professional builder 2013-07

PassiveHouse

ALSO IN THIS ISSUEFast-growing Home Builders / 20Rebounding the Woodside Way / 36House Review: The Grand Kitchen / 52

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7 Leadership ResponsibilitiesPage 40

Converting Traf c to SalesPage 44

July 2013 www.HousingZone.com

2012 JESSE H. NEAL AWARD WINNER

The new gold standard of energy performance for U.S. builders and designers

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©2013 Mercedes-Benz USA, LLC *Based on a comparison of the Automotive News classification of full-size commercial vans.

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4 Professional Builder July 2013

july Professional Builder Volume 78, No. 7

[BUSINESS STRATEGY]20 BIG GAINERS

Double-digit growth for these builders during the recovery started with pre-planning, re-examination, and retrenching during the recession.

[BUSINESS STRATEGY]36 THE WOODSIDE WAY

How one home builder gained market share during bankruptcy and emerged more effi cient than ever.

[LEADERSHIP]40 RANK HAS ITS RESPONSIBILITIES

Scott Sedam explores the seven responsibilities of effective leaders in home building.

[SALES & MARKETING]44 CAPTURE MORE SALES FROM EXISTING TRAFFIC

Bob Schultz says measuring and ranking the quality of potential buyers is the key to raising conversion rates.

[DESIGN]46 PASSIVE HOUSE RAISES THE BAR

U.S. builders and designers are coming around to the new gold standard of energy performance.

[HOUSE REVIEW]52 THE GRAND KITCHEN

The House Review design team weaves function and focal points into the heart of the home.

[PRODUCTS]58 PRODUCT REVIEWS

Insulation and exterior doors

[EXECUTIVE CORNER]66 SOCIAL MEDIA MARKETING

Dave Barisic, Brandywine Homes, Irvine, Calif.

frontofbook

ON THE COVER:In addition to its Passive House attributes, this home in East Falmouth, Mass., features natural cedar exterior clapboards and trim and low-maintenance, non-invasive native landscap-ing. Builder: The Valle Group, Inc., East Falmouth, Mass.PHOTO: JOHN L. MOORE

06 INDUSTRY PERSPECTIVE Upbeat in San Diego

08 EDITORIAL A lesson in buyer intent

10 MARKET UPDATE City migration could lead to more infi ll; Consumers still lack mortgage knowledge; Builders break ground in Canyon Falls

12 HOUSING POLICY UPDATE Rate of return on energy effi ciency

14 EXCLUSIVE RESEARCH Building envelope materials and methods

52

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ALSO IN THIS ISSUEPAGE 51

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industryperspective

Upbeat in San Diego

I had the distinct pleasure of attending the fi rst Pacifi c Coast Builders Conference (PCBC) ever held in San Diego. Previously, it had been

staged in San Francisco for more than 50 years. I was not sure what to expect this year, but the combination of a new venue and an improving market certainly netted a positive result. Like PCBC conferences of old, the energy was back and spilled out of the education sessions onto the exhibit fl oor and into San Diego’s Gaslamp District—where a host of dinners and network-ing events were alive with talk of land deals, hot-selling communities, and new products. Here are some takeaways.

1. California home building is an industry and eco-system that is a world unto its own. Because of its large and diverse economy, and its ability to attract immigrants from around the world and grow new jobs, California has been a thriving market for new homes since World War II ended. With excessive land-use controls and tons of state and local regula-tions, doing business there can be incredibly challenging and rewarding. Perhaps it is the

shared experience that drives builders and sup-pliers to band together more closely than in oth-er parts of the country.

2. For builders and designers, California is a muse. The Gold Nugget Design Awards compe-tition, which held its 50th annual competition, has only very recently opened to builders and architects nationwide. It is still dominated by Californians and their projects. For all of its thriving diversity, California’s wide range of buyers and locales makes it an incubator of design ideas that start here and make their way to other markets. John Thatch, AIA, of Dahlin Group, was commissioned by a cli-ent in Florida to build a massive California Mission-style home because “only a California designer would know how to pull it off.” That same home was awarded custom home of the year at the Gold Nugget ceremony.

3. Millenials are poised to reshape the industry. For decades builders have been adjusting to the wants and needs of Baby Boomers. As Boomers age and move down, and live lon-ger than any preceding generation, they will continue to be a new-home demographic tar-geted by builders. But the talk of the show was Millennials, a generation that is only now emerging into their careers after being delayed by the Great Recession. Numerically they are a bigger group than Boomers but their housing preferences are not yet well un-derstood. Something of the future was seen in the Gold Nugget Home of the Year, designed by Woodley Architectural Group, Inc., and built near San Diego by Ryland Homes. It is a fresh take on the post-and-beam California Modern style of architecture built by Eichler Homes in the 50s and 60s. This home (found at goldnuggetawards.com) advances beyond this concept by offering a structure that com-prises two fl exible wings, enabling a builder to tailor the structure to fi t different shaped lots and buyers with different wants and needs.

Perhaps the best advantage of having a PCBC lo-cated in Southern California was its quick access to many of the new model homes that have been built and opened in the last 12 months. Editor Mike Beirne and I had the pleasure of touring Pardee Home’s model complex at Alta Del Mar with Aram Bassenian and Dave Kosco of Bassenian Lagoni Architects, which designed the project. Residence No. 3 at the project won the Gold Nugget for best residential project of the year. This project, halted for a time during the Great Recession, is selling well at a $2-million price point (only in California). The proportions of the home and its details repre-sent what is best in new-home design today. The plan to alternate PCBC between Northern and Southern California for the foreseeable future will allow conference attendees to tour much of what is new in California building. I am looking forward to it in 2014.

Patrick O’Toole, Publisher | Editorial [email protected]

For builders and designers, California is a muse.

© 2

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editorial

A Lesson in Buyer Intent

Remember Body Smart chocolate bars and fruit chews? I bet you don’t. During the Atkins diet fad in early 2000, pharmaceutical giant

Pfi zer Inc., bet that consumers were ready for candy fortifi ed with vitamins and minerals. Reams of consumer research and focus groups indicated that we were. Indeed, part of the promotion literature sent to snack retailers and distributors boasted about a high “intent to buy” score among consumers who sampled the sweets. That meant when consum-ers were asked if they would buy this product, many said, “sure.”

So Pfi zer backed the so-called healthy candy with a hefty marketing budget and a big new product launch during the summer of 2001. By early 2002, the entire line was pulled from stores due to slow sales. The Body Smart casualty is another example in a long line of many failures explaining why marketers abandoned the intent-to-buy metric. What consumers say we will do often is not what we actually do.

Today, there is no shortage of surveys in which consumers are say-ing “sure,” we’re all for sustainability, reducing energy consumption, and saving the earth. We want to be good. But watch our behavior at home, and we ‘re not consistently doing the simple green tasks like turning off the lights or disconnecting plugged-in phone chargers.

We’ll even tell pollsters we like the idea of living in a net-zero house, yet even there, 20 percent of potential energy savings is lost when inhabitants fail to do the simple green things, according to BASF, the chemicals manufacturer that promotes the construction of sustainable housing through its “Beyond. High Performance” program. That’s why a net-zero house has a

miscellaneous electric load switch—basically a wall switch that we can fl ip to turn off an outlet because doing that is easier than reaching to un-plug a phone charger and all of our other vampire appliances. Behavioral studies suggest that if monitors show us something is consuming more energy than it should, we’ll modify our behavior.

But a better predictor of whether we do what we say we’ll do is the pres-ence of affordability and convenience. When we hear, myth or not, that net-zero houses cost more upfront to build and recovering that expense through energy-cost savings could take decades, being green takes a back seat. Perhaps innovations with materials and building methods will change that dynamic. Maybe more education among buyers and builders will move both parties to reconsider their reservations to change.

That path is a longer road to take, but perhaps it’s the right one. As noted by Rick Davenport, director of sustainable construction for BASF’s Center for Building Excellence, unless a proposition like net-zero homes has something for every stakeholder in the process, it will fall apart.

Mike Beirne, [email protected]

A better predictor of whether we do

what we say we’ll do is the presence

of affordability and convenience.


VOL. 78 NO. 7

3030 W. Salt Creek Lane, Suite 201Arlington Heights, IL 60005-5025847.391.1000 • Fax: 847.390.0408

STAFF

EDITORIAL DIRECTOR | PUBLISHERPatrick O’Toole847.954.7919; [email protected]

EDITORMike Beirne 847.391.1051; [email protected]

MANAGING EDITORKyle Clapham 847.954.7965; [email protected]

CONTRIBUTING EDITORSSusan Bady | Bob Schultz | Scott Sedam

DESIGNERRobin Hicks

GROUP DIRECTOR – PRINCIPALTony Mancini610.688.5553; [email protected]

DIRECTOR OF E-MEDIAAdam Grubb317.219.7546; [email protected]

EVENTS MANAGERJudy Brociek847.954.7943; [email protected]

DIRECTOR OF AUDIENCE DEVELOPMENTDoug Riemer

MANAGER OF EDITORIAL & CREATIVE SERVICESLois Hince

SUBSCRIPTION INQUIRIESCirculation Department, Professional Builder3030 W. Salt Creek Lane, Suite 201Arlington Heights, IL 60005-5025

REPRINTSHeidi Riedl920.397.7056, [email protected]

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SENIOR VICE PRESIDENTRick Schwer

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VICE PRESIDENT OF EVENTSHarry Urban

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2012 JESSE H. NEAL AWARD

WINNER AND GRAND

AWARD FINALIST

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INFILL

City Migration and Preference for Community Could be Harbingers for Infi llContrast the interpretations regard-ing living preferences for demographic groups with U.S. Census numbers that show where people actually live and you have a riddle about future housing demand.

A report from the Urban Land Institute showed that 61 percent of the three major generations polled—Millennials, Gen X, and Baby Boomers—said they would prefer living in a smaller home with a shorter commute than in a larg-er home with a longer commute. More than half also said they would want to live in mixed-income housing that is close to shopping and public trans-portation. Those fi ndings suggested de-mand for infi ll housing that is less car dependent would increase while de-mand for homes in the distant suburbs would decline.

The Brookings Institution also re-leased its analysis of Census data for the nation’s 51 largest metropolitan areas. Those fi gures showed the popu-lation of cities grew faster than those cities’ suburbs in most cases during July 2011 through July 2012 compared with the 2010 to 2011 period. Overall city populations increased 1.12 percent versus 0.97 percent for the suburbs, but the factors to explain this phe-nomenum are not so clear-cut.

Some of the analysis of the Brookings’ number-crunching report-ed in the media attributed this growth to urban revival, while others specu-lated that city residents are unable to

move because their ability to buy in the suburbs has been hurt by the re-cession and slow recovery.

Sixteen of the 20 largest cities posted accelerated growth rates. Among those metros were Chicago, Indianapolis, Ind., Columbus, Ohio, Los Angeles, San Francisco, and San Diego—cities that grew much more slowly during the sub-urban housing boom years. New York led all cities by gaining 161,000 people between the 2010 Census and July 2012, compared with an increase of 166,000 during the previous decade. Los Angeles added 65,000 people compared with 97,000 over the previous 10 years. The fastest-growing cities are in the Sunbelt led by Austin, Fort Worth, Dallas, San Antonio, Charlotte, N.C., and Phoenix.

One Chicago builder benefi tting from the migration to urban infi ll is Andriy Stetsyuk of SmartTech Homes.

His company recognized there was a shortage of new infi ll single-family homes for college educated “tech junk-ies” looking to move into the city or out of their apartments and condos. Stetsyuk and partners adopted designs that take a small footprint and build Energy Star-rated homes, using meth-ods like spraying an air- and moisture-infi ltration barrier from Tremco on the building envelope and installing fea-tures such as a tankless water heater and high-effi ciency HVAC.

Eighty SmartTech homes have sold since the fi rst product went to market in 2010, with fl oor plans from 2,400 to 3,200 square feet and prices rang-ing from $369,000 to $619,000. As land prices increase, SmartTech will unveil a home with less than 1,900 square feet.

“Urban jobs have a lot to do with (peo-ple thinking about) cutting commute

marketupdate

Chicago

San Diego

San Francisco

Indianapolis

Los Angeles

Columbus

www.HousingZone.com/PB Professional Builder 11

time and investing in the quality of life,” said Karen Biazar of North Clybourn Group, the listing agent for SmartTech. “People who raise their children are wanting to come back to the city. It’s also a combination of people with chil-dren, people thinking of having chil-dren, couples that are in partnerships that don’t have children. It’s also about what is enough; since the recession, people are questioning whether they really need a 5,500-square-foot house. 2,400 (square feet) seems to be enough especially for the age groups that are prevalent in home buying.” PB

MORTGAGES

Zillow Survey Finds Consumers Need Mortgage 101

There may be op-portunity in igno-rance, particularly for builders and real estate agents

who make an effort to educate consum-ers about basic mortgage information.

A recent Zillow Mortgage Market–place survey showed that consumers who took an online survey incorrectly answered basic questions about mort-gages nearly one-third of the time. The lack of understanding is not novel since Zillow surveys as far back as 2011 reported almost half of survey participants back then admitted they were not confi dent in their knowledge of home loans.

Survey results showed one-third of fi rst-time home buyers did not know that getting a home loan with less than a 5-percent down payment was possible. Twenty-four percent of home buyers believed that they would fi nd the best interest rates and fees from

the bank that they currently do business with, and 26 percent said they thought they were ob-ligated to close their loan with the lender who pre-approved them. A third didn’t know they should shop around for mortgag-es because they assumed lenders were required by law to charge the same fee for credit reports and appraisals.

One in fi ve, or 14 million home-owners according to Zillow, did not believe underwater borrowers could refi nance. Thirty-one percent believed they have to wait seven years after a short sale or foreclosure to buy a home again. Typically the wait can be two to four years for a buyer with a short-sale history and three-to-seven years after a foreclosure to qualify for a new loan. A third did not know what the term annual percent-age rate (APR) means, and half of prospective home buyers in the survey did not realize mortgage rates changed throughout the day. PB

NEW COMMUNITY

Six Builders Break Ground in Canyon Falls

The fi rst group of builders broke ground in Canyon Falls, a 1,200-acre master-planned community in Denton County, Texas.

Among the builders for the $1 billion development are Ashton Woods Homes, Roswell, Ga.; K. Hovnanian Homes, Red Bank, N.J.; Highland Homes, Plano, Texas; Toll Brothers, Horsham, Pa.; and Plantation Homes, a brand of McGuyer Homebuilders, Houston.

Canyon Falls is slated for 1,700

single-family homes priced from the high-$200,000s to $600,000s. The property will include such features as a community clubhouse, resort-style pool, sports fi eld, playgrounds, and walking trails along a creek. The plan also calls for commercial develop-ment including retail and multifam-ily units. Construction of initial roads and home sites is expected to be com-pleted late this year with home sales beginning in early 2014.

Wheelock Street Capital, Boston and Greenwich, Conn., acquired the prop-erty in July 2012 from Highland Capital Management for a reported $27 million to $30 million. The property had been in bankruptcy protection when Highland fi led for Chapter 11 in 2010. PB

marketupdate

me-not uldvedter y

tes

Commercial Plaza Rendering

Community Lotting Plan

TIME TO RETHINK THE RATE OF RETURN ON ENERGY EFFICIENCY

The housing industry has a common practice of using the rate of return to evaluate the cost and benefi ts of energy effi ciency. The National Association of Home Builders

(NAHB), for example, has a policy that classifi es a change in building codes as cost effective if it returns at least 10 percent in energy savings during the fi rst year.

Another common approach uses a rate of return to discount future energy savings to their present value equivalent. In this context, the rate of return is supposed to capture a home buy-er’s time value of money (how a buyer makes trade-offs when evaluating costs and benefi ts that will be realized at different times). Often, the current rate on a fi xed-rate mortgage is used for this purpose. An important advantage of the one-year rate of return in NAHB’s policy is simplicity. By comparison, the present value calculation is more complicated, requiring many assumptions that are diffi cult to understand, can introduce un-realistic assumptions, and produce unrealistic results.

NAHB economist Paul Emrath contends that the common practice of using the current mortgage rate to discount energy savings is based on several unrealistic assumptions. In particu-lar, the assumptions fail to capture borrowing constraints and do not refl ect the way buyers actually evaluate alternatives when deciding which features to include in a new house.

Three more realistic decision alternatives are the following:• The 11.5 percent average rate households pay on their

consumer debt (from the Fed’s latest survey of consumer fi nances), refl ecting the value of something they could sac-rifi ce at the margin to invest in an additional home feature.

