“Limited inventory”. “Rising interest rates”. “Barbell of imbalance”. Many homebuyers and real estate professionals alike are finding themselves challenged by the law of scarcity in today’s market. Simply put, there are more buyers than there are homes to fill. Anyone in the home building and buying world is intimately aware of the impact presented to us with this unique situation. There are several factors creating this imbalance.

First-time homebuyers who are starting families and move down buyers who are looking to downsize have put a strain on the inventory availability. The need for each group is similar, the wants may differ, but the need can be met with access to more inventory of affordable homes. With the average sales price of homes increasing exponentially, the opportunities for these buyers is continually diminished. Add in the threat that homes will now cost more because of rising interest rates, and a crisis is created. Interest rates are not currently creating a deferral impact upon buying trends, however, as the prices continue to rise, it prices many families out of the market entirely.

What does this all mean? To put it bluntly, the market needs more homes for the fixed income and average income buyers. Meeting these buyers needs starts at a price point and includes flexible options. Fixed income buyers who are downsizing tend to fall into the group of sellers that are cashing in on the equity increases in their current homes. They may be retiring or reducing their workload, pushing them toward fixed income levels. However, first-time homebuyers have a different hurdle. These apartment and rental home buyers need better programs in place to help them get out of the rental trap. With the increased need for rentals came the increased cost of renting. Many of the options available for renters taps out their income which reduces the chances that they can save money for a down payment. A good rental history shows they can afford the home, but they don’t have the income set aside for a 20% down payment. Does your company offer incentives to first-time homebuyers? What can your trusted lenders do to help them?

Although it is a challenge for the buyers, it is a positive for sellers and builders who are looking to gain a profit after a long stretch of being at a standstill. This opportunity for growth for builders is understandably a cautious undertaking. Willingness to work with these buyers can be rewarding to builders but it is wise to take precautions to avoid the pitfalls of the past. Ensuring that you work with other professionals who are licensed properly and that you are providing a high quality, warranted homes will set you as a builder apart from the crowd. Many lenders are now requesting that a 10-year structural warranty is in place when the buyer is using FHA/VA and USDA financing. As a member in good standing with RWC, you are in a position to meet this requirement and can meet the buyers lending needs.

In conclusion, home buying needs and demands are at the crossroads between availability and affordability. Somewhere in the middle is exactly where builders should strive to be to reap the rewards. As a tradeoff, qualified buyers are willing to settle for higher interest rates if given the opportunity to achieve the long-term goal of homeownership. Scarcity is real, but buyers are abundant.

This weekend marked the 48th anniversary of Earth Day. On April 22, 1970, millions of Americans came together to fight for a clean, sustainable environment and that fight still continues today. Consumer-awareness has increased over the years, and so has the demand for Earth-friendly products and procedures. According to the NAHB, and in conjunction with a series of studies conducted by Dodge Data & Analytics, “at least one-third of surveyed single-family and multifamily builders said that green building is a significant portion of their overall activity. And by 2022, this number should increase to nearly one-half in both sectors.”

You, as a builder, can have a big impact from the get-go; essentially starting with a clean slate for every home you build. How can you contribute to the home’s carbon footprint? Simply look around a typical house. There are opportunities everywhere to make improvements or conserve. Do you incorporate environmentally-friendly features such as water saving faucets and toilets, low VOC paints and adhesives, and energy-efficient appliances and systems? Not only is saving money for the long haul important to buyers, but the way the home itself impacts the future (and present) environment is also significant.

House hunters today have a lot of choices when it comes to choosing a builder. Will you measure up? Do you have special certifications such as LEED or Energy-Star? Have you won awards for your ecological principals? If green building is in your wheelhouse, then show off -- highlight these practices on your website, social media, on promotional materials, and by word of mouth! Those are exactly the types of things that consumers today are attracted to.

More and more builders are joining the green home movement with sensitivity to nature preservation and homeowner requests. Slowly but surely, eco-friendly elements are becoming the ‘standard’. If you haven’t done so already, incorporating just a few of these building practices will be beneficial for your business. With this buying preference in mind, there is much opportunity and value in this market. Prospects will certainly do their research when planning for their dream home and you may just win them over when Mother Nature is in your corner.

