WILL REAL ESTATE AGENTS BECOME OBSOLETE?

With the downturn in the housing industry many homeowners are moving away from using Real Estate agents to sell their home.  Even though the benefits of using them to navigate the treacherous waters of mortgages and real estate transfers has always been one of their biggest advantages, about 20% of all home sellers are now choosing to go it alone.

Since most homes for sale are now listed on the Internet, either by Real Estate companies or by homeowners themselves, there have been more websites designed for the “For Sale by Owner” crowd.

It won’t be long before Real Estate agents will morph into “closing agents only” with little need to market homes or show them.  Commissions will drop to the 1-2%  level instead of the 5-7% currently used by Real Estate agencies.  That could mean up to a $10,000 savings on a $200,000 home.

Homeowners can find out how much their home should sell for just by visiting the Internet.  Then they can put it out there for everyone to see.  They can add hundreds of pictures, lengthy descriptions and can even find the best mortgage companies for their buyers.  WOW!

With the Fed instituting new regulations and HUD forms to insure that all home purchasers are protected, why would a homeowner need to list with a Realtor?

Very soon you will see a new industry being born that just “shows” homes to prospective buyers without trying to sell them anything.  These new “agents” will not have to be licensed or insured. They will be paid to only “show the house” by the homeowner.  If someone wants to make an offer on the home, they simply contact the homeowner, make an offer, agree to a price and wait for the closing company to schedule the sale.

It’s coming folks!

WICK BUILDING SYSTEMS LATEST CASUALTY OF RECESSION

Wick Building Systems of Mazomanie, Wisconsin, a maker of homes and other buildings, has filed for Chapter-11 bankruptcy saying it’s the most efficient way to re-structure a division that makes farm-and-commercial buildings – while shutting down two other divisions which make manufactured-and-custom homes.

259 jobs are being lost in those two divisions located in Mazomanie and Marshfield. Wick is leaving Marshfield entirely, while the farm-and-commercial division known as Wick Buildings will stay in Mazomanie.

CEO Jeff Wick said  losses in the housing industry made its balance sheet “un-sustainable,” while the farm-and-commercial building division remains profitable.

On November 10th, the company said 222 people in the Wick Buildings division might be laid off – but the re-structuring would save as many jobs as possible. Jeff Wick said normal operations in that division will continue through the Chapter-11 proceedings.

MORE CHINESE DRYWALL LAWSUITS COMING

Consumers in 24 states have filed a total of 1,174 Chinese drywall complaints with the Consumer Products Safety Commission (CPSC).  Hundreds of homeowners have filed lawsuits against the manufacturers, distributors, builders and others in the Chinese drywall supply chain.

Gases emitted from the drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode.

 A local worker making drywall in Huzhu County of Qunghai Province, China.

USG CONTINUES TO CLOSE DISTRIBUTION CENTERS

USG Corp's distribution unit closed 22 more branches in October and recorded an operating loss of $73 million for the third quarter. 

L&W Supply Corp. and its subsidiaries swung to an operating loss of $73 million in the third quarter from an operating profit of $5 million in the year-earlier period, in large part because of $41 million worth of goodwill and asset impairment charges and another $8 million in restructuring charges in the latest quarter. Net sales shrank 37% decline to $329 million.

L&W closed 12 locations in 2007, 54 locations in 2008, 15 in the first nine months of 2009 and another 22 in October, USG said. That leaves it with 162 distribution centers.

AMERICAN WOODMARK’S LOSSES CONTINUE

America’s third largest kitchen cabinet manufacturer is reporting losses ten times larger than the same period last year.  Its net loss plunged to $5.3 million in its fiscal second quarter ended Oct. 31, more than 10 times deeper than the $481,000 loss it recorded in the year-earlier period. Sales dropped 23% to $104.1 million.

The Winchester, VA-based cabinet maker, whose brands include Timberlake cabinetry for new homes plus special brands for The Home Depot and Lowe's, said gross profit shrank 34.9% to $12.7 million, or 12.0% of net sales, from $19.5 million, or 15.2% of net sales, in last fiscal year's second quarter. That was partly due to relatively higher sales, marketing and administration expenses as a percentage of sales.

With the new results, American Woodmark's net loss for the first six months of its fiscal year deepened to $11.7 million from $324,000 in April through October 2008. That's on a 25.2% decline in sales to $204.9 million and a 41% drop in gross profit to $24.5 million.