• The 13.2 percent average gross return to owners of rent-al property (from a new survey funded by HUD and con-ducted by the Census Bureau), refl ecting what households would have to pay for a home feature if renting.

• The 14.1 percent average rate of return home buyers say they need to invest in energy effi ciency (from NAHB’s most recent consumer survey).

The current mortgage rate is under 4 percent. Using a rate this low to discount savings on utility bills will classify as cost effective some features that are clearly priced higher than the market will bear. NAHB consumer surveys provide clear evi-dence that home buyers are interested in energy effi ciency and are willing to pay more for it. But a more thorough analysis indicates that consumers are not willing to pay as much for it as an armchair analyst might calculate.

This general problem arises when more costly construction practices that deliver less energy effi ciency than buyers want are mandated. This tends to differentially price fi rst-time buy-ers and buyers with modest incomes out of the market. PB

ABOUT NAHB: The National Association of Home Builders is a Washington, D.C.-based trade association representing more than 140,000 members involved in remodeling, home building, multi-family

construction, property management, subcontracting, design, housing fi nance, building product manufacturing, and other aspects of residential and light commercial construction. For more, visit www.nahb.org.

housing policy briefing

Housing market fi gures in April were mixed with builder confi dence, measured by the NAHB/Well Fargo Housing Market Index, gaining three points from the previous month to 44, and sales of new single-family homes increasing 2.3 percent to an annualized rate of 454,000. Housing starts dropped 16.5 percent to an annualized rate of 853,000 and remodeling activity decreased 3.3 percent to $106.9 million.

HOUSING MARKET SNAPSHOT

BUILDER CONFIDENCE RISES

HOUSING STARTS DROP

NEW HOME SALES INCREASE

REMODELING SPENDING DECLINES

2007 2008 2009 2010 2011 2012 2013

60

50

40

30

20

10

2007 2008 2009 2010 2011 2012 2013

2,250

2,000

1,750

1,500

1,250

1,000

750

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400

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the building By Mike Beirne, Editor

[BUILDING ENVELOPE]

Builders weigh in on their preferred materials and methods for the interior-exterior

barrier that plays a critical role in delivering comfort, energy effi ciency, and durability.

The building envelope has evolved from being the shell of a struc-ture to a growing fi eld of con-

struction science fed by a burgeon-ing industry of manufacturers, design professionals, academics, researchers, code bodies, and contractors.

The roster of options for prevent-ing air and moisture infi ltration has ballooned from mere rolls of building paper to technologies, products, and building methods that have upgrad-ed the discussion about foundations, walls, and roofs with words like sys-tems, load defl ection, and component integration. Inevitably there is a clash between the traditional construction materials and methods with which builders are already familiar and new products and techniques for which vendors are trying to win acceptance.

The number of building enve-lope products increased 40 percent since 1990, according to “The Building Envelope Technology Roadmap,” a report

METHODOLOGY AND RESPONDENT INFORMATIONThis survey was distributed in June 2013 to a random sample of Professional Builder’sprint and digital readers. No incentive was offered. By closing date, a total of 290 eligible readers responded. Respondent breakdown by discipline: 34 percent cus-tom home builder; 24 percent diversifi ed builder/remodeler; 15 percent production builder; 10 percent architect engaged in home building; 3.4 percent multifamily builders; 3 percent manufactured, modular, log home, or systems builder, and 9 per-cent other. All regions were represented with 18 percent hailing from East North Central (Illinois, Indiana, Michigan, Ohio, and Wisconsin), followed by the South Atlantic (16.5 percent), Pacifi c (12 percent), and Middle Atlantic and Mountain regions each with more than 11 percent. Fifty-nine percent of respondents had built one-to-fi ve homes during 2012.

Besides climate zone, which factors infl uence your selection of building envelope materials, design, and/or construction techniques?

Cost and durability are the primary determinants for selecting building envelope options, followed by aesthetics and function SOURCE: PROFESSIONAL BUILDER, 2013

Other 1.0%

Uses recyclable or recyled materials 1.8%

Loyalty/relationship with manufacturer 2.6%

Minimum construction waste 3.3%

Promotes healthy indoor air 3.3%

Warranty 6.6%

Manufacturer’s reputation 6.8%

Ease of installation 7.1%

Low maintenance 7.4%

Aesthetics 10.6%

15.8% Cost

12.3% Durabiity

11.3% Reduces energy consumption

10.1% High moisture resistance/weather

tight construction

compiled by building envelope indus-try representatives in conjunction with the Department of Energy. But the re-port adds that deploying building enve-lope innovations has been hindered by the complexity of the housing industry, which is fragmented by thousands of companies of all different shapes and sizes, making collaboration and com-munication diffi cult.

Consequently, construction re-searchers are not informed about in-dustry structure and market needs. Manufacturers, architects, builders, con-tractors, and code offi cials don’t have a widely accepted rating system for eval-uating new products and systems, and

consumers don’t have enough informa-tion to generate demand for innovative building envelope products just yet, ac-cording to the Roadmap report.

While not a majority, one-third of the 290 home builders who participated in Professional Builder’s Building Envelope survey indicated that along with cost, location, and fl oor plan, building en-velope design was a top consideration for their buyers. Although the knock against builders is that they tend to resist change, they are hungry for new information and rely on such sources as trade publications and online litera-ture, code guidelines, energy-effi ciency ratings, trade shows, and conferences.


exclusiveresearch

envelopeWhich types of water resistive barrier(s) (above grade) do you specify for your new homes?

Zip System wall sheating was the most mentioned barrier in the “other” answer category. SOURCE: PROFESSIONAL BUILDER, 2013

5.9% Other

7.8% Rainscreen

9.0% Spray-on weather resistant coating/membrane

45.2% Housewrap

15.6% Drainable housewrap (channeling system

engineered into housewrap)

16.2% Building paper (felt, Kraft paper)

If you specify rainscreens for some or all of your projects, which method(s) do you use to construct an air space for your rainscreen system?

Newer products have overtaken traditional strapping. SOURCE: PROFESSIONAL BUILDER, 2013

10.9% Other

16.8% Use plastic matrix products

41.2% Use combination of plastic matrix products with water resistive barrier

31.1% Strapping (fasten wood furring

strips over wall studs)

Which type of insulation do you specify for your new homes?

Spray foam is in the top three with batt/blanket and loosefi ll insulation. SOURCE: PROFESSIONAL BUILDER, 2013

1.4% Other

4.8% Wet spray insulation

18.3% Rigid board insulation

31.2% Batt/blanket insulation

21.5% Spray foam insulation

22.8% Loosefi ll insulation (mineral fi ber,

fi berglass, cellulose)

Which types of roofi ng materials do you specify for your new homes?

Asphalt shingles are the most popular roofi ng material for builders. SOURCE: PROFESSIONAL BUILDER, 2013

1.7% Other

2.0% Refl ective/tinted

6.4% Synthetic

6.6% Slate

6.7% Wood shake/shingle

12.1% Concrete/clay tile

40.4% Asphalt shingle

24.1% Metal


[BUILDING ENVELOPE] exclusiveresearch

Have the resources (time, labor, and material) your company assigns to caulking and gasketing systems for sealing the building envelope changed in the past 24 months?

Builders are paying more attention to sealing leaks and gaps in the building envelope. BASE: 279 PROFESSIONAL BUILDER’S BUILDING ENVELOPE SURVEY

2.9% No, we’re spending less today

55.2% Yes, we’re spending more today

41.9% We’re spending about

the same

Which type(s) of energy-effi cient window technologies have you specifi ed in the past 12 months for your new homes?

Some builders indicated they use triple pane with low-e coating and inert gas fi ll for north and south walls. SOURCE:

PROFESSIONAL BUILDER, 2013

3.6% Other

1.1% Tintable/switchable glass

3.9% Units with integral blinds/shades

5.7% Insulated frames

6.5% Insulated triple pane with low-e coating

8.9% Tinted window

50.9% Insulated double pane with

low-e coating

19.4% Argon/Krypton-fi lled units

In general, have the resources your company invests in building envelope materials and construction changed in the past 24 months?

What gets installed between the drywall and exterior goes a long way toward reducing warranty costs and call backs. BASE: 279 PROFESSIONAL BUILDER’S BUILDING ENVELOPE SURVEY

0.7% No, we’re spending less today

36.2% We’re spending about the same amount

63.1% Yes, we’re spending more today

Which types of siding/exterior materials do you specify for your new homes?

More than half of the builders surveyed chose siding, veneers, and stucco. SOURCE: PROFESSIONAL BUILDER, 2013

0.3% Other

2.2% Texture coating

2.2% Aluminum/metal siding

3.7% Concrete/concrete block

15.0% Fiber cement siding

4.9% Composite siding

12.9% Stone veneer

11.1% Brick veneer

8.3% Wood

9.1% Stone

9.5% Brick

11.0% Stucco

9.6% Vinyl siding

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exclusiveresearch[BUILDING ENVELOPE]

Are you involved in or have you encouraged your home buying customers to participate with utilities in incentive programs that offer credits or monetary rewards for using building envelope materials/design that reduce the consumption of electricity and/or heat?

Incentive programs offered by utilities could be the pull factor for new materials and building methods. BASE: 279 PROFESSIONAL BUILDER’S BUILDING ENVELOPE SURVEY

15.8% Sometimes

58.4% Yes

25.8% No

Compared with two years ago, are home buyers more or less receptive to the long-term benefi ts (energy effi ciency, weather-tight construction, durability) of a home with a quality-built building envelope when they are deciding to buy?

Home buyers need more information before they infl uence builders by demanding building envelope innovations. BASE: 284 PROFESSIONAL BUILDER’S BUILDING ENVELOPE SURVEY

13.4% No, building envelope is not a factor in their buying decision

53.2% Somewhat, there are other more important factors

33.5% Yes, building envelope construction

is among their top considerations

Which information sources do you rely on when considering alternative or new building envelope materials and building methods?

Builders are hungry for information from authoritative sources about building envelope materials and methods. SOURCE: PROFESSIONAL BUILDER, 2013

Other 7.1%

Government studies/recommendations

(i.e. Dept. of Energy) 2.5%

Trade associations 5.3%

Other builders (word of mouth) 6.4%

Consultants 7.1%

Manufacturers 8.9%

22.3% Trade publications/online literature

19.9% Building/energy code guidelines

10.9% Energy effi ciency rating

9.6% Trade shows/conferences


BIGGAINERS

Sure, low interest rates were the main engine that pulled the home building industry up 10.9 percent to 649,000 completed houses in 2012 compared with the previous year. Market momentum might have been enough for some builders to generate some kind of rev-enue gain after enduring a long economic season of cutbacks and

inactivity. But the companies who reported revenue growth of 40 percent or more have a common strand in their stories. They started setting the table for their rebound as far back, in some cases, as the 2006 housing crash.

After selling off speculative land holdings in 2006 and 2007, Fred Delibero, president and CEO of Summit Custom Homes in Lee’s Summit, Mo., knew he couldn’t continue to run his company as he did before the recession. So Summit Custom scrapped its product offerings and focused on building only two-story houses, which appealed to a buying group that was ready to deal just as housing started to bounce back.

“I recognized early on that we needed to differentiate ourselves in the market,” Delibero said. “We were building a broad spectrum of plan types at different price points.”

Many builders might have deemed the supply and demand situation for prime lots to be a big picture variable that was beyond their control. But rather than wait out the downturn, managers for Granite Ridge Builders decided to become their own land developer.

“Many people asked me: If a lot was bad fi ve years ago, is it still bad? Yes,” said Tony Reincke, president of the Fort Wayne, Ind.-based company. “[Many] people picked the good ones, so we had to reproduce our own good lot inventory.”

Filing for bankruptcy can not only be disappointing, it can also create acri-mony and sever relationships. Yet Jeff Caruso navigated his way through the rough seas of Chapter 11 reorganization with tons of communication. So much so that Caruso Homes, Crofton, Md., held on to its ties with investors, suppli-ers, and the trades. The company is leaner and running more effi ciently with back-offi ce systems that handle contract management, punch lists, and social media tracking. Today the builder also is one of the top revenue gainers on our chart based on percent change between 2012 and 2011 fi nancial data.

Almost 26 percent of the 242 builders who submitted fi nancial data for Professional Builder’s annual Housing Giants report (see May 2013 issue and HousingZone.com) recorded revenue exceeding 40 percent. They turned the downturn into an opportunity to retrench and improve. Some even hired more talent and raised marketing budgets.

We reached out to 11 builders on our list of Big Gainers so they could share their strategies for success. PB

By Mike Beirne and Kyle Clapham

The road to double-

digit revenue

growth during the

recovery started

with pre-planning,

re-examination, and

retrenching during

the recession.

[BUSINESS STRATEGY]


businessmanagement

COMPANY NAME HEADQUARTERS 2012 REVENUE

2011 REVENUE

2012 VS. 2011 REVENUE %

2013 GROWTH FORECAST

1 WCI Communities Bonita Springs, Fla. $139,000,000 $42,550,000 226.7% 25%

2 Caruso Homes Crofton, Md. $47,000,000 $20,000,000 135.0% -

3 Reliant Homes LLC Loganville, Ga. $17,532,000 $7,477,000 134.5% 100%

4 Galaxy Builders Ltd. San Antonio, Texas $57,627,947 $24,600,000 134.3% 25%

5 CB JENI Homes Plano, Texas $32,789,435 $14,589,545 124.7% 80%

6 Fortune-Johnson Inc. Norcross, Ga. $192,000,000 $92,811,000 106.9% 10%

7 Legacy Homes Stockton, Calif. $32,282,000 $16,000,000 101.8% 100%

8 Polygon Northwest Company Bellevue, Wash. $298,651,803 $151,680,324 96.9% -

9 The Warmington Group Costa Mesa, Calif. $121,031,000 $62,316,000 94.2% 10%

10 CastleRock Communities Houston, Texas $120,000,000 $62,000,000 93.5% -

11 CBH Homes Meridian, Idaho $85,349,948 $44,290,000 92.7% 37%

12 Marlyn Development Corporation Virginia Beach, Va. $85,819,339 $45,000,000 90.7% 0% - 5%

13 Century Communities Greenwood Village, Colo. $132,962,746 $70,365,000 89.0% 75%

14 Keystone Group Inc. Greensboro, N.C. $36,612,000 $19,992,300 83.1% 20%

15 American Legend Homes LLC Lewisville, Texas $132,163,296 $72,323,400 82.7% 5%

16 Lombardo Homes Shelby Township, Mich. $118,000,000 $64,665,000 82.5% 25%

17 Simmons Homes LLC Owasso, Okla. $67,279,269 $37,706,000 78.4% 8%

18 Sabal Homes LLC Mt Pleasant, S.C. $22,884,652 $12,845,462 78.2% 30%

19 LGI Homes The Woodlands, Texas $149,481,596 $85,900,000 74.0% 45%

20 Homes by Dickerson Raleigh, N.C. $43,000,000 $25,000,000 72.0% 35%

21 DSLD LLC Denham Springs, La. $198,045,911 $115,850,063 71.0% 40%

22 Keyland Homes Prior Lake, Minn. $38,000,000 $22,500,000 68.9% 0% - 5%

23 James Engle Custom Homes LLC Olathe, Kan. $64,500,000 $39,000,000 65.4% 2%

24 Ashton Woods Homes Roswell, Ga. $533,267,837 $323,400,000 64.9% -

25 S & A Homes Inc. State College, Pa. $75,260,000 $45,967,000 63.7% 15%

26 SummerHill Homes San Ramon, Calif. $99,200,000 $61,000,000 62.6% -

27 Stevens Fine Homes Wilmington, N.C. $57,034,817 $35,442,982 60.9% 18%

28 Legend Homes Portland, Ore. $23,192,407 $14,435,823 60.7% 18%

29 Jimmy Jacobs Custom Homes Georgetown, Texas $66,182,376 $41,931,090 57.8% 15%

30 John Mourier Construction Inc. Roseville, Calif. $85,000,000 $54,000,000 57.4% 12%

31 Impression Homes Fort Worth, Texas $9,815,000 $6,240,000 57.3% 30%

32 Ence Homes St. George, Utah $30,346,350 $19,371,029 56.7% 0%

33 Boone Homes Inc. Manakin-Sabot, Va. $33,689,374 $21,738,579 55.0% 33%

34 Signature Homes Hoover, Ala. $124,243,930 $80,967,348 53.4% 1%

35 Wood Partners Houston, Texas $228,100,000 $149,000,000 53.1% -

36 Bonterra Builders LLC Matthews, N.C. $43,610,490 $28,548,947 52.8% 65%

37 Oakwood Homes Denver, Colo. $89,906,225 $59,230,460 51.8% -

38 The Builders Group of West Alabama LLC Tuscaloosa, Ala. $13,438,579 $8,865,200 51.6% 20%

39 Stylecraft Builders Inc. College Station, Pa. $48,000,000 $32,000,000 50.0% 25%

40 Summit Custom Homes Kansas City, Mo. $36,000,000 $24,000,000 50.0% 94%

41 Allen Edwin Homes Portage, Mich. $91,000,000 $61,000,000 49.2% 40%

42 Granite Ridge Builders Inc. Fort Wayne, Ind. $42,697,399 $28,671,013 48.9% 10%

43 Scott Felder Homes Austin, Texas $65,360,000 $44,076,000 48.3% 30%

44 Devon Street Homes Houston, Texas $15,466,325 $10,541,751 46.7% -

45 Braselton Homes Corpus Christi, Texas $21,931,000 $14,950,000 46.7% 21%

46 Main Street Homes Midlothian, Va. $68,900,000 $47,109,843 46.3% 15%

47 True Homes Monroe, N.C. $117,000,000 $80,000,000 46.3% -

48 Cornell Homes Media, Pa. $53,300,000 $36,511,268 46.0% 38%

49 History Maker Homes North Richland Hills, Texas $66,446,937 $45,600,000 45.7% 43%

50 Rodrock Homes Lenexa, Kan. $40,965,817 $28,117,542 45.7% 32%


All of the good lots had been picked over. So rath-er than buying the bad leftovers, Granite Ridge Builders created its own lot inventory.