It is perennially important that builders focus on keeping whatever profits they can generate by managing their risks and limiting their potential liability. Homeowner claims for defective construction can eat away profit in the form of repeated customer service and punch list work, prolonged disputes with customers, payments to disgruntled homeowners, and attorney fees.  Here are some suggestions for limiting that exposure.

Employ proper construction practices. This may seem like an elementary point, but contractors who are building new designs in unfamiliar locations or who are desperate for sales are more likely to fall short in this regard. Proper education for workers, regular inspection by builder representatives, and professional oversight from engineers and attorneys, for example, as needed, can limit builders’ exposure to homeowner claims and to other risks like OSHA fines and penalties.

Watch for and avoid subcontractor problems. Your contract is with your customer. If a subcontractor’s work harms your customer, that customer will look to you to make it right. Use capable subcontractors and inspect their work so that you know you are getting what you pay for. Make certain your subcontractors are insured and consider being named as an additional insured on their liability insurance policies.

Service your customer. As we so often hear in lending and home building advertisements, the purchase of a newly built home is almost always the largest transaction your customer will make in his life, and he will likely spend ten or twenty or thirty years paying for it. Consequently, your customer will expect you to address any reasonable post-settlement concerns he has about your product. Prompt and courteous communication with home buyers after the sale and faithful attention to those concerns that are properly your responsibility will not only create a positive buzz about you as a builder but will also reduce the chances that a homeowner will sue you.

Avoid the problematic customer. Some customers are simply not worth the trouble. They will often demonstrate this early in the relationship, before the contract is signed, by making impossible demands on your time, asking for incredible reductions in price, or complaining about other builders they have seen or other businesses with whom they have had disputes. While some such demands and complaints may be legitimate, it is important to recognize the customer who will never be happy. That kind of customer limits your ability to make a profit on a house, often retains a lawyer to sue you and should be avoided whenever possible.

Shift the risk. Make sure you have adequate insurance to protect you against liability risks and take full advantage of your associates’ insurance policies by being named an additional insured whenever appropriate. Purchase a warranty product to provide to your home buyers to shift some of the risk for construction defects onto a third party.

Don’t be afraid to settle homeowner cases. If sued or threatened with suit immediately ask your attorney for an assessment of the chances of success and an estimate of what it will cost to get to that result. Too often clients complain that fighting a lawsuit has cost them more than settling it earlier would have. Some battles must be fought, but not all of them. Pick the ones you want to fight and have at it.  For each of the others, make a good business decision and solve the problem on the most cost-effective basis possible.

Manage your attorney fees.  Lawyers are struggling with the same economy you are.  If a lawyer has quoted you a certain rate, you should not hesitate to negotiate with her to see if she will take the case for less.  Insist that a fee agreement is prepared in writing for signature by you and your lawyer.  Encourage the lawyer to assign less complicated work to less expensive members of the firm like associates, paralegals, and clerks.  Finally, obtain an estimate of the cost of defending the case up front.  This provides you with information necessary to determine whether you should settle the case, helps with budgeting, and serves as a cap on fees by at least requiring a persuasive explanation from your attorney if the cost of defending the case exceeds what was estimated.

Consider alternative and early dispute resolution options.  Arbitration is often less expensive than a full-blown jury trial.  Mediations offer opportunities for adversaries to sit down together and work with a neutral third party to resolve disputes.  These alternative dispute resolution options are less combative and less expensive, and when employed early, can result in significant savings in attorney fees and costs for all parties involved in the dispute.

For a builder to succeed in any economic conditions, he must accept some risk of loss and exposure to liability.  It is good business sense to implement strategies to limit those risks and exposures, especially when money is tight and so many builders are conducting business in new ways.

In addition to the strategies listed here to help reduce risk and exposure, builders who include a warranty on their homes are making a smart decision. A warranty not only eases the buyer’s mind should a defect arise in the future, but it also limits the builder’s liability, thus helping them keep as much of their hard earned profit as possible.

A new home is a major purchase, and homeowners will certainly weigh the pros and cons when choosing a builder. Of course, a builder’s reputation, integrity, craftsmanship, and success stories will lay the foundation (um, pun intended), but one surefire way to assure buyers they’re in good hands is to include an RWC new home builder warranty with the home. If unforeseen circumstances should arise and a builder is unable to honor their commitment, a written, insured warranty will be a lifesaver.