CHICAGO HBA CHAPTER FILES BANKRUPTCY

It was bound to happen sooner or later.  HBA Chapters are losing members and having a tough time paying their bills.

The Home Builders Association of Greater Chicago filed Chapter 11 bankruptcy in US Bankruptcy Court in Chicago on Friday.  The association has about $2 million in debt and a dwindling membership base, caused by the recession and eroding housing market.

 The association had as many as 1,500 members at its height, but it's dropped to about 500 members in recent months. It also has cut its staff to one person and moved from an Addison building with a mortgage to a Rolling Meadows suite in the past month to save expenses.

No mention of the bankruptcy could be found on their website.

NEW HOUSE STARTS DROP 10.6% IN OCTOBER

Construction of U.S. homes unexpectedly plunged last month to its lowest point since April, the Commerce Department said Wednesday. The weak figures show that builders still lack confidence that buyers can soak up the glut of unsold homes already on the market — a supply magnified by a record number of home foreclosures.

The figures also illustrate how much the fledgling recovery depends on government support.  Builders broke ground on fewer homes in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.

The report on home construction said building of homes and apartments fell 10.6 percent in October to a seasonally adjusted annual rate of 529,000, from an upwardly revised 592,000 in September.

Applications for building permits, a gauge of future activity, fell 4 percent to an annual rate of 552,000 units. That was the lowest since May and missed analysts' expectations of 580,000. But permits for single-family homes fell only 0.2 percent.

The number of homes under construction last month fell 3.4 percent to 560,000, the lowest on records dating to 1970.

5 WAYS TO LOSE PROSPECTS

Most Home Builders are having a tough time right now and you would think that they would work twice as hard to get and maintain good prospects for their homes.  But the reality is that every prospect that bought a new home this past year visited an average of 4 builders before signing a contract.

So what makes the difference between the winners and the losers? 

There are many answers but most of them fall into several categories.  These include how you are perceived, your language and your positive (or negative) attitudes.  Here are 5 things to keep in mind when interacting with your next prospect.  And none of it involves PRICE!

1.     Keep ignoring them and you won’t know when they are gone.

On shopping trips to the local Lowes or Home Depot, have you ever needed help and approached the only employees in sight and have them continue doing what they were doing before you asked your question?  Usually they just point to the aisle with your requested item or appear to be oblivious to the importance of your request.  If you have a prospect in your office, don’t ignore them because the phone is ringing, let it go to voice mail.  And don’t keep checking you email while you’re talking.  Your prospect will politely say goodbye and never return.

2.     Shut up and listen!

Good salesmanship is about understanding what the prospect wants and needs, not how much you know.  Helping them to satisfy their needs will keep them at your office.  Nothing irritates a prospect more than a pushy salesperson.  Stop being that person….slow down and listen to what they need and want.  Writing this information down on paper will show that you are listening and make them feel important.  If you throw the paper in the trash after they leave, maybe you should be working at 7-11.  Please apply Pareto's Law of Economics to this one - listen 80%, talk 20%.

3.     Do you have a “No Response to Email” policy?

Let’s assume that your prospect had a good meeting at your office and went home to think about what you have to offer them.  Over the next few days they email you several times a day about a wide range of things concerning your homes;  lead times, options, etc, but you decide that answering their email is somehow beneath you. Hey Stupid…they want answers from you because you are the one they are considering to build their home.  They are talking about you and your building process and want some additional information.  Would you like them to call you ever hour or two or drop you an email which you can answer at your convenience?  That’s what I thought.  When they stop emailing you, it’s over!

4.     Don’t complain to them about your other customers.

Boy, wouldn’t you just love to tell your prospect all the stupid things other customers did so they won’t make those mistakes?  Sure you would!  But in the real world, telling them about other customers is the “Kiss of Death” for your relationship.  All they can think about is what you will say about them to other people.  Nobody wants to be the “bad example”.  Each customer is unique and what happens between you and them is confidential.

 5.     Don’t treat them like they can’t afford what you sell.

Do you ever judge a customer in the first few seconds of contact based on how they look or sound? If you do (and I am sure we are all guilty of it at one point or another), this one is for you.  One of the best ways to avoid this is to ask them about their budget.  I know, a lot of people don’t want to discuss this with you but there are many ways to help them see the importance of budgeting but I’ll save that for a later article.  What cannot happen is that you assume they can’t afford to buy one of your homes.  Maybe they can’t, but you never know if one of their friends can and you just might have blown your chances of landing that sale.  Remember the Golden Rule when dealing with prospects.