“We became our own developers,” said Tony Reincke, president of the Fort Wayne, Ind.-based builder. “We’re trying to pinpoint the really good locations, do the devel-opment ourselves, and that has worked out famously.”

Granite Ridge stopped buying lots fi ve years ago. The company prepared for pent-up demand by hiring subcontractors to set up lots in markets where houses haven’t been built or where construction wasn’t very active during the past fi ve-to-10 years. The 8-year-old company niche-marketed its way to $43 million in rev-enue last year, a 48.9 percent jump from 2011, on 276 closings. Reincke expects the company’s volume to hit $50 million this year; the builder is on pace to sell 350 homes.

Another niche market that is paying off for Granite Ridge is the villa concept—enclaves or subdivisions where the builder or property manager, not the home-owner, maintains the exteriors and landscaping.

“People are really enjoying the no-maintenance (as-pect),” Reincke said. “One thing that was unexpected in that niche market was that young professionals, not just the retired people, love that market.”

Another opportunity is the U.S. Department of Agriculture’s Home Loan, a program that offers

consumers a zero-percent loan and low interest rates with no private mortgage insurance for purchasing homes in USDA-designated rural areas. Granite Ridge used the program to help buyers build in small towns and in small veteran communities that are near bigger markets where people commute to work.

Reincke also staffs full-time draftsman and decora-tors at a very large studio where buyers can go to cus-tomize their new home plans.

“People really do enjoy customizing to the way they want and, as long as we can educate them about the products they can pick from, they make those decisions pretty easily,” Reincke said.

[BUSINESS STRATEGY]

GRANITE RIDGE BUILDERS

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Reputation matters. But fl ashing your company’s credentials after emerging from Chapter 11 reor-ganization can be as tough as mixing a yard of

concrete with a hand trowel. Crofton, Md.-based Caruso Homes fi led for bankruptcy protection in 2008, liquidat-ed much of its land holdings, and emerged from reorga-nization in 2009 as a leaner company with 30 full-time employees, down from 160 before bankruptcy.

To combat the doubters and the naysayers, CEO Jeff Caruso implemented a policy of no surprises and “100-percent communication” with buyers, subcontrac-tors, trade contractors, and suppliers.

“If our investors ever had any questions, we welcomed them right into the offi ce and said, ‘Let’s take a look at what we’re doing,’” Caruso said. “We keep them up to date with reports. Every investor we ever did a deal with has come back to do a second deal with us. It’s because we always had an open-book policy with them.”

Though the builder is smaller than before its Chapter 11 fi ling, Caruso Homes saw 2012 revenues grow 135 percent to $47 million and expects to double its closings this year. The company operates with more automat-ed systems for contract management, punch lists and tracking emails and social media activity. Rather than building houses in Virginia and Maryland that averaged more than 3,400 square feet priced between $600,000 and $900,000, Caruso went smaller with houses

averaging 3,000 square feet priced in the $400,000s. But that product is changing because the company stayed on top of changing trends by conducting focus groups with buyers.

“We redesign our product constantly to meet the needs of the buyers,” Caruso said. “The buyers are going right back to where they used to be. The two-story fam-ily room was for a short period of time seen as a little excessive, but they’re back in demand. “

He added that buyers did pull back to smaller houses for a while, but the market-rate buyer today is looking for the same type of bigger house designs they were looking for fi ve years ago.

“Even though we went through reorganization, our buy-ers are pleased that we never missed a beat,” Caruso said. “The message was [that] Caruso Homes is in it for the long run; we had an open-book policy with everyone, and our customer is No. 1, no matter what. All our subs and employees had to remember to take care of the buyer be-cause your reputation is what matters. Our buyers never had to give up anything (because) of the downturn.”

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Circle 759


Warmington Residential set up its stellar growth in 2012 by believing in the impending recovery as early as 2010. The Warmington Group divi-

sion backed that bet by becoming aggressive. The Costa Mesa, Calif.-based builder hired additional staff for its land acquisition team and made improvements in opera-tions, design, and sales. The company closed out unprof-itable legacy deals made before and during the recession. While the downturn zapped access to capital for many businesses, Warmington strengthened its long-term re-lationships with equity investors and lenders, enabling the company to fi nance many deals that other private companies could not.

Next was remaking product. Warmington focused on creating communities that were special and different from anything found in the market. Among those offer-ings were single-story homes and predominantly single-story living—a product that is scarce in the market today. Warmington also married its fl oor plans with true indoor-outdoor living, customizable options for some locations, and features refl ecting tomorrow’s market trends. One such product, the Plan 1 luxury home for the Legacy Collection in Covenant Hills in Ladera Ranch, Calif., was a Golden Nugget Award of Merit winner for the Single Family Detached Home Over 4,000 Square Feet category. At least 18 of the million dollar-plus homes in the Legacy Collection have sold since debuting in November 2012.

Warmington also integrated upgrades and designer

selections throughout its Chateau Interiors & Design di-vision. The company considered extensive research and planning to enhance designs for communities that were better suited for their targeted buyer groups.

Revenue last year for Warmington Group—which also includes Warmington Properties Inc., a full-service real estate company, and its interior design fi rm—soared 94.2 percent to $121 million with Warmington Residential posting 296 closings. The builder expects a 25-percent increase in 2013.

“We have largely done the work necessary to reach these goals in 2013,” said Jim Warmington Jr., president and CEO. “We own and are building the communities, or have entitled the properties we may sell, plus we have hired the necessary staff. To reach our goals for 2014, we are continuing with more of the same. Specifi cally, add-ing staff where necessary, aggressively focusing on land acquisition, and creating special and different commu-nities and home designs.”

Warmington builds single-family homes and multifamily houses and apartments and is most active in California and Nevada.

[BUSINESS STRATEGY]

WARMINGTON GROUP

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Marlyn Development started as a custom home builder when it was founded in 1983, but has since planted its fl ag in the multifam-ily market, building almost 7,000 new units and renovating more

than 1,600 in Virginia, North Carolina, and Maryland.Last year’s revenue for the Virginia Beach, Va.-based contractor jumped

90.7 percent to $85.8 million on the closing of 903 low-rise units. Marlyn expects 2013 revenue to match or slightly exceed 2012. Ninety-fi ve percent of the business is focused on for-rent multifamily construction.

“It has been Marlyn Development’s philosophy of providing a quality prod-uct at a fair value that has carried our company through good times and bad,” the company said in a statement. “We work hand in hand with our clients from project inception until completion to deliver on this philosophy.”

Marlyn credits its growth to being well-versed in all types of construction from affordable to high end, and being able to navigate any type of con-struction fi nancing. Project managers, superintendents, and subcontractors all work toward the common goal of making the owner and developer suc-cessful. Accomplishing that end multiple times helped establish long-term bonds to the point where Marlyn has been the sole builder for some owners and developers for more than 25 years.

“We will continue to follow our philosophy of providing a quality prod-uct at a fair value as we adapt to the changing market,” the company said regarding 2013. “Marlyn has developed a unique pricing structure that has provided nice benefi ts to our clients.”

MARLYN DEVELOPMENT


Growing revenues in 2012 by 57.8 percent from the previous year is a fi gure any builder would be delighted to tout. But the folks at Jimmy

Jacobs Custom Homes also have a lot of pride in another number—70 percent. That’s the baseline percentage of American-made materials that the Georgetown, Texas-based company sources to build custom and semi-cus-tom homes under its Made in America program.

One such home was a mortgage-free house presented last year to an Army staff sergeant who lost both his legs after stepping on an improvised explosive device while serving his fourth tour in Afghanistan. The handicapped-accessible home was featured last year on an episode of ABC TV’s “Extreme Makeover: Home Edition,” one of sev-eral houses the builder has donated since 2006 to veter-ans and needy families through the TV show. American Made launched last September as a way not only to give back but also to create and sustain American jobs by us-ing competitively priced products made in the U.S.

Jimmy Jacobs reported $66.2 million in revenue in 2012 with 144 homes sold in its core markets—Austin, Georgetown, San Antonio, and New Braunfels, Texas. The company projects 2013 revenue will grow 12 per-cent and closings will increase 23 percent. To get there, Jimmy Jacobs will continue sales education for its staff, maximize effi ciency through process improvement, and execute more targeted marketing strategies.

“We have worked to better streamline the sales and building processes internally,” said Rebecca Whitehurst, marketing director. “We have emphasized through coaching and counseling of our sales team that it is im-portant to truly understand our buyers’ needs. We need to be diligent in making sure that we ask the right ques-tions in order to assist our guests in building their dream home. For the building process, we constantly search for ways of improvement through new process creation and tool implementation. By looking closely at our internal processes, we successfully address effi ciency opportuni-ties and continue to improve on our build timeline.”

Jimmy Jacobs offers fl oor plans custom-designed by an in-house drafting team, as well as detailed ceiling treat-ments, commercial-grade cooking appliances, and qual-ity materials including spray foam insulation.

[BUSINESS STRATEGY]

JIMMY JACOBS CUSTOM HOMES


businessmanagement

What do developers like to see in a builder?“We are very effi cient in analyzing deals and

making decisions,” said Kevin Egan, president of American Legend Homes.

The Lewisville, Texas-based company has a couple more qualities that developers admire: a clean balance sheet and very few legacy issues with underperforming communities. Consequently, the semi-custom builder was able to be very aggressive with contracting new lot opportunities since the market started improving in early 2010. In all, American Legend has contracted more than 24 new deals and future phases.

“In early 2011, we hired a new land acquisition manager,

who has been extremely good at developing relationships with developers, builders, and brokers. He has done a tre-mendous job selling what we do and following up to en-sure we are top on the list for any new deals,” Egan said.

The company hired approximately 15 people in 2013 and intends to add four or fi ve more by year’s end. Other changes that have helped the builder grow include add-ing more than 30 new house plans, including a new zero-lot-line product that will be offered starting this fall. American also fed the momentum with a brand-ing campaign that launched in 2012. The “Legends Begin at Home” initiative includes billboards and prints ads in regional and local publications featuring American Legend buyer families in their new homes.

The builder posted $132 million in 2012 revenue, an 82.7-percent increase from the previous year, on 385 closings. Egan expects the company to close 460 homes this year and bank $164 million in revenue.

American Legend and sister company Belclaire Homes build in the Dallas-Fort Worth area, including McKinney, Frisco, Lewisville, Allen, The Tribute, Flower Mound, Celina, and Keller. The 100-percent Energy Star builder allows customers to modify existing plans to meet the needs of their family, with single-fam-ily detached homes ranging from 2,000 to 5,000-plus square feet and prices ranging from the low $200,000s to $900,000 and higher. American Legend has sold more than 1,000 homes in the Dallas-Fort Worth mar-ket since its fi rst closing in 2004.

AMERICAN LEGEND HOMES


When Fortune-Johnson Inc., took on building a $60-million residential mixed-use develop-ment targeting student renters near Atlanta’s

Emory University, the company compressed a 24-month construction schedule into 18 months so fi rst-phase apartments would be available by the start of the 2012-13 school year.

A major part of the preplanning process was exten-sively vetting subcontractors before inviting bids, and then involving those partners in scheduling every day of the project before breaking ground. Having apartments available for rent before the start of the school year was critical for achieving high occupancy. That sort of prepa-ration also helped the Norcross, Ga.-based company de-liver on customer satisfaction and grab repeat business. The approach also complements Fortune-Johnson’s practice of cultivating and maintaining long-term coop-erative relationships with clients and employees.

“Through the recession, we maintained a commit-ment to our strong core values, such as customer ser-vice, integrity, performance, and follow-through, and supporting our greatest asset, our people,” said Brett Fortune, principal and CEO. “Fortune-Johnson is a team-work-based, customer-fi rst company whose goal is to be our clients’ preferred contractor. Repeat business re-mains the mainstay of our growth.”

The 22-year-old company saw 2012 revenue grow 107

percent from the previous year to $192 million off the closing of 1,657 units. Fortune-Johnson expects reve-nue to grow about 10 percent as the multifamily indus-try thrives and Millennials continue to prefer renting over homeownership.

Internally, Fortune-Johnson uses several programs to meet and exceed customers’ expectations. The training program TEAM—Training Everyone Absolutely Matters—was compiled from more than 20 years of building ex-perience and defi nes company procedures and expecta-tions to new employees. A quality assurance program reinforces the company’s mantra, “Do it right the fi rst time,” and ensures that a standard of excellence is con-sistently achieved.

Fortune-Johnson has built more than 15,000 units across the Southeast and Mid-Atlantic states. Projects range from garden-style dwellings to complex, high-density mixed-use developments including apartments, student housing, and retirement communities.

[BUSINESS STRATEGY]

FORTUNE-JOHNSON INC.


businessmanagement

Fred Delibero recognized Summit Custom Homes had to zig when other builders zagged. Not that there was much competitive activity happening in

the Kansas City market during 2008, but the founder, president, and CEO of the Lee’s Summit, Mo.-based com-pany knew he couldn’t just wait for business to come knocking at his door. So Delibero scrapped all of Summit Custom’s home plans and introduced a new line of two-story homes that not only were more effi cient to build, but also offered open fl oor plans that were in line with consumer preferences.

“We focused on only two-story plans because, un-like ranch plans and main-fl oor master plans typically bought by empty nesters or more established families with older children in the house, two-story homes were appealing to a more fl uid buyer who is in the market more often because of job transfers, marriages, the birth of a child, or a job promotion,” said Delibero.

But there was more than one battlefront to conquer. Summit also focused on solidifying its lending relation-ships and secured the capital it needed to expand into a new playing fi eld with far fewer competitors. With new capital and fl oor plans in hand, company managers wanted to put icing on the cake. In late 2008, the com-pany introduced its Green Build Advantage program, of-fering home buyers more energy-effi cient homes with cleaner indoor-air quality, increased comfort, and a home constructed with sustainable building practices.

“Nobody was building energy effi cient homes in the market at that time, and we came on strong certifying homes to meet the ANSI Green Building Standard at the silver level, and each home we built was Energy

Star certifi ed,” said Delibero. Altogether, it was a recipe for success. Last year,

Summit generated $36 million in revenue with 112 clos-ings, up from $24 million and 77 closings in 2011. The builder is poised to hit $70 million and close more than 200 homes this year, a far cry from the mere 29 proper-ties the company closed in 2008.

Continuing the zig-while-others-zag playbook, Summit doubled its marketing budget while competitors cut back. The company bought print media ads at the fraction of the cost publishers charged when the housing market was on fi re. Summit also went heavy on direct mail mar-keting, fi ne-tuned its sales processes, redesigned the web-site, and bolstered relationships with co-op Realtors who brought in buyers. Behind the scenes, Delibero focused on hiring more talent while managers implemented new software aimed at improving production times.

Now that the recovering housing market has raised competition, Summit is taking advantage of its position as Kansas City’s most active single-family home builder in terms of permits to further grow unit volume and sales.

“We’re keenly aware that with new competitors in the market, we have to be sharper than ever before,” says Zalman Kohen, senior vice president and COO. “Focusing on further refi ning home plans and broadening our prod-uct offerings as buyers for ranch and main-fl oor master product return in stronger numbers will help us capture market share. In addition, our team is actively manag-ing issues caused by increased demand such as sourc-ing skilled labor and controlling material costs increases. And we’ve focused on securing more land and lot inven-tory to meet our needs as we continue to grow.”

