating to those of us who are paid to make sense of it all.

But here’s something I know is a constant. All housing purchases are driven by problems. Your current house is too big or too small. You just had a baby or your youngest just went off to college. You got married, or divorced. And somehow the home you’re living in, that once was the “perfect decision” for you at the time, is no longer perfect.

If we can focus on the problems potential buyers have – not in a negative sense – and determine as teachers and consultants if what we have provides a credible solution to that problem (with all of the inherent complexities that go with a home buying decision), we’re well on our way to a more steady stream of successes.

Flicker by cjc4454

This morning I had to run by Best Buy and purchase a printer for a colleague of mine. I knew they opened at 10:00 a.m., but as luck would have it, I arrived about 9:50. Over the next ten minutes, I watched the crowd outside the front door build, as Best Buy employees reported to work using their key to slide in the side door. By 9:57 I got out of my car and joined the fray. By then I counted 18 people in line and another 7 waiting in their car watching. Now I have to admit, having 25 people waiting outside the door of my business, just dying to get in – what business wouldn’t love that?? But I stood there knowing exactly how this would play out. People outside growing more and more impatient as the clock neared 10. Lots of foot shifting and shuffling. And, just as I predicted, at 10:01.40 the doors finally opened.

I’m guessing somewhere in the Best Buy rulebook, it says, “Our store opens at 10:00 a.m. Monday – Friday”. So I guess by that standard, opening only a minute and forty seconds late would be considered pretty good. But what if an employee, seeing the growing crowd of impatient people outside the door, had taken the initiative to open at 9:55 a.m., greeting people by saying, “I can see you are all anxious to come in and buy something, so I thought I’d open a few minutes early just for you!”

But I guess that qualifies as some crazy, out-of-the-box thinking when what businesses really value (far too often) are employees who play by the rules. Does anyone else see a business opportunity here?

Flickr by peternamara1

This morning I sipped my coffee and watched Matt Lauer anchor a story on “strategic foreclosure”. As soon as I heard those words, I knew we (yes, literally you and me) were in trouble. As the story goes, of course, a middle income family buys a home at the top of the market only to see its value dip during the downturn. While, admittedly they can afford to make their payments, they are making a simple business decision to walk away from their mortgage. “Hey – it’s just a business decision. We bought something, we can afford the payments, but it’s not worth what it used to be, so why wait for the equity to build over time? Let’s just dump our little problem on someone else (we’d like to think it’s those big, Cadillac-driving, cigar-smoking bankers…but it’s really you and me again). And then the Today show brings on the financial expert to tell us that while you’re credit score is going to take a hit, there are all these ways to creatively rebuild your score quickly, so it’s really won’t be that devastating after all. And I’m guessing those same people who are walking away from their mortgage had no trouble taking the mortgage deduction off their taxes when they were making their payments, and will no undoubtedly petition their accountant to find a way to take their “loss” off their taxes as well. So the impact grows and grows.

Does anyone else have that sick feeling in the pit of their stomachs? We want housing to recover, which will help drag the economy into recovery (especially in the jobs sector) and we’re now getting advice from a major media outlet on how to get rid of that pesky little problem called our mortgage payment? What’s next? Those Jimmy Choo’s I overpaid for and have worn a few times, they just aren’t exactly what I’d hoped for, so I think I’ll walk away from my credit card debt? I bought a car last month, then I found out it dropped in value as soon as I drove it off the lot. Hey, GM, it’s sitting in my driveway. Come and get it!!

The very heart of the housing problem started with people who bought a home for the wrong reasons (short term investment gain), and took a mortgage they knew they couldn’t afford if their home didn’t continue to gain in value at 10% – 20%/year. The very definitiion of irresponsiblity. And now, to add to that bad decision, they think it’s okay to just walk away from their debt because it’s “a strategic business decision”.

Foreclosure is a terrible thing. My heart breaks for those good, hard-working, honest people who have lost their jobs and now face losing the home in which they were raising their families. Let’s not denigrate their pain and flippantly add to our collective economic woes by taking the easy (my new synonym for “strategic”) way out.