WHAT IS CHAPTER 11 BANKRUPTCY?

Filing for Chapter 11 suspends all judgments, collection activities, foreclosures, and repossessions of property against the filing business. This gives it time to negotiate with its creditors. The company's creditors are not allowed to pursue debts or claims that arose before the bankruptcy petition was filed.

The business must file a written disclosure statement and a plan of reorganization with the bankruptcy court. The disclosure statement contains information about the company's assets, liabilities, and business affairs, and the reorganization plan includes a discussion of how the company will handle the claims against it.

The company's creditors participate in the bankruptcy proceedings. A creditors' committee, usually consisting of those holding the seven largest unsecured claims against the company, can investigate the company's conduct and its business operations, and the committee can help formulate the reorganization plan. The creditors can question the company under oath during what is called a "section 341 meeting" (after the relevant section of the bankruptcy code). Creditors can also file motions to convert the bankruptcy to a Chapter 7 liquidation or to dismiss the case.

For 120 days after filing for Chapter 11, the business has the exclusive right to file a reorganization plan, and the business has 180 days to persuade creditors to accept its plan. If the company misses those deadlines, creditors can file their own reorganization plans.

Once the creditors have accepted a reorganization plan (either the company's plan or a competing plan), the bankruptcy court confirms that the plan is feasible and proposed in good faith. The plan's confirmation discharges the company from its old debts, but the company is bound by the plan to make payments to its creditors.

CHAMPION GETS COURT APPROVAL FOR CONTINUED OPERATIONS

The Honorable Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, DE, yesterday announced that Champion Enterprises can keep the doors open and continue to pay vendors, employees and even their sales reps’ commissions.

Here is part of the press release from the company:

"The Company has worked very hard to formulate the special relief it would need so that its transition into Chapter 11 would have no impact on our customers," said Champion Chairman, President and Chief Executive Officer William C. Griffiths. "We are very pleased that we received approval to continue our customer programs today, including our customer warranty programs and retailer rebate programs."

Champion also received interim Court approval of its $40 million debtor-in-possession (DIP) financing, permitting it pursuant to the terms of the facility immediate access of up to approximately $31 million to continue operations, pay employees wages and benefits and purchase goods and services going forward during the restructuring period. The final hearing on the DIP financing has been set for Thursday, Dec. 10, 2009 to approve the remainder of the DIP facility.

"Receipt of interim approval of our DIP financing should provide us with ample liquidity to fund operating expenses and meet obligations during the restructuring, so that daily operations continue as usual," said Mr. Griffiths.

If you have any questions or concerns about Champion, you can call their corporate information line at (877) 857-7554

NEW ERA, NORTH AMERICAN AND OTHERS INCLUDED IN CHAMPION FILINGS

Here is a list of the US manufactured housing divisions of Champion Enterprises.  If you are currently buying from them, you should be contacting them as soon as possible.

Champion Homes

Dutch

Carolina Building Solutions

Commander

Fortune

Highland Manufacturing

Homes of Merit

New Era

North American

Redman

Silvercrest

Titan.

CHAMPION HOMES FILES BANKRUPTCY

It comes as no surprise to me…… Champion Enterprises Files for Bankruptcy Protection.

Here is the press release I received this morning.

TROY, Mich., Nov. 15 /PRNewswire-FirstCall/ -- Champion Enterprises, Inc. (NYSE: CHB), a leader in factory-built construction, today announced that it and its domestic operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company is taking this action to improve its capital structure and further strengthen its competitive position. The Company's operations in the United Kingdom and Canada were not included in and will not be impacted by the filing.

In conjunction with the filing, the Company has obtained a $40 million debtor-in-possession (DIP) credit facility from certain of its current lenders that will be available to fund post-petition operating expenses and to ensure that it continues to meet its obligations to employees, customers, and trade partners. A portion of these funds will be available for use outside the U.S. to ensure the continued adequacy of working capital for the Company's non-U.S. operations.

The Company expects that this restructuring will be accomplished through a court-supervised sale of its operations. The Company chose to pursue a broader sale process in which its lenders and others may participate after opting not to accept a third party offer for the Company. To that end, the Company's investment banker has already received initial indications of interest from a number of parties expressing a desire to participate in this sale process over the coming weeks.

"Our Company has operated for many years with a significant debt load. As we've had to downsize to keep up with the declining markets, this debt has become increasingly burdensome," said Champion Chairman, President and Chief Executive Officer William C. Griffiths. "Despite our best efforts to reposition the company for diversified growth, the continued challenging economic conditions both here and abroad have negatively impacted our capacity for debt.