SUMMIT CUSTOM HOMES


DSLD began offering larger house plans that most-ly disappeared from its markets in Louisiana and Mississippi after the industry bottomed out a few

years ago. The J-swing product, which features a side en-try, invokes a home typically handled by a custom build-er; but DSLD saw an opportunity to provide unconven-tional value by incorporating the layout in its production housing, said managing partner Saun Sullivan.

Encompassing a living area from 1,800 to 2,600 square feet, the J-swing product ranges from $210,000 to $270,000 and includes amenities such as a fi replace, 42-inch custom cabinets, crown moulding, and a litany of perks in the master suite: double vanity, jetted tub, sep-arate shower, and walk-in closet. DSLD introduced simi-lar fl oor plans in a few of its subdivisions two or three years ago, but now offers the home package in “almost eight or nine” of them, said Sullivan, who attributes the product’s success largely to burgeoning activity and ra-zor-thin inventory following a lengthy downturn.

“There is an increased demand because a lot of the older product is tired; there wasn’t a lot of stuff pro-duced over the last fi ve years,” he said. “So you’re not really competing with a 3-year-old house—you’re com-peting with an 8-year-old house.”

DSLD reported $198 million in revenue on 1,116 closings in 2012, up 71 percent from $115.8 million on 687 closings in 2011. The builder ventured farther south in Louisiana and entered the Thibodaux and Houma markets in the past year, but remains focused on fi lling holes in its cur-rent footprint—such as Lafayette, La., where it recently expanded after limited initial exposure.

Even though DSLD has enjoyed considerable growth

in the last few years, Sullivan understands that quality control, sales communication, and ultimately customer satisfaction—all of which drive referrals—will keep the company afl oat when the housing market takes another dive and prospective buyers must deliberate more be-fore they make decisions.

“As the market comes back, a lot of builders are go-ing to get some market sales where the people just have to move,” he said. “When the economy gets bad again and people have choices, that’s what’s going to separate companies that care about it from a lot of companies that don’t.”

DSLD, which adheres to a strict 42-day frame-to-fi nish schedule, has found it increasingly diffi cult to uphold that assurance amid a spreading labor shortage within the industry. “It’s defi nitely more a struggle now to fi nd qualifi ed people than it ever has,” Sullivan said. “A lot of these guys have been burned by the last six years, so their willingness to just go and do absolutely whatever to chase volume is going to be limited.”

The company has produced YouTube videos that aim to train new trades entering the business, and has sought to ensure its existing partners have the ability to “beef up” their crews when appropriate. Sullivan pre-dicts DSLD will grow slightly less in 2013 compared with previous years because its markets did not plummet as far as Phoenix, Atlanta, and Las Vegas, and thus do not have as much ground to gain back.

“I’d much rather see slower downturns and slower upturns than being down 25 percent a year then up 25 percent a year,” he said. “That creates all sorts of logis-tical problems.”

[BUSINESS STRATEGY]

DSLD HOMES

businessmanagement

CENTURY COMMUNITIES

Century Communities took advantage of opportuni-ties during the downturn to buy land at discounted rates and started amassing favorable lot positions

in 2009, said Rob Francescon, co-CEO of the Greenwood Village, Colo.-based builder. Century focused specifi cally on acquiring fi nished infi ll lots in master-planned commu-nities when purchasing distressed properties so that the company could “go vertical” quickly in quality locations.

“By doing that, we were able to roll those communi-ties out starting in 2011, more in 2012, and continuing into 2013 and beyond,” Francescon said.

Century reported $132.9 million in revenue on 545 closings in 2012, up 89 percent from $70.4 million on 252 closings in 2011. The builder raised $241 million in a 144A private equity placement from institutional investors in May. “It puts us in an excellent position for future growth both inside the Colorado market and outside the market,” said Francescon, who adds Century recently extended beyond the Colorado market and entered Austin, Texas.

The margin-driven Austin market has fundamentals similar to Denver—the average home sales price is just over $250,000, for example—and boasts housing inven-tory of less than three months, as well as permit activ-ity well below historical norms, Francescon said. “Even though we’re not back to a normal year in terms of per-mit levels, there’s still a lot of supply that didn’t get put into the market over the past fi ve years,” he said.

Based on Century’s recent expansion and the opening of new communities, Francescon expects the company to double in size in 2013. He also predicts year-over-year growth in 2013 will be more than 70 percent, a testa-ment to the hard work of a core team that has been together for more than fi ve years.

“We’ve worked together through the downturn; from a systems and operational standpoint, we’ve been able to hone those internal controls so that we’re positioned for future growth,” Francescon said. “Like any builder that survived and grew during the downturn, you had to have the right internal controls; you had to have the right cost structure.”

Century’s foresight afforded the company enough time to identify shrewd deals and enough cash to pur-chase valuable properties from banks and builders in fi -nancial trouble. As the builder rolls out those new com-munities, it will incorporate product updated to meet current home buyer trends: open fl oor plans, higher en-ergy effi ciency, and more indoor-outdoor living.

Fresh off a $241-million private equity investment, Century now has the capital and scale necessary to sat-isfy its plan for future growth, Francescon said. The next step will be an initial public offering of the company’s stock, he added.

together for more than fi ve years.


In an effort to better understand market conditions, CBH Homes acquired distressed properties throughout the downturn in hopes of developing them and capital-

izing on their value when the housing market returned, but the strategy could not keep the company from hit-ting “rock bottom” in 2011, said Corey Barton, president of the Meridian, Idaho-based builder. When business stalled, Barton bought existing homes through auctions and trustee sales with the intent of fl ipping them for profi t.

Barton did not understand why prospective buyers opted for a used house as opposed to a “shiny” new one, a consumer choice that contributed to the builder’s lack of success back then. “To us it was just a no-brainer, but we kept losing sales to some of these existing markets with foreclosures,” he said.

Although his new business venture never produced considerable yields, the process educated Barton about what buyers were seeking and what they were willing to pay for it.

What ultimately helped CBH capitalize on the up-swing came down to inventory, land purchases, and its Outstanding Partner program. “We had the inventory, and we were prepared when the market came back with over 200 homes sitting, available, and ready to close,” said Ronda Conger, vice president. The builder was able to buy developed land at favorable prices in highly sought-after areas, adding to its edge in the market. At the end of 2012, CBH launched its Outstanding Partner “Get Some” Realtor co-list program, which led to an im-mediate 40-percent increase in sales.

CBH reported $85.3 million in revenue on 548 closings in 2012, up 92.7 percent from $44.3 million on 316 clos-ings in 2011. The builder learned home buyers were try-ing to get everything they could at the lowest price possi-ble while the market remained depressed. “The buyers at that time, especially in 2012, they were just asking for ev-erything: closing costs, fences, landscaping,” Barton said.

As a result, CBH became more competitive by making key changes in its new product: different fl oor cover-ings (hardwood over tile), upgraded cabinets, and more windows, to name a few. The downturn had been es-pecially hard on the Boise market and, consequently, most builders just stopped building there. The pent-up demand for new homes resulting from a dearth of sup-ply now dictates the market, said Barton, who estimates 15-percent growth for the company in 2013 based on its attractive locations, increased competitiveness, and better communication with buyers.

CBH has been running lean for so long that Barton acknowledges the challenge of fi nding qualifi ed workers and properly training them about the company’s proto-col, culture, and mission. But he comprehends the im-portance of the task.

“By far, the people are the most critical part of our busi-ness going forward,” he said.

[BUSINESS STRATEGY]

CBH HOMES

businessmanagement

Submit your homes and plans and

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being among the best of 2013!

Be a part of our annual Professional Builder Design Awards and see

how well your designs, plans and

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VISIT WWW.HOUSINGZONE.COM TODAY TO SUBMIT YOUR ENTRY.


[BUSINESS STRATEGY]

WOODSIDEWAYBy Kyle Clapham, Managing Editor

1977Company

founded in Utah

1984Woodside becomes

top Utah home builder

1988Company enters the

Las Vegas market

1992Entry into the

Phoenix market

n 2005, Woodside Homes closed nearly 3,700 hous-es and generated revenue in excess of $1.4 billion, becoming one of the largest private builders in the United States. Three years later, the company de-faulted on more than $730 million in debt after the housing bubble burst and, as a result, fi led for Chapter 11 bankruptcy.

Joel Shine, who agreed in 2009 to advise Woodside’s creditors committee and forestall the company’s liq-uidation, brought plenty of pertinent experience with

him. A third generation home builder, Shine had run the gamut of the industry, from managing and leasing a port-folio of properties to overseeing the development of thou-sands of residential units. But perhaps most importantly, Shine had spent the prior decade handling investment funds that focused on home building.

“One of the real advantages that I was given was I had been an equity provider to some of the larger public and private home builders around the country, so I had a chance to see what really worked and what didn’t work,” he says.

Woodside overleveraged its land positions during the housing boom and suffered crushing losses when the mar-ket fl oundered. “Home builders were putting current pay debt, and a lot of it, on dirt,” Shine recalls. “The leverage ratios and the terms that were applied to land loans just didn’t make sense.”

North Salt Lake, Utah-based Woodside, like many of its

industry counterparts, was effectively broke. Shine’s direc-tive as consultant included determining which areas of the company warranted restructuring, and which should re-main intact despite the builder’s fi nancial troubles. Shortly after starting his new gig, Shine discovered Woodside’s pre-vious management had done an admirable job keeping the company lean and employing dedicated professionals who took pride in building a quality brand.

In fact, Woodside sold about 2,500 homes and cap-tured market share while the company reorganized for 14 months. When the builder emerged from bankruptcy in 2010, Shine took the reins as CEO and tasked the in-dependent board that he chairs with developing a long-term strategy for shareholders and employees. The senior management team opted to downsize, meaning Woodside would become a regional builder. A new corporate mantra was crafted to encapsulate the company’s focus on being robust yet nimble: “Look public, act private, make money.”

Woodside made a concerted effort to keep its fi nan-cial problems separate from its home building opera-tions. General Counsel Wayne Farnsworth managed the bankruptcy and worked with Chief Financial Offi cer Rick Robideau to ensure the company’s restructuring did not confl ict with the builder’s primary function to construct quality houses and take care of its customers. Executives even asked Woodside employees for a special concession. “We never thought of it as a bankruptcy,” Shine says. “We

THE


businessmanagement

How one home builder gained market share during

bankruptcy and emerged more effi cient than ever

1997Woodside enters

the Southern California market

1998Entry into the Sacramento, Calif., market

2000Division opens in California’s Central Valley and Woodside becomes the nation’s 46th

largest builder with 1,786 closings

2001Woodside closes 2,225 homes, becoming the 32nd largest builder

sort of requested that everybody in the company take that term out of their lexicon.”

Shine, who had presided over two other corporate “turn-arounds” before Woodside, learned while growing up in a family-run home building business that any one person can only do so many things particularly well. By breaking up re-sponsibilities and allowing senior personnel to concentrate on specifi c tasks, the company expedited its restructuring as well as a comprehensive makeover of its product.

TOUGH DECISIONSShine and his corporate team fi rst had to determine how

many divisions in which the company would operate and how large the builder would be geographically upon its re-launch. Before defaulting on its fi nancial obligations, Woodside built homes in nine different states including Florida, Maryland, Minnesota, and Virginia. By the time he became CEO, Shine had walked every one of builder’s 200 projects across the country, he says.

Shine worked closely with key personnel to create a spreadsheet and grade each existing division based on 12 criteria. They considered the leadership qualities of current division presidents as well as the people immediately sur-rounding them. The company then judged each division’s land holdings and, in collaboration with John Burns and his

staff at John Burns Real Estate Consulting, gauged the pros-pects of each specifi c housing market for the next few years.

Examining Washington, D.C., Shine and his team ac-knowledged their division president’s strong, capable lead-ership and agreed the area’s market outlook seemed favor-able. But Woodside’s assets in Washington, D.C., left much to be desired—the company had just one attractive land holding amid a slew of top-of-the-market acquisitions that lost their value once housing crashed.

Shine concluded rebuilding the relatively small Washington, D.C., division and its balance sheet would prove more diffi cult than what it was worth; furthermore, the region presented logistical hurdles being so far away from the builder’s Salt Lake City headquarters. Woodside’s senior management decided to shutter the division and, after careful consideration of the builder’s other loca-tions, moved to sell all of the company’s assets east of San Antonio. The resulting capital was redeployed to the re-maining western divisions.

Woodside now builds homes in just fi ve states—Arizona, California, Nevada, Texas, and Utah. Shine refers to the number of jobs being created relative to the amount of homes being built as a measure for assessing the strength of a particular market; a healthy one generally refl ects a 1.1 or 1.2 ratio of jobs to homes, he says. Housing in the western U.S. generally fell furthest during the downturn

Consultant Joel Shine became CEO after Woodside exited Chapter 11.


[BUSINESS STRATEGY]

2004Woodside acquires a Texas builder and

enters the San Antonio market. Operations also begin in Fresno, Calif.

2005Woodside closes 3,676

homes and becomes the 27th largest builder

2008Woodside closes

2,072 homes and is the 20th largest builder

2009Woodside closes

1,788 homes

and, as a result, markets such as Phoenix exhibit the great-est imbalances between supply and demand.

By retrenching west of San Antonio, Woodside posi-tioned itself to take advantage of the hottest markets during the housing recovery. “Every market that we are in right now has a minimum of a 2-to-1 jobs-to-permit ratio; so they’re creating twice as many jobs as we are building houses,” Shine says.

The company is outperforming the market in many of its communities including Andalusia in Summerlin, Nev.; Countryside in Yuba County, Calif.; Bella Brisas in Sacramento, Calif.; Lindsay Park in Mesa, Ariz.; and Arrowood in San Antonio. Woodside’s Belvista community in Temecula, Calif., is the top-selling attached new-home development in the Inland Empire. In Utah, Woodside’s Foxboro community is one of the largest master-planned developments in the state. The builder’s redesign of Foxboro tripled the commu-nity’s sales pace and sparked rejuvenation.

Woodside remains committed to designing and building innovative single-family and multifamily homes targeted to entry-level and move-up buyers. The company’s lean overhead inspired a new design approach that focuses on personalization without sacrifi cing price or value.

BETTER BY DESIGNIn order to reinvent Woodside, Shine knew the builder

would have to accelerate sales and increase its footprint in the western U.S. markets. He tabbed Jay Moss, who had served as a regional president with KB Home for 25 years, as chief mar-keting offi cer and charged him with reshaping Woodside’s sales team and revitalizing the company’s product.

Moss started KB Home’s Las Vegas division from scratch and built up infrastructure predicated on process, people, and product. He repeated the task in 2000 when KB shipped him to Southern California to shore up the builder’s op-erations in the region. Not long after arriving at Woodside and evaluating the landscape, Moss found the company’s divisions were managed well but that its sales team never underwent serious training.

Woodside’s “Better by

Design” approach aims to deliver an exceptional

home buying experience to

every customer by allowing complete

personalization and simplifying

decision-making.


businessmanagement

2010 Woodside emerges from restructuring

2010Woodside closes 1,444 homes and

sells off East Coast assets to redeploy capital in the western divisions

2011Woodside closes

888 homes

2012Woodside recapitalizes with $75 million equity and $128 million debt from investors

“I wanted the best sales force in the business because that’s what I thought it would take to turn it around,” says Moss, who understood Woodside’s salespeople were still a bit shell-shocked from the housing crash and the builder’s subsequent bankruptcy.

He contracted a professional coach to conduct intense training sessions and hone the company’s sales approach. Moss was careful not to include marketing concepts in the instruction because he wanted Woodside’s sales team focused on improving communication with prospective home buyers, an important consideration in light of the builder’s publicized bankruptcy.

With sales training underway, Moss turned his atten-tion to the company’s product, which he admits was a bit outdated. Woodside’s homes for the most part did not embrace an open fl oor plan, a growing preference among current home buyers. The company’s product used arches to increase openness, but that architectural feature largely went out of style, Moss says. Woodside’s houses relied on a formal look replete with large interiors and bulky fur-niture, which clashed with the much more casual living environments sought-after in the current market.

For Woodside’s new product, Moss considered the kitchen and greater room as the command center of the home and incorporated aspects that appealed to generational housing and families facing the possibility of boomerang children. He worked with consultants such as John Burns and refer-enced consumer research to build a profi le of current home buyers; consequently, Woodside began distributing an initial survey that placed prospective customers into one of three categories: traditional, contemporary, or eclectic.