So let’s talk about one of the most valuable features of the RWC builder warranty -- the resolution process. All Unresolved Warranty Issues have the opportunity to benefit from the warranty’s resolution process. An Unresolved Warranty Issue is defined as, “All requests for warranty performance, demands, disputes, controversies and differences that may arise between the parties to this Limited Warranty that cannot be resolved among the parties. An Unresolved Warranty Issue may be a disagreement regarding:

1. the coverage in this Limited Warranty;
2. an action performed or to be performed by any party pursuant to this Limited Warranty;
3. the cost to repair or replace any item covered by this Limited Warranty.”

Builders often wonder, do I become involved or should I let RWC handle it? The answer is... the Member's involvement is crucial to a resolution and here's what's involved:

Mediation is the first step to resolution. The Member’s proactive communications is critical. Upon receipt of a homeowner’s proper written notice, RWC will communicate with the Member and the Homeowner. We’ll discuss the relevant information, actions taken, and coverage standards that apply. RWC will also explain why an issue is not covered and we’ll secure the Member an opportunity to resolve the issues.

Inspection of the issue is another avenue of resolution. As the Administrator, when the insurer is the warrantor and responsible party under the warranty, RWC will perform an inspection of the issue. The Member’s involvement in providing RWC with all relevant information, such as a copy of the Member’s customer service file is important to RWC having complete data prior to making a coverage determination. The Member is encouraged to discuss the issue with RWC and provide any relevant construction information that would assist RWC with understanding the construction practice that was utilized.

Arbitration is the final and binding step. If the request cannot be resolved through mediation or the Homeowner disputes RWC’s coverage determination, binding arbitration is the next step provided under the warranty’s resolution process.  The Homeowner begins the arbitration process by giving RWC written notice for arbitration of the Unresolved Warranty Issue. The decision of the Arbitrator shall be final and binding upon all parties. When the Member is the Warrantor, participation in the arbitration proceeding is essential to the arbitrator understanding the Member’s position and the Member’s warranty obligation. The arbitration shall be conducted in accordance with the Limited Warranty and the rules and regulations to the extent that they are not in conflict with the Federal Arbitration Act.

Mediation, Inspection, and Arbitration……3 fundamental steps to RESOLUTION!

In today’s economy and its effect on the residential home building industry, having the RWC warranty as a source of resolution for homeowners and builders to resolve their disputes is an excellent and proven customer service tool. It also gives homeowners a confidence in knowing that if their builder no longer remains in business there is a dependable warranty standing behind their home.

Let’s talk about you. Do you build at least 20 homes per year? Or do you build at least $2 million in sales volume?

If you can answer yes to either question, have you considered joining our exclusive Incentive program?

The Incentive program is a great way for qualifying Members to effectively reduce their overall warranty costs by maintaining a high level of quality construction and customer service. Members receive “cash” back for a good claims record.

The idea behind the program is that if you have a good track record regarding claims issues for the 1st 5 years of your home enrollments, then the warranty company lets you “cash in” during the 2nd 5 years and earn back some of those premium dollars.

Both you and the warranty company chip in an initial minimum deposit to open up an Incentive account. Every time you enroll a home while in the Incentive program, the warranty company redirects a portion of the premium you’ve paid us into an account. As homes are enrolled, the fund grows. If you have a claim or hard-cost expenses (think Engineer’s structural inspection or geotechnical soils test) relating to a claim, we use this fund first – because those were insurance premium dollars that were being set aside rather than being paid to the insurer. If you don’t have a claim, the fund just keeps on growing.

Then beginning in year 6 and continuing through year 10, you start to receive checks back from us based solely on your own claims experience. It’s like betting on your own track record that you won’t have serious major structural defects in your homes.

If you have claims, you haven’t lost anything because you’ve paid the exact same rate that you were paying before joining the Incentive program. If you don’t have claims, you “cash in” and stand to get back up to 15% of your premium dollars.

After the first year, we’ll even waive your annual registration fee of $295 for every year that you participate in the program. That saves $1180 for your bottom line over the first 5 years even if you never get one penny back in distributions. It’s pretty much a win-win proposition.

So again I say, let’s talk about you. Can we help you cash in? Call us today at 800-247-1812, Ext 2149 for a free, no obligation illustration based on your company’s numbers and let’s see if we can help you benefit a little more from your good customer service.