"As a result, management and the Board decided that the Chapter 11 process provides us with the most timely and orderly means to restructure our debt obligations and facilitate a sale and recapitalization of the Company so we can be best positioned to capitalize on future opportunities. Filing for Chapter 11 will allow us to maintain our going concern value for the benefit of our stakeholders while we address current market realities."

Mr. Griffiths noted that in response to the challenging housing market and impaired capital markets, Champion has already successfully implemented a number of initiatives aimed at improving operating performance, including the reduction of overhead costs, closure or idling of 15 underperforming manufacturing facilities in the U.S. since mid-2006, staff reductions at operating plants to better match current demand levels, increased focus on multi-family, military and commercial sales opportunities and enhancement of single-family home product offerings.

"Our balance sheet is the problem, not our operations. The next step in our reorganization is to restructure our balance sheet and position our company to capitalize on the anticipated recovery in the residential and commercial construction markets," said Mr. Griffiths.

The Company emphasized that daily operations are expected to continue throughout the restructuring. The Company filed nearly 20 "first-day motions" covering the continuation of employees and business operations, as well as post-petition DIP financing, the continuation of supplier payments, customer warranty programs and retailer rebate programs, and other case administration matters. The Company anticipates that these first-day motions will be heard this week. Pursuant to the relief requested in those motions, homes will be sold, manufactured and delivered as normal and employees will be paid and continue to receive the same benefits as before the filing.

"Despite the current challenges in our core markets, we still believe there are considerable opportunities in the factory-built construction industry in the future," said Mr. Griffiths. "Addressing our liabilities through the Company's bankruptcy filing is the last step in a comprehensive restructuring we began some time ago. We fully expect to proceed through this restructuring swiftly and with the strong support of our lenders. Throughout the process we will continue designing and manufacturing high quality products for our retailers, builders and developers."

The Company filed its voluntary petitions in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

BLU HOMES’ AMAZING FOLDING HOUSE

I just read an article about Blu Homes of Littleton, MA and I kept asking myself why would anyone want this type of home.  Maybe the end user is one of those people that just has to have the oddest and most weird thing available.

They are actually producing homes that fold up and can be shipped on a flat bed truck.  The finished homes (they are not as finished as a modular home would be) can have a finished width of up to 20’ wide when unfolded.

This is the company that bought Michelle Kaufmann’s defunct company’s designs and brought them to the east coast. Their Evolution model is 1,400 sq ft with a base price of $164,000 FOB.  That’s $117 a sq ft!

Here is the pricing directly from their website:

Size: 1,400 sq. ft.

Floorplan coming soon.  (not even a floorplan yet)

Details and Pricing

Length 40  Width 22  Square Feet  1400

Blu Factory Cost $164,000 ($117 sq ft)

Shipping Min & Max* 3,000-15,600  Set & Finish Cost $10,800

Approx. Crane Rental $3,600  Foundation** $7,200

Min Blu Standard Price $188,600   Max Blu Standard Price $201,200

Min Extra Site Budget (20%)*** $38,000 

Min Total with Extra Site Costs $226,600 ($161 sq ft!)

* Shipping minimum based on shipping units from Boston, MA to Hartford, CT;  Maximum shipping based on shipping units from Boston, MA to Los Angeles, CA.

ENJOY THE VIDEO!

 

KEISER MODULAR HOMES SOLD TO INVESTORS

Keiser Modular Homes in Oxford, Maine was recently sold to New Hampshire based R. J. Finlay and Company, LLC, a nationally known real estate firm. 

The sale will not effect the 100 jobs at the factory.  R.J.Finlay has no plans to expand or move the modular company at this time and will be developing a business plan during the next several months.

Keiser Homes President David Cuttler praised the move as one that will allow more growth for the company in an economically depressed time.

"It gives us a much bigger depth of financial stability and allows us to enter into new markets," Cuttler said.

AND YOU THOUGHT YOU WERE HAVING A BAD DAY!

NATIONWIDE HOMES BACK FROM THE BRINK

Nationwide Custom Homes’ production is up 50 percent since March, company officials said.

If that trend continues, the company’s goal is to recall workers and/or fill about 75 positions next year at the company’s Martinsville division, according to Nationwide President Andy Miller.