“We weren’t just selling exteriors, we were selling interi-ors based on people’s taste,” says Moss, who spearheaded a new company initiative, “Better by Design,” which aims to deliver an exceptional home buying experience to every customer by allowing complete personalization and sim-plifying decision-making.

Instead of dragging prospective buyers to a cavernous, overwhelming design center, Woodside allows them to con-struct an “inspiration wall” in the sales offi ce based on their

personal tastes. Customers can choose from hundreds of different looks and combinations arranged by professional decorators—a thoughtful way to compete with resales.

Moss fi gured “Better by Design” would thrive in the en-try-level market but was surprised to fi nd the program resonated with third-time move-up buyers in Phoenix. Shine lauds the company’s creative new approach to home design and concedes the initiative took time to refi ne. “It’s the part of the company that we completely turned upside down,” he says. “And the feedback we’ve gotten directly from the buyers is that we’re right.”

LOOKING FORWARDOn October 22, 2012, Woodside recapitalized with $75

million in equity and $128 million in notes that refi nanced its existing debt. The recapitalization signifi cantly in-creased the company’s liquidity, strengthened its balance sheet, and created the right fi nancial structure to facilitate the builder’s aggressive growth plans.

Woodside reported $313 million in new residential con-struction revenue and 1,300 closings in 2012, up 45.1 percent from $215.6 million and 888 closings in 2011. When asked whether the private builder will follow the lead of Taylor Morrison and others and eventually sell stock to sharehold-ers on a public exchange, Shine says delineations of public and private often miss the point: It all depends on how a company is capitalized. For now, Woodside does not need to raise money through an initial public offering, he adds.

“We’re probably a lot closer to being ready to go public in terms of reporting and good, sound fi nance and account-ing management than most of the companies that are go-ing public,” he says.

Woodside reduced its staff from about 800 employees during the builder’s peak to approximately 200 after the company’s restructuring, and Shine praises all of them for their contributions and sacrifi ces in saving one of the na-tion’s most successful home builders.

“At the end of the day, the letterhead doesn’t mean any-thing,” he says. “It’s a bunch of people working together.” PB


you know you’ve made it as a writer when you get hate mail or, barring that, sincere emails challenging you to quit avoid-ing a subject or imploring you to take something up of par-ticular concern to a reader. The

hate mail was abundant last fall after I published my se-ries on the supplier-trade shortage and dared to suggest that a guest-worker program and path-to-citizenship for

non-resident labor might be the only way out of our labor quandary. One of the emails proclaimed, “It is people like you that are destroying this county!”

Regarding more constructive emails, I received several of late noting how many of my articles and columns in the past few years have concluded that at the end of the day, year, decade, or millennium, the single variable that trumps all others in the organizational success equation is company leadership. More specifi cally, the direction leaders set, the culture they build, the systems they create, and the attitude

By Scott Sedam, Contributing Editor

the seven

[LEADERSHIP]

rank has its

responsibilities


businessmanagement

they promote. Having attained the offi cial age of sage-dom (which is 60, for those keeping score at home), I can state un-equivocally that this is not a theory or even a hypothesis. After 35 years of intensely studying organizations, I have not a shred of doubt. This is not ideology. This is simply a fact of organizational life. It’s all about the leaders.

What the readers challenged me with was, “What makes a leader?” Specifi cally, what does a good leader do? I start-ed working on this topic about 10 years ago with a couple of blog posts and a short article. I felt I had the basic model, but then something interesting happened—the greatest crash of any major industry in the history of the United States. It is one thing to lead when times are good or perhaps merely stable. The degree of diffi culty rises exponentially while try-ing to lead people through a storm of epic proportions. Some leaders who looked great before the fall lost their luster al-most overnight. Others less heralded rose to the challenge and emerged on the other side with healthy companies now growing with the re-emerging markets. Having worked with more than 200 builders along with a host of suppliers and trade contractors, I have not seen it all, but I have seen more than I could have imagined. That exposure combined with my former life working for and with companies such as U.S. Steel, Motorola, John Deere, Caterpillar, Cummins Engine, and several units of the old Bell System, among many oth-ers, provides me with a pretty strong database. Thus my job now is to fl esh out the model, write about it, and hope I can illuminate the issue for others. So let me take you back to the

specifi c day that launched my evolution from merely observ-ing the good, bad, and ugly of leadership to a more conscious attempt to analyze and understand it.

It was 1992, more than 20 years ago, that eleven corporate vice presidents of a major home builder sat around the con-ference table as the senior vice president led them through another weekly exercise in non-decision-making. The MO of the senior VP was to appear initially supportive as each VP made his or her report. He then took carefully aimed pot-shots and asked unanswerable questions such as:

“Ron, so far it looks to me like Todd here has wasted about a half-million on his software analysis when we all know what the problem is. What do you think?” Then there was, “I am committed to a system of paying our superintendents 100 percent by this list of monthly metrics I created. I am ex-cited about this. Do you think it will work, Tony?” The SVP, of course, had never spent a single day working in the fi eld. And how vividly I remember this one: “John, how long will it take the Atlanta division to recover from Steve’s recent supplier-trade training efforts that have all of the subs up in arms?” After pitting each VP against the other and taking everyone down a few notches, the SVP fi gured he had opened them up to change and would then regale everyone with principles from the latest management book he had read. Most of the VPs learned to hide their angst and just play along.

On this particularly frustrating Friday morning of going through multiple rounds with such questions, the talk fi -nally turned positive—to golf games, country clubs, and

responsibilities of leadership


[LEADERSHIP]

boondoggle trips that harbored only a vague business connec-tion. One of the VPs, Steve, evi-dently telegraphed his growing dis-gust over the fact that the team had once again managed to avoid making any number of tough, important decisions needing their attention. The SVP looked at him with a smirk and declared loudly in front of all, “Well Steve, I see you do not approve. You understand, don’t you? Rank has its privileges?” Steve, never one to back down from a fi ght, returned the look with the iciest of stares and said in a low but emphatic voice, “What I understand mostly is, rank has its responsibilities. If we spent as much time on responsibilities as we do on rank, maybe we’d be getting somewhere.” With that, Steve picked up his notebook and coffee, turned his back, and walked out of the room. A stunned silence ensued. Someone tried to make a joke, but it fell fl at. Another said, “Well, there goes Steve again,” but the group was already breaking up. Something important had happened, but they weren’t quite sure what.

I’d like to say that everything changed that day in the com-pany, but that would be a fantasy. Yet Steve’s brazen com-ment did launch some good discussion about what our roles were, and what the roles of leaders in an organization should be. I began watching leaders that day even more closely than I had the previous 10 years. What did this one do so well? Why did that one fail miserably? How about this one who just sort of spun in circles? What did leaders do that made work easier or harder for people? What behaviors garnered respect from the troops? Which behaviors turned the willing work-ers into a pack of attack dogs or into indifferent employees just putting in their time and hanging on for the weekend? Which actions by leaders enabled people to do even more than they thought they were capable of?

Take a quick trip over to Amazon.com, click books, enter “leadership,” and you get more than 93,000 hits. I don’t have the year it might take to sift through all the listings, but I did review the fi rst eight or 10 pages and I saw at least 50 books on leadership, half of which sounded compelling and about half of those I have read. Interesting though, I have not read any for more than fi ve years, and I don’t plan to until I get my own thoughts crystallized on the subject. It is impossible not to be infl uenced by others but as I launch into this effort, I want to have the cleanest sheet of paper available. There is the distillation of my years of experience trying to answer

the question, what makes a leader? The answer is not found

in rank and privilege. The answer is found by understanding a leader’s

responsibilities. The order is not impor-tant, except for No. 7. By putting the other

points fi rst, the last one takes care of itself.

the seven responsibilities of leadership:

1. responsibility to self If a leader is not together personally, keeping an organization on track will be extreme-ly hard. Responsibility to self is the antithesis of self-absorp-tion, but it does require a high level of self-understanding. The ethical and moral compass that is missing in so many of our companies is because leadership has either lost its own bearings or lacks the will to extend ethics throughout the company. “Do the right thing” is popular to say, but know-ing what that is and doing it consistently is harder. As Dr. W. Edwards Deming would have said, “It’s essential, that’s all.”

2. responsibility for strategy Leaders set the direction of a company, the highest level of strategy. Strategy requires fi rst and foremost knowing which business you are in, which business you are not in, and why. It requires an un-derstanding of your market and your customers on a macro level. Strong, clear, consistent strategy results in strong op-erational tactics deployed by managers up and down the line. Do that well and associates at all levels will understand the company strategy and how their work is tied to it.

3. responsibility to people Jim Collins, author of “Good to Great,” said it best. Leaders are responsible for getting the right people on the bus and in the right seats. Then a leader challenges them, removes obstacles, and sup-ports them relentlessly. Leaders who insist on such an ap-proach in the fi rst few levels fi nd it becomes pervasive all through the company, all the way through the selection of suppliers and trades. But overlook that one division presi-dent’s malfeasance because he is producing good numbers


businessmanagement

and you erode the foundation. There are no secrets in a company. Everybody knows. You can destroy in one day what took 10 years to build.

4. responsibility to customers The purpose of a business is not to make money. The purpose of a busi-ness is to solve or prevent problems, fulfi ll needs, and remove pain. Do those things well and you make money. Money is the result. Don’t believe it? Ask any customer what they care about: their problem or your profi t margin? Knowing this, how can we have any other attitude toward customers but to love them, cherish them, and adore them rather than just merely take care of them. Leadership that demonstrates this responsibility continually has half the battle of a successful business already won.

5. responsibility for systems and process The job of a leader is to lead the creation of great systems and processes where solid everyday people can do a good job. This responsibility is so often missed. You cannot build a business on the backs of heroes. There are not enough heroes and not enough hours in the day. The business landscape is littered with the bodies of good people, even great people, who gave up because they toiled away in broken systems and could not accomplish good work. Here is the acid test: Do your systems and processes help your people get work done, or do they hinder work getting accomplished? You don’t know, so ask them—beg them—to be brutally honest. Now lead the effort to create new, improved, and more productive systems.

6. responsibility to community True leaders understand that customers, employees, suppliers, and the company are all part of a community. Accepting responsibility for that community should go without saying, and the stron-gest leaders won’t have to be reminded. Their frustration is not being able to get to all their ideas that will help make the community better. Ideas are essential, but never discount the meaning—and joy—that comes from getting your hands dirty in the process of helping others. Wear a little dirt and your em-ployees will respond in kind. There is no greater builder of re-spect and appreciation than working hard together to improve the lives of others. Do it for the right reasons, but prepare to be amazed at the positive impact it has on business.

7. responsibility to investors A key result for any business is profi t. Anyone with a checkbook—or a debit card—understands the basic principles. Finance and

accounting make things a lot more complicated but the es-sence is unchanged. The stark truth is if investors make their return, most don’t care much how you do it, and many won’t even care about the long-term future prospects. That’s why people still invest in tobacco companies or soft drink manufacturers. So leaders have to care even more. The ul-timate responsibility to investors is to create a sustainable organization that generates consistent profi t in an ethical and moral way. If you take care of the fi rst six responsibili-ties, is it even possible to do otherwise?

George Box, a renowned professor of statistics at the University of Wisconsin who passed away this year, left us a remarkable quote that is good to remember when consider-ing any model that tries to explain some part of our world be it statistics, chemistry, adolescent behavior, or leadership. “All models are wrong. Some models are useful.”

The statement is important to remember as we venture into this series. My concern is not did I capture every last nuance of leadership, but did I establish a useful model to analyze the impact of leaders and, more importantly, help you build your own leadership paradigm?

Was Steve right? What if leaders and managers spent as much time worrying about their responsibilities as they do their privileges? Would our companies improve? Would our employees have greater satisfaction? Would our customers love us? Would the investors line up to offer us more money? We can say for sure that Enron, Tyco, and Madoff Securities would never have become household names. But do the re-sponsibilities of leadership apply to your business, even down on the street level? I’m interested to hear your feedback.

In Part II of this series we’ll take a deeper dive into each of the seven responsibilities for more examples of what works and what does not. In Part III, we’ll look at seven builders who have shown exceptional leadership in one of the seven responsibilities and show you how to create the complete package. If we garner enough response, perhaps we can go with Part IV, written by you. Send me examples of your best and worst leadership stories and whether I can use your name, of course. That could provide the deepest learning of all. PB

Scott Sedam is president and founder of TrueNorth Development. His articles appear in Professional Builder and his Lean Building Blog appears on www.HousingZone.com. Sedam welcomes your feedback at [email protected] and invites readers to join the LeanBuilding Group on www.Linkedin.com.


Consider that all traffi c is not the same, costs the same, nor does it convert to sales at the same rate. New-home sales is a contact sport and a numbers game, so traffi c can be defi ned as the number of contacts a build-er’s sales organization makes directly with a prospective buyer.

To answer my question—Doing what you are doing, the way you are presently doing it, how many sales and how much revenue are you missing?—here is a checklist of some key ar-eas to focus on for capturing more sales from the traffi c cur-rently being generated.

STAFFING AND AVAILABILITYYou are in the retail business, not the real estate business.

Individual potential buyers who constitute what is called traf-fi c are far more likely to buy if they come into personal contact with a well-motivated and skilled sales professional. Pay at-tention to the advice of retail genius Sam Walton: “To be suc-cessful in the retail business, be open for the convenience of the customer, not the convenience of the company.” The time between Thanksgiving and Christmas is harvest time in retail. During that period most stores report as much as 50 percent to 80 percent of their sales revenues and profi t for the entire year. To maximize that opportunity they staff up and stay open longer hours. For most builders, weekends are similarly har-vest time. Most potential home buyers work during the week and have weekends to shop and compare. Regrettably, I see too many builders’ sales offi ces are not open for the convenience of the customers, in particular on weekends. That oversight can be easily fi xed. By simply keeping weekend hours, more contacts will be established. Another mistake is the one-sales-person phenomena. If at any time during the weekend there

is at least one more prospective customer than salesperson in the offi ce at the same time, sales are potentially lost. This im-balance is easily fi xed by recognizing that one good new-home salesperson working in concert with a well-trained and moti-vated associate (assistant), in particular on weekends, will out-sell two of the best salespeople working without an assistant.

SALES READINESSAssuming proper retail staffi ng, the next step is to assure

that each of your salespeople is contact ready. Providing more traffi c to any sales person who cannot consistently demon-strate extraordinary presentation, communication, and sales skills congruent with diligent follow-up is simply wasting valu-able resources and giving them more chances to fail.

RANKING THE QUALITY OF TRAFFIC Since all traffi c is not created equal, it’s critical to properly

assess the traffi c that is generated. Individual units of traf-fi c should be ranked or rated based on what a salesperson has found out about that customer regarding their level of being ready, willing, and able to buy, rather than how they feel about them. If a customer does not buy on the fi rst visit, the ranking will directly impact the quality and diligence of the follow-up.

MEASURING CONVERSATION RATES W. Edwards Deming laid it all out when he said, “You cannot

manage nor improve that which you don’t measure.” But as they say in the computer world, GIGO—Garbage In, Garbage Out. Consequently, getting as close as possible to recording and accounting for all traffi c, not just what is perceived to be the good ones, should be your goal.

• BY SOURCE: Tracking the genesis of each particular unit of

By Bob Schultz, Contributing Editor

Measuring and ranking the quality of your potential buyers

are among the keys to raising your conversion rate.

[SALES & MARKETING]

CAPTUREMORE SALES


sales&marketing

traffi c and its conversion to sales, e.g. website, advertising, Realtor, referral, signs, and social media, is critical in order to know which types of generated traffi c are providing the highest conversion possibilities. Understand that a Facebook “like” is not a unit of traffi c unless and until it comes into personal con-tact with someone in your sales organization.

• BY SUBSET: The more you review and mea-sure those elements, the more likely you will develop a passion for the important metrics that will increase conversion ra-tios. You also will discover that new-home sales, as a numbers game, is much like what was portrayed in the book and movie, “Money Ball.” Then you can begin to drill down among other activities and events such metrics as the following:1. Sales by customer visit—what percent

on the fi rst, second, third, and beyond. 2. By the number of customers taken

through a full presentation and to a home site or completed home on the fi rst visit.