Ah, fall is the air. Are you ready for brilliantly colored leaves, pumpkin flavored treats, apple cider, or, ARE YOU READY FOR SOME FOOTBALL? George Will once said, “Football combines the worst two things about America: violence punctuated by committee meetings”. What that means is that for the next five months many Americans who tune in to NFL games will be watching a lot of TV but, in actuality, very little football. Several studies including one by the Wall Street Journal have calculated that although an NFL game lasts about 3 hours and 12 minutes there are only a mere 11 minutes of actual play time that takes place. Why is that? One big culprit is the rules. The paperback version of the NFL rulebook is close to 300 pages in length and filled with rules and regulations that address almost every possible scenario that could take place during a game. And while the rules may seem excessive and overbearing, they serve to ensure the uniformity, integrity, and safety of the game and its players.

Rules impact nearly every aspect of our lives. We can’t get away from them, nor should we. There are rules for governance, conduct, mathematics, grammar, driving, even cooking and the list goes on and on. It is fair to say that without rules there would be anarchy. Rules provide a society with structure and accountability. As a builder or manufacturer, you too are subject to a unique set of rules that address every aspect of your homebuilding from development through settlement. And, if the rules aren’t followed, there can be big problems. Without proper site preparation, foundations can fail. Without proper flashing, homes will leak. Without proper placement of beams, loads won’t be supported. Without proper spacing between joists, floors will sag. And this list too goes on and on.

The good news is that if you are an RWC, HOME of Texas and/or MHWC member builder, only the best of the best are accepted into their program…builders/manufacturers that follow the rules. Your homebuyers can be assured that you have met the company's high standards of quality workmanship, financial stability, and ethical customer dealings. And, then there’s the rulebook…The Limited Warranty Agreement. Your homeowners are given a set of rules, in writing, that explains what’s acceptable, what’s not and what steps to follow. What a great way to show them your integrity and how much you care about the product you deliver. Vince Lombardi once said, “Perfection is not attainable, but if we chase perfection, we can catch excellence”.

A simple number can really give you perspective. Perhaps you were on the fence about doing more remodeling? Or are trying to brainstorm ideas for a fresh take on the homes you build? Consider these numbers and be inspired to try that new kitchen design or implement features in your homes for the aging population, for example. ...Or simple impress your colleagues with some fun industry facts!

3.5 PERCENT
Percentage of current housing stock that offers all three of these features to support independent living for an aging population: zero-step entrances, single-floor living, and wide halls and doorways.

1901 SQUARE FEET
Average U.S. home size, which is nearly 30% larger than European homes, but smaller than the Australian average of 2032 sq. ft.

$3.1 BILLION
Size of the kitchen and bath remodeling industry.

60 PERCENT
The percentage of contractors that said the number one way to drive up costs is when homeowners ask for changes after a project begins. These changes increase the cost by an average of 10 percent.

When most insurance agents hear the RWC Insurance Advantage offers Claims-made general liability coverage, they warn their general contractor customers to stay away from it. They say you’ll be trapped by the “gap” in coverage that will open up the moment you try to leave. What happens upon termination of coverage is one of the biggest arguments against Claims-made. The way some agents talk, you’d think Claims-made is like the old children’s poem “The Spider and the Fly;” “Will you walk into my parlor?’ said the Spider to the Fly.” We know the fly enters - never to leave. These agents argue there would be no coverage for any claim made after policy termination even if the loss occurred during the time the policy was in force. And they would be right – with any other company’s Claims-made policy. Those companies will offer you a Supplemental Extended Reporting Period, or SERP, at the end of your policy term when you try to move your coverage to another company. They will charge you up to 200% of your expiring policy’s premium for the SERP. Who can afford that and the new policy premium as well?

This WILL NOT HAPPEN with the RWC Insurance Advantage’s unique Claims-made policy. With our policy, the SERP is offered UP FRONT, and we GUARANTEE that it will be attached, as long as your policy is not canceled for non-payment of premium. Rather than charge a large lump sum at the end for the SERP, we add a reasonable 25% charge to each policy term, and you have 6 years to pay it off. After that, the SERP is fully funded and we GUARANTEE it’s attachment at policy termination - no matter what. Even better, if you decide to leave before the 6 years are up you’ll still get the SERP - and NO COVERAGE GAP.*

The SERP is unlimited in duration and can never be canceled for any reason. It automatically restores limits that may have been used up by prior claims. Even if you decide to move your general liability coverage somewhere else after just one year with the RWC Insurance Advantage, you’ll still get the SERP – guaranteed.

