Barriers To Entry Level

Because Weekley can't hide behind hype, he also recognizes his company's product must be high quality and backed up with strong customer service to get happy buyers raving to their friends about their new home. A key initiative is continuous improvement in the quality arena.

Weekley is building and billing many of the homes targeted for this buyer as “healthy houses,” tightly sealed homes designed with more energy-efficient HVAC systems that also improve indoor air quality and keep mold-conducive humidity down. Buyers are given extensive information about why their new home is healthier, less expensive to operate, and better for the environment.

The company also offers a proactive home inspection program during the warranty period where inspectors visit the home at three months after closing and again at 11 months to check for defects and help buyers learn more about maintaining their homes. Weekley claims that this technique has driven referral rates from 30 to about 35 percent.

During construction, Weekley also takes photographs of the homes under construction every two weeks and posts them on a special buyers' Web site, where they can see the progress and share the photographs with friends and family. “They love it, especially if they are from out of town,” says Weekley. “And it's a great referral mechanism.”

Recognizing that Gen X and Gen Y buyers not only want their homes built well, but they also want them fast, Legend Homes Corp. has revamped its traditional selling approach. Now when the company targets a buyer, they sell houses like a car dealer sell cars—inviting shoppers to stroll through the huge number of inventory houses in a neighborhood, pick out the one they want, then 30–60 days later, they move in.

“It's almost like a car lot, really,” says Scott Villarreal, the Houston-based, privately held company's vice president of sales and marketing. Legend, which primarily sells entry-level homes in the Houston and San Antonio markets, has geared its entire business plan toward Gen X's and Gen Y's need for speed.

“There's no question that this generation wants things very quickly,” says Villarreal. “What we are doing is putting a lot of inventory into the ground, so we are not just selling them a dream; we are selling them a tangible item. They can go see it and they can say, ‘That is where we are going to live.'”

But the sales process isn't the only arena to see changes driven by this unique buyer group. To fully support the sales concept, the entire business structure has been overhauled. “We have had to change our advertising, the way we build, and everything else to fall in line with that,” says Villarreal

The company's advertising campaign hinges heavily on the immediate move-in theme. “A new home is waiting for you,” is one slogan. Television ads feature a couple standing with a geeky salesman on an empty lot asking, “Don't you have anything that's done?”

Getting young buyers in homes fast has a number of benefits, says Villarreal. Many have credit scores that are so marginal and volatile that a long wait could risk them not qualifying for the loan. “Their credit changes with the wind,” says Villarreal. “We have to get them into the home before they make another major purchase or before they change their minds.” Legend also helps potential buyers clean up their credit if needed. “What we will do is pay for the credit repair for them,” says Villarreal. “We use their earnest money to pay for it, and then we credit it back to them. We tie them to us that way. They feel like we are helping them out.”