• BY COST: When something becomes per-sonal, it becomes important. Traffi c gen-eratioin for builders paying the bills is just that. So reviewing the costs related to the various sources of traffi c and their conver-sion rates will provide insight and desire to focus on more cost-effective and produc-tive activities. For example, in my seminars

FROM TRAFFICTHAT YOU’RE ALREADY GENERATING

around the world I always ask salespeople this ques-tion: “Would you like me to recommend to your com-pany that they increase the rate you are paid for mak-ing sales? As you can imagine, without exception, the answer is always a resounding “yes.” Knowing that in their particular company the cost of producing one unit of traffi c is $500, I then say what if we stationed an inde-

pendent auditor at their sales offi ce to track all the traffi c generated. At the end of each day, the auditor presents an invoice for that number multiplied by $500 to be paid by the salesperson, whose compensation was already adjusted upward. When asked if they want me to make that recommendation, no one (except the builder) said, “yes.” Then I ask, hypothetically, if this scenario did occur, what would you do differently? The majority of salespeople answered “better follow-up.”

FOLLOW UP For traffi c that does not buy on the fi rst visit, diligent and

consistent follow-up is vital. Consider that follow-up, or follow-through as my colleague Steve Hoffacker calls it, is just an ex-tension of the fi rst contact. It must be planned, practiced, and orderly with the purpose to get the customer back in one more time. My CIP System (Customer In Process Analysis and Action Plan System) is designed to do exactly that. To obtain a compli-mentary copy of CIP and “How to Increase Registered Traffi c to Measure,” contact me at [email protected]. PB

Bob Schultz is president and CEO of Bob Schultz & The New Home Sales Specialists, a management consulting and sales fi rm based in Boca Raton, Fla. Schultz is the author of two best-selling books, “The Offi cial Handbook for New Home Salespeople” and “Smart Selling Techniques,” and was named a Legend of Redisdential marketing by the NAHB. He can be reached at [email protected]


EED used to be the buzz-word for energy-effi cient homes in the United States, but a new standard in town could be a game-changer: Passive House. This con-

struction standard is the toughest one yet, requiring very low levels of air leakage, very high levels of insulation, and windows with a very low U-factor.

Passive House has its roots in North America, but it blossomed in Europe (see timeline), where it has been an ac-cepted standard for the last 18 years.

“Passive House has certainly taken a big foothold in Germany and Austria and other [European countries],” says Mike Duclos, a Certifi ed Passive House Consultant (CPHC) and principal of DEAP Energy Group in Stow, Mass.

Europeans tend to view their homes as long-term investments of 50 years or more, rather than possessions they’ll outgrow in three-to-fi ve years. “That’s why, in the U.S., Passive House is a slowly growing, organic movement,” Duclos says wryly.

The base theory of Passive House de-sign and construction can be summed up as follows: maximize gains and minimize losses.

“You maximize gains via passive solar heat gains and internal heat gains from mechanical systems and occupants, and minimize losses via a thick insulated building shell and a great airtight layer achieved through air sealing,” says Eric Barton of Biltmore Insulated Concrete, Highland Park, Ill., a CPHC and Passive House Institute US (PHIUS) Certifi ed

Builder who constructs super energy-effi cient building shells. “This keeps the internal heat gains within the building envelope and living areas.”

Barton points out that because the specifi c space heat demand and spe-cifi c primary energy demand require-ments are the same for all climate zones, it’s easier to achieve Passive House standards in a mild climate, such as San Diego, than in a very cold climate such as Duluth, Minn.

Most builders say achieving the standard requires an additional up-front investment of 5-to-10 percent. But Falmouth, Mass., builder Christian Valle says, “The overall incremen-tal costs are not as signifi cant as one might think. The tradeoffs of building a tighter ‘mousetrap’ result in smaller

By Susan Bady, Contributing Editor

American builders and

designers are beginning

to view Passive House as

the new gold standard of

energy performance.

[DESIGN]

LHOUSEPASSIVE

This 2,000-square-foot home in East Falmouth, Mass., has 17-inch thick

exterior walls and R-values surpassing a conventionally built home.

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HVAC systems, among other things, which help offset other costs.”

While Passive Houses are more chal-lenging to build than standard homes, Valle believes that as more builders get on board, the learning curve will shorten. “The building industry has trended toward energy-effi cient con-struction, driven by clients and more rigid energy codes,” he says. “Builders are paying attention to air-sealing and insulation details. That’s what Passive House is really about, in a nutshell.”

As the movement gains momen-tum, though, American window makers are going to have to up their game.

“We don’t make great windows in this country, but that’s starting to change,” Barton says. “Some manufac-turers are stepping up to the plate.”

Reading, Mass., architect Steven Baczek collaborated with Duclos on the Massachusetts home featured here. Baczek laments that “nobody [in the U.S.] makes a cheap, triple-glazed, Passive House-certifi ed window. Your window package is going to go from $20,000 to $45,000. On the other hand, $300 a year to heat, cool, and sup-ply hot water for a 2,000-square-foot house is pretty amazing.”

EXTREME ENERGY SAVINGS

Valle Group’s fi rst Passive House was built for a client who was fi rmly

ARE YOU READY FOR PASSIVE HOUSE?If you’re getting involved in a Passive House project for the fi rst time, here are a few things to consider:

• Become a Passive House consultant. PHIUS offers both virtual and in-class training tailored to North American climate variations, market conditions, and building components.

• Invest in the software. The Passive House Planning Package (PHPP) is available for $225 from either PHIUS or the U.S. Department of Energy. The PHPP calculates energy demand for high-performance buildings. Among other things, the spreadsheet-based software provides data needed to determine a home’s heating and cooling loads and properly size its heating and domestic hot-water systems.

• You’ll have to source windows from Canada or Europe.

• Precertifi cation is required while the home is still in the design phase. After construction is completed, a fi eld test will be performed to ensure the home meets all parameters.

• Get ready for a learning experience, says CPHC Mike Duclos. “Think things through in the beginning, and have a good plan. If you can pull somebody into the team who has done one of these before, that’s a plus.”

design

RAISES THE

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committed to a rigorous standard of en-ergy effi ciency. The home sits on six acres of wooded land in East Falmouth, Mass., and includes a large organic garden.

“The biggest challenges of building this home were the tolerances we had to meet for air leakage, mechanical system design, and insulation values, and the unbelievable attention to de-tail required during all phases of con-struction,” says Christian Valle.

The 2,000-square-foot home has 17-inch-thick exterior walls. The R-values surpass those of a conven-tionally built home: R-105 in the ceil-ing, R-72 in the walls, and R-77 in the fl oor. The custom-built, triple-pane windows, which were made in Canada and shipped to the site, feature differ-ent glazing techniques depending on their location in the house. They allow for maximum solar gain on the south elevations and minimum heat loss on

the north elevations. As a result, says Baczek, 57 percent of the home’s heat energy is generated by the windows.

Valle Group used a combination of insulation types including blown-in cellulose, blown-in fi berglass, and rigid insulation. The virtually airtight home was subjected to several blower-door tests during construction to detect and eliminate any leaks. The cumula-tive leakage of the entire home was the size of a playing card, versus a sheet of plywood for a comparably sized, con-ventionally-built home.

A heat-recovery ventilator captures heat from stale exhaust air and intro-duces it back into the house through incoming fresh air. The home’s heating load is minimal, allowing a high-effi -ciency, electric air-source heat pump to be used in lieu of a boiler or furnace. The actual heating load of 8.6 million BTUs per year is at least 50-percent lower

than the annual heating and cooling energy consumption of a similar home in the same climate zone, Valle says.

At press time, Valle Group was in the design and precertifi cation pro-cess for two more Passive Houses. Construction is expected to begin in the next few months.

FIRST IN CHICAGO

As a college student, Brandon Weiss played professional basketball in Europe. One of the towns he played in was Darmstadt, Germany, home of the Passivhaus Institut. “That really opened my eyes to a better, more ef-fi cient, and more durable way of build-ing homes,” Weiss says.

Today he runs Weiss Building & Development in South Elgin, Ill., and

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design

has a long list of certifi cations includ-ing Graduate Master Builder and LEED AP. Weiss recently built Chicago’s fi rst certifi ed Passive House—a 3,598-square-foot, three-story home in suburban River Forest.

The clients wanted a concrete home, which is not a requirement for Passive House certifi cation but does add signifi -cantly to its durability. Insulated con-crete forms (ICFs) run from the footings to the roof. “Part of the [reason] we did so well on airtightness is the ICFs,” says ICF contractor Eric Barton. “When you pour the concrete into the ICF blocks, it natu-rally fi lls the void, creating an airtight exterior building shell. In a wood-frame house, we would have had to tape all the seams and plywood butt joints. Here, all we had to worry about was taping around the windows for the air sealing.”

Normally a builder would drywall the undersides of the plywood roof trusses,

but in a Passive House the trusses are laminated with ½-inch plywood or OSB, and all the seams are taped. “That helps create an airtight layer on all six sides, which is one of the key details and differences between Passive House construction and conventional con-struction,” Barton says.

Determining the correct shape and orientation of the windows and the amount of shading required was criti-cal, says Oak Park, Ill., architect Tom Bassett-Dilley, CPHC. His efforts were aided by a solar pathfi nder—an engi-neered glass dome with a grid super-imposed underneath it. “We took pho-tos at the center point of each façade at the second-fl oor level,” he says. “It’s not just the south side that matters; all four sides matter in terms of radiation, both direct and indirect.”

In a blower-door test, the home achieved 0.39 ACH (air changes per

A BRIEF HISTORY OF PASSIVE HOUSE

1970sThe phrase “passive solar house” is coined to describe houses with extra thermal mass and extensive south-facing windows; demonstration houses are built in the U.S. and Canada.

1988A conversation between Swedish professor Bo Adamson and German physicist Dr. Wolfgang Feist leads to development of Passivhaus standard.

1991Feist builds fi rst Passivhaus prototype in Darmstadt, Germany.

1996Feist founds Passivhaus Institut and obtains funding for major research project involving hundreds of houses all over Europe.

2003German architect Katrin Klingenberg builds home to Passivhaus standard in Urbana, Ill., and goes on to found Passive House Institute US.

2006America’s fi rst certifi ed Passive House is built in Minnesota.

Chicago’s fi rst certifi ed Passive House in suburban River Forest was built with insulated concrete forms. It features triple-pane

windows and indoor-air friendly products such as zero-VOC paints, adhesives, sealants, and formaldehyde-free cabinets.


hour) at a pressure of 50 Pascals, well within the minimum Passive House criteria of 0.60 ACH. Bassett-Dilley says there are no cold spots: “No part of the house gets below 62 degrees, even when it’s zero degrees outside. One pellet stove can heat the entire house.” There’s no need for a furnace or air-conditioning units; instead, two small ductless, wall-mounted, mini-split heat pumps satisfy the minimal heating and cooling needs.

Weiss focused on indoor-air quality as well as energy effi ciency. He used drywall that absorbs VOCs in the air and no-VOC sealants, caulks, and ad-hesives. “We gave [the house] a two-week fl ush-out period after construc-tion was fi nished,” he says, to ensure there were no chemical fumes or par-ticles left in the air.

The energy-recovery ventilator pro-vides a continuous stream of fresh air to all of the living areas. “Stale or humid air is always being exhausted from the bathrooms and kitchen,” Weiss says. “The air quality in Passive Houses has been shown to be superior [to code-built homes].”

URBAN RENEWAL

Tim McDonald believes Passive House is best suited for large-scale mul-tifamily, urban buildings, and needs to be promoted as such. Long a proponent of sustainability, McDonald’s com-pany, Onion Flats, was one of the fi rst to design and build to LEED Platinum standards in Philadelphia.

“Passive House is just a natural ex-tension,” says McDonald, a registered architect and CPHC. His group has built three certifi ed Passive House projects to date and has three more in the pipeline. “LEED is a great holistic program to deal with sustainability, but [Passive House is a better tool for] getting down and dirty about how you actually reach net zero.”

The company’s projects include Belfi eld, a trio of HUD-funded row-houses for low-income buyers; and The Stables, a 27-unit, market-rate townhome project. The 1,920-square-foot, three-story Belfi eld homes are 100-percent occupied. To date, two homes at The Stables are sold and two more sales are pending. Prices start in the mid-$700,000s for the four-story townhomes, which are approximately 2,500 square feet and include optional fi nished basements.

“We designed [both projects] to be built in a modular factory with con-ventional framing techniques, and we specifi cally designed this building sys-tem so that it could be built with no cost premium,” McDonald says.

The Stables was developed by Onion Flats as a joint venture with Domani Developers. The building generates its own power from a 4.23 kilowatt solar PV array, and the site is 95-percent per-meable with green roofs and porous paving for stormwater management.

Finding materials has been a bit of a challenge, McDonald admits: “We couldn’t fi nd [the windows we needed] in the United States. And we had to invent our own mechanical systems with off-the-shelf components.” PB

[DESIGN]

The insulated concrete forms for this River

Forest, Ill., home are 18 inches thick, and the

wall frames are 24 inches on center. A heat pump

warms and cools the 3,598-square-foot house. P

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Architectural Firm: Killefer Flammang ArchitectsProduct: Illumination Series

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with Nichiha’s Illumination SeriesSleek Sophistication comes home

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By Larry W. Garnett, FAIBD, House Review Lead Designer

Professional Builder’s House Review design team weaves

function and focal points into the heart of the home.

According to virtually every home buyer survey, the kitchen remains the most important room in the house. That’s not surprising since this space is where we really live. As a result, the kitchen must be carefully arranged

to not only function as a food preparation area, but also as a gathering place for family and friends. Typically, the idea of a grand kitchen involves a huge area with a massive amount of cabinets, granite countertops, and high-end appliances. However, a truly grand kitchen can actually be created by paying strict attention to the overall layout and functionality, while creating one or two grand details or focal points. As you’ll see in the following examples, a really outstanding kitchen design simply doesn’t have to be grand in scale or overall cost.

THE GRAND KITCHEN[HOUSE REVIEW]

2013 HOUSE REVIEW THEMES

AUGUST Infi ll Housing Concepts

SEPTEMBER Features That Make a House a Home

OCTOBER Design Hot Buttons for

Different Generations

NOVEMBER Creating “Wow” Exteriors

DECEMBER Versatile Plans

A Florida basement for all those things that don’t fi t in the garage but stuff we Floridians can’t put in the basement.

B Bulk storage closet is just steps from the SUV and the perfect storage spot for a case of vegetables, 24 rolls of toilet tissue, and the giant box of cereal.

C The home studio/laundry is perfectly suited for doing laundry, but isn’t confi ned by one singular task. The space can be used for various arts and crafts from scrapbooking to fl ower arranging.

D A kids study area close to mom but still private is the perfect solution for younger children.

E Pantry for storageF Breakfast café overlooking the lanai and pool

environment beyond.G Adjacent gathering room with seating at the

grazing barH Formal dining salon conveniently located next to

the kitchen for ease of serving.I Gourmet kitchen at the heart of this family

oriented home

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GRAND KITCHEN

A grand kitchen is a great kitchen that works for

today’s family. It isn’t the largest or the fl ashiest room. It is the heart of the home with design creativity and ingenuity that takes the family into consideration. From the garage, there is a bulk storage closet in the hall, a Florida basement room, a home studio/laundry, kids’ study area, pantry, breakfast café, gathering room, and a dining salon all with the large gourmet kitchen as its hub.

ARCHITECTDonald F. Evans, AIAThe Evans [email protected]


A The sunroom off the dining creates a retreat space that brings the outdoors in.B With three walls of cabinetry, this kitchen has an abundance of storage.C The walk-in pantry goes beyond a Costco pantry and contains a fridge, with all

of the appliances plugged in and ready to go, as well as mega storage space.D The family entrance has all the goodies, cubbies/bench lockers, and huge

walk-in family closet, as well as front-loading washer and dryer for incidentals (the workhorse laundry room is on the second fl oor).

E The kitchen has two islands, an 8-foot working island and a 12-foot serving island.

F The kitchen is wide open to a massive informal dining and great room space.

G A nice-sized offi ce is located directly off the kitchen for a convenient place to keep bills, paperwork, etc. This space can be closed off when entertaining.

[HOUSE REVIEW]

ENGLISH MANOR

ARCHITECTTodd Hallett, AIA, CAPSTK Design and Architecture248.446.1960thallett@tkhomedesign.comwww.tkhomedesign.com

PLAN SIZEHouse living area: 5,800 sfPorches: rear 292 sf; front 127 sfGarage: 1,260 sfWidth: 97 feet, 6 inchesDepth: 80 feet, 2 inches

Are grand kitchens just about surfaces and materials? How about, quality, color, and fi nish? No. Those are elements of a grand kitchen, but in order to truly make a kitchen grand the room has to be properly planned. I travel regularly all over the country to work with builders, and I see far

too many kitchens that have great features with wonderful color palettes but simply do not work. If a kitchen’s fl oor plan is not functional, dramatic, and the core of the design, there will be no way to decorate grandness into it. The kitchen demonstrated today is a current kitchen, designed for today’s higher-end buyer that takes advantage of many satellite spaces to become a cornerstone of the home.