So, walk into our parlor anytime without fear of being trapped. Call us at (866) 454-2155 and ask for Ron Sweigert or click here for a free no obligation quote.
(*Subject to short rate premium penalty if you cancel your current policy before its expiration date.)

As the economy continues to improve, builders are gaining more and more confidence in their business' future. Tides are shifting from builders only treading water to keep their company afloat, to moving forward and expanding profit margins.

The number one cost for builders is direct construction expenditures. Simply reducing costs, even modestly, and strategizing ahead of time will unmistakably help you reach your goals.

Check out the following suggestions and tips and implement them into your business plan to maximize your bottom line.

• Design your new models to attain a predetermined direct construction percentage rate based on the anticipated sales price. A model will not be acceptable if it exceeds a recommended percentage.
• Consider the cost of the lot to determine “how much” house you can build.
• Identify base-model features that can be replaced with more economical items without reducing the home’s appeal. Include input from subcontractors and suppliers about potential cost reductions including design alternatives and worker efficiency.
• Include all options and upgrades within each job’s budget.
• Determine the target gross profit as a component of the budget before starting a project.
• Avoid estimating by square footage. Unless the materials are identical, the site work known, and weather conditions constant, pricing by square foot often leads to inaccurate quotes and underpriced bids.
• Keep the specs simple. Too many options will limit the number of potential buyers.
• Re-estimate immediately after completing the first unit of a new plan to evaluate if additional costs should be considered for subsequent units.
• Create detailed direct construction budgets on model/display homes, just as you would with any other home. Display homes tend to evade the normal budgeting process, leading to higher costs and reduced profits when ultimately sold.
• Perform periodic walkthroughs to control costs and ensure materials are being used as intended. Project managers, superintendents, estimators, and designers should all participate in walkthroughs.
• Develop strong relationships with a select group of subcontractors and suppliers. Constantly switching subs and vendors in search of minor savings can be counterproductive. Try to work with your regular subs and vendors to find savings together.
• Schedule together with your key subs. This will result in a much more accurate schedule than if you created it yourself, and the subs will feel more responsibility to meet their milestones.
• Change orders should be documented using only written forms. This allows both you and the buyer to sign the change order, which should list the change, adjusted total price, and necessary schedule revisions.
• Don’t be afraid to raise prices, especially in a good market. As your costs increase, many of these should be reflected in the sales price. A regular price increase program should be in place.

Source: nahb.com

Why is it important to worry about safety when it comes to wet concrete? Because concrete is one of the most widely used construction materials there is, which means there are an untold number of workers who are exposed to these hazards on a daily basis. The biggest hazards include skin irritation, severe chemical burns, and serious eye irritation. Concrete can be safe when used appropriately and with the safety precautions below.

• Wet cement (an ingredient in concrete) is caustic, abrasive and drying, so protect your skin. Wear appropriate PPE such as tall rubber boots, pants, waterproof gloves and long-sleeved shirts.
• If concrete comes into contact with your skin, it’s important to immediately wash off with clean water and replace any wet clothing or PPE. Don’t wait!
• Be sure to wear eye protection when working with wet concrete. Your eyes can be seriously injured due to splashing concrete. Wear safety glasses with side shields or safety goggles.
• Wet concrete can conduct electricity. All electric tools should be grounded and used with care.
• When raising or lowering concrete chutes, be aware of pinch points. These can take off a finger or hand if you’re not paying attention.
• Protect your back. Place wet concrete via chute, wheelbarrow or pump, as close to the work area as possible. Concrete should be pushed, not lifted, into place.
• Use waterproof kneepads or a dry board when kneeling to place or finish concrete.

It’s important to understand that you may not experience any acute symptoms right away if wet concrete touches your skin. But if you don’t wash the area as soon as possible with cold, clean water, you could end up with a serious burn. If a burning sensation continues or worsens even after you’ve flushed the area with water, seek medical attention. If wet concrete splashes into your eyes, flush them continuously with clean water for at least 15 minutes and then go to the hospital.

Source: www.ccicomply.net