The company already has recalled more than 20 of the 100 workers who were laid off in 2008 and filled six positions since June of this year, Rakes said. The Martinsville division has 206 employees, he added.

The company credits a lot of the upturn to the their new Mainstreet Collection of smaller homes that feature a more straight forward design that can be easily modified by first time home buyers and baby boomers.

Nationwide Homes, a division of Palm Harbor Homes, has more than 325 authorized builders in 16 Mid-Atlantic, Southern and Gulf Region states and added 32 new builders since March of this year.

TRACT BUILDERS BUYING LAND AGAIN

After being deep in red ink for the last few years and being forced to sell entire tracts of land to investors, the big home builders are back in the hunt for land. 

This summer, Ryland bought land or signed option contracts to do so in several markets, including Indianapolis, Atlanta, Houston, Las Vegas and Baltimore.

"We are pursuing more deals than at any time in the past several years," said CEO Larry Nicholson.

But don’t think they are buying vacant land.  Almost all the land they are seeking has already been developed into lots with all utilities in place.  The most sought after land is in the Southwest, Mid Atlantic and Florida areas.

 Let’s hope they’re right this time!!!

GEMCRAFT HOMES FILES BANKRUPTCY

Baltimore-based builder Gemcraft Homes filed for Chapter 11 bankruptcy protection Monday "because of the economic and market conditions existing in the land development and homebuilding industry," the company said.

Gemcraft is one of the largest homebuilders in the country, according to the statement. Since 1996, it has completed 40 developments across five states.

Gemcraft president Bill Luther said he expected to have $37 million in new financing from existing lenders and "a related party."

The company was forced into restructuring due to the downturn in the construction and real estate markets and that the business would operate normally during the bankruptcy.

THIS IS YOUR COMPETITOR

Here is one of the most honest commercials for homes that I’ve ever seen.  ENJOY!

5 REASONS FOR BUSINESS FAILURE

Many, many years ago my mom and dad told me not to play with matches.  So guess what I did….I almost burned our house down!  I was only 6 at the time but a house destroyed by fire is still gone no matter what the age of the little arsonist.  Thank God I was able to put it out quickly because my dad also had shown me where the fire extinguisher was and how to use it!

A lot of small home builders are just like that when it comes to starting and running their business.  They know what they have to do to build a house but they don’t know the danger signs of business failure .  So here are 5 very important things that will lead to business failure.

1.   Failure to build a Team.  You probably have an accountant and a lawyer you could to talk to about keeping your business on the straight and narrow but I’ll bet you don’t call them very often.  That’s a huge mistake.  They are invaluable to your success. 

Other people to add to your team include your modular factory salesperson and the management team at the plant.  If they know that you are on their side, they will bend over backwards to help you.  Get yourself a website builder and someone to help you with marketing.  You can’t do it all yourself.

2.    Failure to Establish a Niche.  Sure, you’ll build anything for anybody, anywhere and anytime, but is that a niche?  If you are hunting a deer, you don’t walk around aimlessly with a shotgun making noise and shooting wildly!  No!  You quietly find a spot before dawn along a path that you know deer travel and wait until you see your target.  Most of the time it is a distance away so you use your rifle and scope to bring it down. 

The same thing has to happen in your business.  Find a target market, find a place that they frequent, stake it out and pick them off as they get near.  If your niche is empty nesters, set up a booth at senior expos, for first time home buyers, push the Tax Credit advantage of your affordable homes, etc.  

3.    Failure to be Unique.  Why should your prospects buy from you and not your competition?  Evaluate your business for what makes it unique and attractive for your customers. Summarize your key selling points that make your product or service a 'must have' for your clients.

Prepare a very brief and easy to read checklist of things that you do that your competitors don’t.  Green and Eco are two buzzwords that are great for in this list.

4.   Failure to be Organized.  You must have  business and marketing plans.  First you need to have a vision for your business. What are your business goals?  How are you going to achieve those goals?  What are you going to sell? 

Second, you need to plan your time. If you are a disorganized mess, with to do lists on scrap paper all over your desk, it’s time to get a planner and use it. Your business needs your guidance, if you can not manage your time, how will you manage your business?

5.    Failure to Market your Business.  Marketing will make or break your business.  There are hundreds of thousands of web sites, you have to continually promote your site to let people know you exist. If people do not know your site is out there they are certainly not going to find it by chance.

If you have a model home, marketing while important, is not as critical to your success. Location, on the other hand is crucial. If you have a good location where consumers naturally will see your model home, this in effect does a lot of your marketing for you.