Start with planning fi rst. Look at how supporting functions such as a pocket offi ce or a large pantry will relate to the core functions. Think through the relationships to larger spaces such as dining and living. Only when these items have been established and planned carefully is it time to rock the fi nishes.

slands, an 8-foot workingserving island.pen to a massive informalm space.

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THE CHANDLER

ARCHITECTGMD Design GroupScott Gardner, [email protected] McGrath, [email protected]

PLAN SIZETotal: 4,500 sf

The kitchen is a place for family, friends, and the

gourmet chef in all of us to enjoy our everyday lives and special occasions. Today’s busy world has a family coming and going in all directions at all times. This grand kitchen, with its pivotal location to all other living spaces and its something-for-everyone features, is designed to naturally draw the family together.

The hearth room with fi replace and abundant natural light is a great space for casual family interaction. From this kitchen you can access the outdoors from multiple locations and directly access the upper or lower level via the conveniently located stairs. A generously sized mudroom provides a stackable washer-dryer, an offi ce area, access to the driveway, powder room, and ample storage to help keep the living spaces clean and clutter free. The kitchen itself provides generous counter space, expansive views, multiple workstations, and a variety of eating areas.

A Screened porchB Double doors to

screened porchC Hearth room with

fi replaceD Secondary entrance

to rear yardE Informal stairs to upper

and lower fl oorsF Door to two-car garageG Friends and family

side porchH Additional stackable

washer and dryer

I Valet area for jackets, shoes, storage

J Door to one-car garage

K MudroomL Powder roomM Study/offi ce areaN Walk-in pantryO Dining roomP Butler’s pantryQ Multiple islandsR Breakfast areaS Covered porch

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A There’s plenty of counter space and cabinetry along each side of the fi nely detailed cooking area.

B Family area with a fi replace and fl at-screen TV

C Note that traffi c fl ows between the family room and the kitchen.

D Single large dining area for the family and entertaining

E Large pantry that includes space for a freezer.

F Conveniently located utility roomG Outdoor dining and living area are

accessed through double French doors.

[HOUSE REVIEW]

THE WALKER RESIDENCE

DESIGNERLarry Garnett, FAIBDlarrygarnett@larrygarnettdesigns.comwww.smartlivinghomedesigns.com254.897.3518

PLAN SIZEMain house living area: 3,345 sf

Often the relationship to the family room, dining area, and outdoor living space is what actually defi nes a grand kitchen. Although not overly large, this kitchen offers plenty of counter space for food preparation and casual dining along the island. While the

cabinetry and fi nishes are exceptional, the focal point becomes the fi nely detailed vent hood and tile backsplash.

The meticulous attention to detail is evident with the handcrafted corbels and gently curved paneling on the island. Using the same stained wood for the island and the family room cabinetry provides two key elements: contrast with the painted cabinets, and a perfect transition to the family room since the island really looks like a fi ne piece of furniture. Thoughtful design and quality materials, along with proper space planning, result in a truly grand kitchen.

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GARDNER AVENUE

ARCHITECTRick GarzaRPGA Design Group Inc.www.rpgaarchitects.com817.332.9477

PLAN SIZETotal: 4,933 sfGarage: 525 sfPorches: 402 sfDecks terrace: 223 sf

design

The most used space in a home is by far the kitchen, and when you spend most of your time in this

room, it should be grand. Typical kitchens are equipped with a stove and oven combo, a double sink, and a refrigerator. The grand kitchen at Gardner Avenue was well thought-out with entertaining in mind. Stacked double ovens, a triple sink, stove top, and large island with dry visible storage are a few of the luxury amenities in this grand kitchen. Doors open up into the family room to stay in tune with guests while the cook is preparing the meal. A large entertaining dining room opens up to the terrace, while a warming room opens up to the deck and backyard.

A Double doors open the kitchen to family room.B Triple sinkC Large island with visible storage underneathD Double ovensE Butler’s pantry with sit-in deskF Warming room with fi replaceG Dining room with terrace

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INSULATION products

FortiCelCertainTeed’s FortiCel mold prevention system is a topical spray-on application that can be used on virtually any interior construction surface, including dimensional lumber, steel studs, concrete, and fl oor joists. Backed by a 25-year warranty, FortiCel dries in 20 minutes and will not wash off or degrade. This product achieves the highest rating when tested in accordance with ASTM D3273-94 specifi cation regarding mold growth on lumber. For more info circle No. 800

All-Purpose Foil-Faced Polyiso Foam SheathingThis new product from Johns Manville meets 2012 IBC requirements for continuous insulation for residential buildings. It is composed of a uniform closed-cell polyisocyanurate foam bonded on each side to a foil facer—one side has a refl ective foil facer and the other a non-refl ective foil facer. All-Purpose Foil-Faced Polyiso Foam Sheathing is designed for easy installation where high thermal effi ciency is required; it resists heat transfer with R-values up to R-22.8 (RSI-4.01). For more info circle No. 801

Handi-Foam Fireblock

WestDesigned for low humidity,

high-temperature climates, this new sealant

from Fomo blocks the passage of fl ame and

smoke in concealed penetrations from room

to room and fl oor to fl oor. Handi-Foam Fireblock West effectively seals,

fi lls, bonds, and stops air infi ltration in even the

hottest and driest climates of the western U.S. It has

been evaluated per UL ER13919-01, and one 24

oz. can of Handi-Foam Fireblock West may

replace up to 30 standard tubes of caulk. For more

info circle No. 802

EnergyComplete SealantThe design of Owens Corning’s EnergyComplete

Sealant allows the expanding gasket to easily fi ll gaps and cracks that can’t be accessed post-drywall, and also allows easy access to all top plates pre-drywall. EnergyComplete reduces

the chance of mold growth by keeping airborne moisture from entering wall cavities, and creates

a fi rst line of defense against insects and other pests. A specially designed nozzle works with the sealant to help reduce product usage and allows

contractors to seal critical, hard-to-reach joints. For more info circle No. 803

Styrofoam Brand XPS InsulationStyrofoam Brand XPS Insulation from Dow Building Solutions can be installed directly to masonry walls, offering a solid layer of moisture-resistant insulating comfort in one easy step. The widely recognized Blue rigid insulation boards can be installed and left exposed (up to 2”) in basements per Code Report ICC-ESR 2142. Styrofoam Brand XPS Insulation is thermally effi cient, delivering high R-value of 5.0 per inch, and is available in a selection of edge treatments, sizes, and thicknesses. For more info circle No. 804

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productsEXTERIOR DOORS

RolscreenThis retractable screen can be installed on Pella

350 Series premium vinyl sliding patio doors. It rolls sideways across the patio door to provide ventilation

when needed and then rolls back out of sight when not in use, allowing more natural light to fl ow into a home rather than looking

through a screen year-round. When rolled away, Rolscreen is protected from the

elements, children, and pets. Also, there’s no need to take the screen down and store it in

the winter. For more info circle No. 805

Nantucket CollectionSimpson Door has expanded its Nantucket Collection exterior wood doors to include Douglas Fir and Sapele Mahogany, adding to the existing Black Locust and Nootka Cypress options. These doors are manufactured using two-piece laminated stile and rail construction with a modifi ed mortise-and-tenon joinery technique. With a ribbon grain and reddish-brown color, the new Sapele Mahogany doors complement a variety of high-end traditional and modern looks. The new Douglas Fir doors (pictured) offer a tight, vertical grain and a classic aesthetic. For more info circle No. 806

Pulse Entry DoorAccented with clean lines and crisp

angles, Pulse entry doors from Therma-Tru cater to homeowners

seeking to celebrate their own special sense of style. Pulse entry

doors are available in oak-grained fi berglass, smooth (paintable)

fi berglass, and steel, and come in both 6’8” and 8’0” heights.

Therma-Tru offers the door line in four different styles—Ari, Solei,

Echo, and Linea—with four privacy glass options, along with clear

low-E and internal blinds. For more info circle No. 807

W-4500 Wood Folding Patio DoorJeld-Wen’s new W-4500 Wood Folding Patio Door is a wall system that allows homeowners to make the most of the space they have. The W-4500 uses fl oor-supported bottom-roller technology and, unlike many head-supported systems, panels are weighted at the bottom. Available in two-, three-, or four- panel confi gurations, 21 clad colors choices, seven anodized fi nishes, and 10 interior fi nishes, the Jeld-Wen W-4500 gives homeowners the fl exibility they need to open up a larger space and maximize indoor-outdoor living. For more info circle No. 808

2600 Series Door2600 Series wood/aluminum-clad multi-slide doors from Western Window Systems are available with thermally broken frames, cutting-edge low-E glass, and can be built to virtually any size. These systems are popular for their ability to create sliding walls of glass that open up any home to the outdoors, and the stain-grade wood on the interior adds a touch of warmth. Available with massive glass sizes, 2600 Series doors provide great views and let natural light into the home. For more info circle No. 809

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Windows 01 Andersen 02 Pella 03 Marvin 04 Jeld-Wen 05 Milgard

Siding 06 CertainTeed 07 James Hardie

08 Ply Gem 09 LP 10 TAPCO

Faucets 11 Kohler 12 Moen 13 Delta 14 Amer. Std.

15 Elkay

July 2013

Other (specify): _____________________________________________

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Rapid InstallThis new storm door system from Andersen ensures installation takes no more than 45 minutes. Rapid Install comes pre-hung in the factory with drip caps, sweep, and lock case in place. A self-squaring clip system eliminates the need to measure, and a drip cap extender at the top of the door eliminates the need to cut Z-bars. Rapid Install comes in multiple sizes, eight colors, three hardware fi nishes, and clear or decorative glass options. For more info circle No. 810

Factory Stain and Clear Interior FinishesMarvin’s factory stain and clean interior fi nishes involve a multi-step process that takes place before the door is assembled, saving homeowners time, trouble, and the mess of staining and fi nishing on-site. Six stain options are offered: Honey, Wheat, Hazelnut, Cabernet, Espresso, and Leather, in addition to the option for a clear coat. Interior stain and clear fi nishes are available on seven wood species: Pine, White Oak, Cherry, Douglas Fir, Cedro Macho, Mahogany, and Vertical Grain Douglas Fir. For more info circle No. 812

Decorative Doorglass DesignsODL has added two new decorative doorglass designs to the nature-inspired Craftsman and traditional Classic collections. Inglenook (pictured), new to the Craftsman line, is a geometric design that features clear soft wave and micro-iced granite glass with clear bevels and ruby-red fl oral accents. Grace, an addition to the Classic line, features a combination of granite, micro-granite, micro-cubed, and clear bevels. The fl owing center pattern includes soft edges that highlight the structure of the glass panel. For more info circle No. 813

Lemieux Torrefi ed Collection

The Lemieux Torrefi ed Collection by Masonite is the fi rst of its kind in the wood door industry to undergo

a protective torrefaction process, an all-natural green procedure in which wood is heated over time to eliminate its tendency to rot. A 20-year guarantee covers any warping, twisting, delamination, or rotting that might occur. This

collection is offered in each of the 10,000-plus Lemieux residential

entry door design options, and is available in maximum 4/0 widths

and 8/0 heights and in select grade Douglas Fir, Brazilian Mahogany, Appalachian Poplar, and Aspen.

For more info circle No. 815


products

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JULY 2013

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EXTERIOR DOORS

Patio Door SystemsHurd Windows and Doors has partnered with Vista Pointe Architectural Systems to offer a wider range

of patio door products. Vista Pointe’s multi-panel, bi-fold, and telescoping systems are now available with Hurd aluminum-clad patio door panels. Hurd’s range

of glass, wood species, and interior and exterior fi nish options are offered in these unique operating

modes. The door systems are sold through Hurd distributors. For more info circle No. 811

Exterior Color OptionsPly Gem expands its line of design capabilities with the introduction of 38 new exterior color options for the aluminum-clad Mira Premium Series patio door line. Featuring hues such as Black Cherry (pictured), Sunset, and Sapphire Ice, the 38 new colors include the Signature palette, with 27 matte fi nish colors, and the Radiance palette, with 11 new metallic colors. The company also is introducing a custom color program with capabilities of matching nearly any existing color. For more info circle No. 814

*See Nichiha warranties for detailed*See Nichiha warranties for detailedinformation on terms, conditions and limitations.information on terms, conditions and limitations.©2013 Nichiha USA, Inc. All rights reserved.©2013 Nichiha USA, Inc. All rights reserved.

Homeowners everywhere are

falling in LOVE with Nichiha...

Ever-expanding offering of siding textures, profi les and fi nishes

Backed by the BEST warranties*

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Circle 762

Throughout the year, the staff of Professional Buildercollects books, dvds, snacks and personal care items to send “thank you” packages to our troops.

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Brandywine launched its social media compaign two years ago and has been able to generate traffi c spikes drawing as many as 900 visitors at a time, responding to promotions as simple as vote for your favorite fl ower photo. Professional Builder talked to Doug Barisic, VP sales and marketing, about the ins and outs of incorporating social media in Brandywine Homes’ marketing and advertising activities.

QWhat is the objective of your social media outreach, to sell online or to engage online?

AThe primary objective is to engage but with the ultimate objective of driving interest and traffi c to the website. Us-

ing social media, if you don’t engage fi rst, you’re really not going to be successful in driving that traffi c. As far as houses are concerned, I don’t believe you can sell online. You can cre-ate interest online, but the actual sale of a home needs to be in person with personal contact between the sales agent and actually walking through the completed model home. That’s where the emotional connection comes from. But the online portion is a wonderful starting point because it can peak someone’s interest.

QDid Brandywine struggle with deciding to put time and energy into a social media campaign, and how much of

your company’s resources is dedicated to updating, providing content, and tracking?

AAs far as resources that are dedicated to it, really not a whole lot. What we ended up doing was rather than dedi-

cating our own in-house resources to the updating and track-ing of social media, we hired an outside fi rm to do that. Our

Twitter feed is updated two or three times a week. It’s not done by me or by someone sitting in the offi ce doing that. While we certainly have input, it’s done by our PR company with our review fi rst. We decided to use our fi nancial resourc-es rather than our time to do that. What pushed us to dedi-cating resources to social media? With the exception of my dad, Jim (chairman), the company is run by people in their 30s and 40s, and we all use social media. We all recognize especially with an entry level buyer profi le—younger, just out of college, maybe starting a family—that in the next decade social media is going to be a leading resource to attract that buyer to any sort of product. Really it’s a strategic decision knowing that maybe not today but in a few years, the benefi ts from engaging in social media will be huge.

QDescribe your outreach efforts?

AThe main focus is to drive traffi c back to the website. One of the best and most effective ways we’ve been

able to do that is with our direct-to-consumer press releases. Those press releases are put on our blog on the website and when we do that, we also blast out links to the various social media outlets including Twitter, LinkedIn, Google+, etc. All of those are then linked back to the press releases, which have links to all kinds of things located on the website including other press releases, corporate brochures, and direct links to individual community pages where people can sign up on the interest list.

QWhich outreach has been your biggest hit so far?

APeople like free stuff. One of the best ways to get people engaged whether its Facebook fans, Twitter followers,

or whatever, is to have some kind of a competition or drawing where someone can win free stuff. One of the most successful for us, because it brought us actual buyers for an actual de-velopment that was currently selling, was a Facebook contest called, “Eat Well, Live Well.” Every time someone liked our Face-book page, they were entered into a drawing for two VIP “Taste of Orange County” tickets. So we were geographically qualify-ing everybody that entered around a certain community that we just happened to be selling. I don’t know exactly how much online traffi c it generated, but we did get a lot of people walking into the sales offi ce talking about that contest. PB

executivecorner

Brandywine’s Dave Barisic on Diving into Social Media Marketing and Outreach

Dave BarisicVP Sales and MarketingBrandywine HomesIrvine, Calif.

TM

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3030 W. Salt Creek Lane, Suite 201Arlington Heights, IL 60005-5025847/391-1000 • Fax: 847/390-0408

staffEDITORIAL DIRECTOR / PUBLISHERPatrick O’Toole847/954-7919; [email protected]

EDITORMike Beirne 847/391-1051; [email protected]

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CONTRIBUTING EDITORSSusan BadyMark Richardson

DESIGNERElena Mengarelli

GROUP DIRECTOR – PRINCIPALTony Mancini610/688-5553; [email protected]

DIRECTOR OF E-MEDIAAdam Grubb317/219-7546; [email protected]

EVENTS MANAGERJudy Brociek847/954-7943; [email protected]

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Good Experience, Good Margin

Remodeling and custom home building are similar in that both are ‘high touch’ rela-tionships. Not to say that production home building is not high touch; but there is a gap. People who build one-of-a-kind custom houses expect a lot of your time when they commission you to design and/or build their next home. Nobody wants to feel like they are ‘owned’ for any period of time, but if you were somehow able to crawl into the mindset of most clients, they feel like they ‘own’ a good portion of your time during the building process. Yes, they know you have other clients, but they don’t care about that very much.

Good remodelers and good custom builders know how to manage this type of mindset. They know how to make the client feel extremely special during the building process. In short, they know how to deliver a positive and rewarding building experience for clients.

In my years covering the remodeling business, I came across many remodelers who really knew how to properly set expectations about timelines, costs, and any number of other pos-

sible inconveniences posed by an impending project. Some had developed a way of reinforc-ing possible glitches and gaining the client’s verbal acknowledgment of potential negative outcomes with delays and added costs. But this balance is delicate because you don’t want to caution buyers so much that they decide to take their business elsewhere.

By far the best tool for setting proper ex-pectations with clients came from a Houston remodeler named Dan Bawden of Legal Eagle Contractors. He called it a Funk Chart. This chart assigns a happiness value over time.

When a project starts, everyone involved is nearly euphoric. Then as the project wears on and outward signs of construction progress slow down, the clients become ornery. This stage is the low point of the emotional roller coaster, Bawden will explain to clients. But later, when the project is complete, we are all going to feel great again, he adds. This primer really helps the client know what is coming, and that knowledge keeps them on a more even keel during the process.

I say this because I frequently see custom builders devote too much of their time chasing an elusive happiness factor from their clients. In the process, they are increasing overhead against the project and in effect reducing margin.

By observing successful custom builders, I have noted that the best and most profi table know how to deliver a good experience without impacting margins. The next time you do a post-mortem on a completed job, be sure to get a good gauge on overall profi tability, and be sure to account properly for all of your time. You may discover that you’ve not earned as much as you think. If you can set proper expectations about the building process and deliver a great product while making a good profi t, you are among an elite group of builders who stand to make good money in this business over the long term.

editorial

Patrick O’[email protected]

www.CustomBuilderOnline.com Custom Builder 3

I frequently see custom

builders devote too much

of their time chasing

an elusive happiness

factor from their clients.

Are you a Professional?

By Mark Richardson, CR, Contributing Editor

Are you a pro? Do your clients think they are hiring a profes-sional when they do business with you? Do you believe that

paying more for a professional versus an amateur is appropriate?

Defi ning and articulating what is a profes-sional in remodeling or new construction is tougher than in some other industries. Dentists have extensive education, testing, and credentials to prove their pedigrees. Pro athletes have team owners paying their salaries based on game statistics. But being a remodeling or building pro is much less well defi ned. What is not up for debate, however, is that most all of you want to be a professional.

Often times the best way to understand and improve is to look at other occupations. I like to use the athletic analogies because those comparisons generally can be trans-lated to business. Watch a good baseball game, and you’ll see similarities that can be applied to a business. In that spirit let’s look at attributes that make a professional.

1) Commitment to constant improve-ment: A professional believes that constant improvement is a requirement. If you are not focused on always improving and adjusting, you will slip backwards. Investing time on a daily and weekly basis to improving is a necessity not only for the player but also for the teammates (or the co-workers in the case of a business). Professional athletes invest 20-to-40 hours a week into practicing. How much time are you and your team devoting

to constant improvement? If it is not several hours a week, then you may not be able to compete in the future.

2) Thinking long term: A professional balances short-, medium-, and long-term goals. You need to win today’s game but not at the expense of losing the season or being unprepared for the future. Achieving this balance has been tough with the challeng-ing market, but this perspective will affect many business decisions and investments for healthy sustainable growth. Begin with making a weekly one-hour appointment with yourself. Focus on what your business might look like in one-to-three years. You will fi nd this exercise insightful and energizing.

3) Have a coach: Do you have a coach? Do you think there are any professional tennis players who do not have a coach? Very few remodeling owners have a coach. Those who do are generally in much better shape than those who don’t. Having a coach is about be-ing professional. A coach can be an adviser, a trainer, and a sounding board. A coach will help hold you accountable to your success goals. Coaching can take as little as a couple hours a month or more if your needs are greater. We all need a coach to take our game to the next level.

4) It’s a business, not just a game: A professional understands that 80 percent of your success is about business acumen, not just the sticks and bricks. As fans we see the tennis player on the court but in the stands are his business manager and coaches. This support network is counterintuitive for

many remodelers and builders because you got into construction as a result of your passion for the house or your interest in helping homeowners live in a better home. While these are prerequisites to get into construction, the professional understands that a big part of being professional is about the business. It’s about leadership, team development, fi nancial acumen, mar-keting strategies, and sales skills. A profes-sional devotes a large majority of their time to working on the business, not just in it.

5) Failure is not an option: A professional does whatever it takes to achieve the goals and succeed. This mission requires a very high work ethic by everyone and an under-standing that goals are not just wish lists. Goals are what you need to have the vision and direction to know where you are heading. Failing to hit the goals will have an effect on the future of your business.

The real question at this stage is not are you or are you not a professional. The real question is will you do what it takes to move toward a more professional disposition. Like a pro athlete, being professional takes time and commitment. It takes a buy-in by all of those around you. Your business results may go up or down, but you can control your own destiny by how professional you are. CB

Mark Richardson is co-chairman of Case Design/ Remodeling Inc.

and the Case Institute of Remodeling. He is a member of the NAHB

Remodeling Hall of Fame and a Fellow at Harvard University’s

Joint Center for Housing Studies. Richardson is the author of the

best-selling book, “How Fit is Your Business?,” and a forthcoming

book, “Business Themes to Live By.” He can be reached at mrich-

[email protected].

A consistent commitment to improvement and evaluation can move your business from amateur status to the pro ranks.

4 Custom Builder July|2013

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The world may see the curb appeal of a home’s exterior, but it is the interior that homeowners live, work and entertain in. Clients are de-manding that their building professionals offer the highest quality in in-terior finishes, but they can be messy and time-consuming to do right. Luckily, Marvin® Windows and Doors has answered this need with fac-tory-applied stains and clear finishes. These new factory applied stains join an existing option for a factory-applied painted interior finish.

Marvin’s meticulous finishing involves a multi-step process that takes place before the window or door is assembled. Each individual piece of wood is sanded, conditioned, stained and oven-cured. Then the fin-ished pieces are clear-coated, sanded a second time and clear-coated a second time, providing an ideal finish.

Clear finishes undergo a similar multi-step process. Each individual wood piece is sanded, clear-coated and oven-cured, then sanded and clear-coated a second time before assembly.

Available on all of Marvin’s wood species, stains come in six colors: Honey, Wheat, Hazelnut, Cabernet, Espresso and Leather, in addition to the option of a clear coat. With seven wood species available, that’s 49 available stain and clear options for clients to choose from—every-one can find something to match a home’s style.

Factory-applied finishes have an environmental benefit as well. All of Marvin’s finish work is done using state-approved procedures to con-tain volatile organic compounds (VOCs). The company’s products contain no volatile hazardous air pollutants (VHAPs) and they use a waterborne acrylic enamel that’s more environmentally friendly than solvent-borne materials. Since these interior finishes are factory-ap-plied, building professionals can leave it up to Marvin to take care of the entire process.

Easy, beautiful and with all the customization people have come to ex-pect from Marvin…learn more about factory-applied stains and clear finish and find an local dealer at Marvin.com/Finishes.

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BEGIN WITH THE IDEAL FINISH

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The living spaces aren’t large, but they connect and fl ow together well, “so it doesn’t feel like you’re in a tiny space,” says architect Tim Brown. Transom and clerestory windows can be opened to allow breezes to naturally ventilate the house.

sustainable homes

www.CustomBuilderOnline.com Custom Builder 9

Many custom builders, architects, and designers have become adept at creating green homes that offer tangible benefi ts such as lower operating costs and improved indoor air quality and comfort. But there’s

more than one way to achieve sustainability. As this article shows, a modestly-sized home that maximizes passive solar heat gain and ventilation can work just as well as a large one where the clients opted for a hefty investment in alternative energy sources.

Making every inch countWhen architect Tim Brown designed his home in Hays County, Texas, he wanted it to be as small as possible. In fact, he’d have preferred it to be smaller than 2,075 square feet, but his wife in-sisted on having a third bedroom. “I’m glad we [included that], because we have out-of-town guests from time to time,” says Brown, principal of Tim Brown Architecture in Austin.

The home sits on 10 acres of land just west of the Austin city limits, but the footprint is only 2,120 square feet. The property appealed to Brown because it was naturally terraced and didn’t require a lot of site work.

“There’s actually one tier higher than our house,” he says. “If we’d built on that, we could have captured more views, but we wanted a little bit of privacy from the neighbors.”

Brown, who recently started his own practice, previously worked for Barley & Pfeiffer Architects, an Austin fi rm renowned for its pioneering work in sustainable design. “I’ve always had a physics-geared mind, and working with Peter [Pfeiffer] was great,” he says. “He gave me time to delve into the minutiae of energy effi ciency.”

The home’s large shed roof faces north, so it receives no direct sun during the scorching Texas summers. Large windows and doors on the north side help keep the indoor environment comfortable.

Passive ventilation plays a key role in conditioning the inte-rior. Clerestory and transom windows allow cross breezes to fl ow

throughout the house. “The way it’s oriented to take advantage of prevailing winds is really nice,” says builder Cody Schmidt of Schmidt Custom Homes, Dripping Springs, Texas, noting that all the windows except one are operable.

One of the family’s favorite spots is the screened porch on the west side. Two 3-foot-wide doors open onto it from the house. “We naturally ventilate four months out of the year,” Brown says.

Thanks to a rainwater harvesting system, the Browns don’t have to draw water from an aquifer or groundwater source. “The beautiful thing about (the water) is that the pH balance is neutral.

Two Ways to Go Green

These homes are vastly different in size and appointments, but both are sustainable.

By Susan Bady, Contributing Editor

Since all views are to the northeast, Brown placed windows and roof overhangs where they would get minimal solar heat gain during the day. On cool nights, the family enjoys gathering around the wood stove on the screened porch.


You don’t get hard or soft water when you’re showering or wash-ing clothes or dishes, and there’s never sediment on the plumbing fi xtures,” he says. A fi ltration system removes all the minerals from the cloudy, malodorous well water. “At our house, you can fi ll a glass right from the faucet. The water is crystal clear and it tastes great.”

A multi-stage, zoned HVAC system covers 700 square feet per ton and removes humidity without lowering the temperature.

Brown says his utility bills are about $150 per month in the summer. “Our neighbors, whose home is approximately 500 square feet bigger, pay $400 to $450 per month, and they have two air-conditioning units.”

The home received a fi ve-star rating (the highest possible) from the Austin Energy Green Building program, and achieved Gold in the NAHB’s National Green Building Program.

“It’s not an extremely fancy house,” says Schmidt. “It’s very well thought out. You don’t need much electricity for lighting during the day because of the transom and clerestory windows.”

Plus, says Schmidt, it’s a home that stands out in the central Texas landscape. “The red two-story section looks almost like a barn until you get right up on top of it.”

Balancing size with effi ciencyAt the other end of the spectrum is a custom home in Oxford, Conn., that is nearly 8,000 square feet including the walkout lower level. Yet this home, too, is green. “This was going to be their last home, so the clients wanted their wish list fulfi lled in every way,” says John Ricci, president of Ricci Construction Group, Cheshire, Conn.

For an active family that enjoys water sports, the opportunity to purchase two lots in a lakefront development was irresistible. Even though they were planning a large home, they wanted to use as little of the property, which totals 3.47 acres, as possible.

“We tried to get the house to work on one of the lots,” says architect Jack Kemper, principal of Kemper Associates Architects, Farmington, Conn. “But in the end, we had to put part of the driveway on the second lot. And partway through the process we fl ipped it.”

The developer had previously excavated the site to use some of the material in road construction. Ricci had to re-excavate it to accommodate a 3-percent pitch on the driveway and build a 9-foot walkout basement. “With the road being higher than

The design of Tim Brown’s Texas home pays homage to his native New England with the two-story red, barn-like structure on the left. Runoff from the roof is captured and fi ltered to satisfy the household’s water needs.

Reclaimed merbau, an Asian hardwood, was used for the stair treads and the countertop on the kitchen island. The shiplap detail on the wall is another fl ourish that builder Cody Schmidt especially likes.

Architect Jack Kemper broke down the mass of the house into smaller pieces to reduce the scale, and oriented it to capture lake views and take advantage of passive solar heat gain. “We weren’t shooting for anything formal or European,” says Kemper. “It’s an amalgamation, with elements of Craftsman style in the porch columns and French style in the steep hip roofs.”

sustainable homes

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the top of the foundation it was a little tricky, but we built a retaining wall and brought the driveway along the front and put in some additional drainage,” he says.

The fi rst and second fl oors total 5,902 square feet, plus another 2,004 square feet of fi nished space on the lower level. Ricci was determined to make the home energy effi cient and comfortable. Rooftop solar panels heat water in storage tanks for the family’s household needs, and a geo-thermal system heats and cools the home while keeping operating costs low. Closed-cell insulation in the out-side walls and sealed ductwork keeps air infi ltration to a minimum.

Even though retirement isn’t yet on their horizon, the clients wanted to age in place, so Kemper put the master suite on the fi rst fl oor. They wanted a lot of deck space, he says, and a private dock so the family can indulge in boating, water skiing, and other aquatic activities.

The use of native wood species gives the home a warm and intimate ambience despite its size. The fl oors and interior doors are hickory, and the front entry and foyer has custom-crafted hickory columns. The offi ce has a hickory coffered ceiling and a

Above: The great room has 21-foot ceilings with reclaimed wood beams that had to be crank-lifted into place. Rounding out the rustic look is a two-story stone fi replace and hickory columns in the entry foyer. Top left: In lieu of a formal dining room, the clients have a large eat-in kitchen with a coffered ceiling, a walk-in pantry, a large island, and two-tone stained and painted custom cabinets.

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sustainable homes

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sustainable homes

Including the walkout lower level, the Connecticut home featured in this article is 7,906 square feet, but it’s no energy hog. Here are the details:

• The HERS index of 43 is 56 percent better than a comparable code-built home.

• According to a blower-door test, the air infi ltration value of the heating and cooling system is 5400 CFM at 50 Pascals.

• Five geothermal air-to-water, two-stage geothermal heat pumps exchange heat through closed-loop well fi elds located more than 400 feet below ground. The homeowners will recoup their investment in the geothermal system in 10 years, says builder John Ricci.

• Solar roof panels collect energy to heat water in large storage tanks, providing all the hot water for the family’s needs.

COMPARISON OF GREEN FEATURESArchitect Tim Brown’s home in Austin, Texas, is 2,075 square feet. Brown provided the following details:

• In a blower-door test, the home scored 0.7 air changes per hour (ACH). To meet Energy Star requirements, that fi gure must be 2.5 ACH or less; 1 ACH is considered excellent.

• In a duct-blaster test, air leakage was 3.8 percent. The acceptable level of leakage is 10 percent.

• The roof is Galvalume, an aluminum-zinc alloy coated sheet steel made by BIEC International. A portion of the home is sided with the same material.

• Three fi lters—sediment, charcoal, and ultraviolet—purify collected rainwater for drinking. The water is gravity-fed into two 10,000-gallon tanks, where it’s stored until needed.

• The home has low-fl ow faucets, dual-fl ush toilets and an effi cient electric water heater that loses only one degree in temperature per day when it’s shut off. A recirculation system at each shower and bathtub ensures that water isn’t wasted as it heats up.

• Native grasses and plants don’t require irrigation.

• Brown convinced his trash-collection company to haul away recyclable materials from the site, which earned him extra points from the Austin Energy Green Building program.

custom-built hickory fi replace mantel. Two staircases lead to the second fl oor, where the children’s bedrooms and guest suite are located. The guest suite has a private bath and kitchenette.

The clients were eager to use a new material called NuCedar, a vinyl composite product, for the siding and trim. “I would use it again,” Ricci says. “It’s very expensive—three times the cost of regular western red cedar—but it does have a great look and it’s maintenance free.”

The home was named Best Custom Home (7,000 to 8,000 square feet) by the Home Builders & Remodelers Association of Connecticut. CB

The use of native wood species gives the home a warm and intimate

ambience despite its size. The fl oors and interior doors are hickory, and the

front entry and foyer has custom-crafted hickory columns.

DESIGN WITH CONFIDENCETM

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© 2013 H

earth & H

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