Misery loves company
It was refreshing hearing that a builder of your stature [Jay Grant] had to also change to accommodate the changing economy [“Managing post-sale relations,” February/March 2009]. I always assumed smaller guys would have to bend over backward to stay afloat. I’m obviously wrong.
I own a design firm that also builds our clients’ high-end dreams. Whether it is a remodel or new construction in the multi-million dollar range, these clients can be a handful. Even though the market is very slow, we more often find ourselves doing more personal things for our clients that have nothing to do with construction or closing.
Some of the things my staff and I have been doing for these clients are: physically helping them move in; building their gazebos and/or detached covered patios and putting together their patio furniture; helping them place their furniture; helping them organize; feeding them the day of the move; and paying my personal housekeeper to help them clean up while moving.
I find this to be a bit much; however, we’ve had to endure this with smiles on our faces. My revenue has been down over a half million dollars, I’ve had to reduce my staff (whom I love dearly) by 11 people, and at this point I don’t know what will happen this year. I will not give up hope because those of us that have faith and can hold out will be on top when the market returns.
Eric Spurlock, AIBD
Eric Spurlock Custom Home Design
Things aren’t all bad
Good morning Jay [Grant]. We build homes between $140,000 and $300,000, and believe it or not we have been doing pretty well for ourselves here in the Midwest. We’ve sold eight homes since December and have seen a little more traffic on weekends. Gas prices dropping have helped drastically as has the tax credit for first-time home buyers. This little spurt of activity we’ve seen is a relief. I guess you could say we are doing OK. I don’t know what your views are on the stimulus package, but we can only hope for the best.
As I see it, if people are not working, it doesn’t matter how low the interest rates are or how much a tax incentive is given; people need to get to work. But you hit the nail on the head in your article (“Tough times, tough questions,” February/March 2009]. Hesitating on advertising, hiring, laying off, building an inventory home — you name it — we have run into the same type of problems. And buyers are very wary of builders that don’t have at least half of their subdivision built out.
The whole problem in my view is the media. I can’t stand negative reporting when I know there are bright spots in this world. There are 90 percent of people working in this country, and gas prices are at the same level as in 2004.
Larry and Missy Evans
The Evans Co. Homes
PVC toxicity clarified
Mr. Wagner states the following about PVC decking: “All-plastic PVC decking is another product that has resistance to scratching, staining and fading that is superior to composite decking. But PVC decking has been getting slammed for the toxicity of the manufacturing process, which releases mercury and dioxin. That said, there is a green case to be made for PVC’s performance and durability. If you use PVC, you are less likely to harvest, manufacture and ship replacement products, which therefore makes PVC a viable alternative to wood; using lifecycle analysis, PVC holds up well in comparison to wood.”
While Mr. Wagner presents many of the attributes of PVC decking, the assertion that the manufacturing process is toxic and releases mercury and dioxin should be clarified. PVC is an extremely small source of dioxin (less than 0.5 percent), so small that levels in the environment would be essentially unchanged even if vinyl were not being manufactured. The production of PVC is contained in a totally closed processing loop. In fact, dioxin levels in the environment have been declining for decades, (90 percent since 1987, according to data from the U.S. EPA. [Since then] production and use of vinyl have soared (visit dioxinfacts.org).
A similar perspective can be presented for mercury. Mercury is used by a dwindling number of U.S. manufacturers in the chlor-alkali process, a precursor to the manufacture of PVC. Once again, the process, which is conducted in a totally enclosed loop, represents a fraction of total mercury emissions and after several chemical reactions mercury is not present in PVC. During the past 10 years, total U.S. mercury emissions have dropped 45 percent.
The AAMA testing and certification programs have generated extensive comparative materials data. As a trade association, we never promote a manufacturer or specific product. We do take it seriously when an entire class of products is misrepresented.
Richard G. Walker
AAMA President and CEO
Final payment solution
Great article on the final payment (January 2009, pg. 10). We have had many bad experiences lately with collecting our final payment. It seems to be harder than ever.
We arrived one time for our final closing meeting to review our closing book and discuss the final $30,000 payment. Unfortunately for us, 10 minutes prior to arriving, the client had opened a letter notifying her that the bank was canceling her credit line. The story has a somewhat happy ending; the client has made monthly payments and has promised to have the final payment paid in full by July 2009. Another client of ours worried about his bank doing the same to him, so he asked if he could deposit half of the contract (roughly $200,000) into our account as in his words, “I felt that my money is safer with my contractor than in my own bank.” I wondered what kind of times are we living in when a contractor is now more trusted than a federally insured bank?
This experience has made our company look at the possibility of these situations occurring more often as the economy slides. So we came up with a simple solution. Immediately after the agreement/contact is complete, we open a fund control/escrow account for the entire amount. This provides value to our company and our client. The account is FDIC insured up to $250,000 and is monitored by the client who has full control of dispersing the funds. The account is interest-bearing and the client receives all interest. The fund control company is in charge of collecting all lien releases prior to dispersing the funds. The payment schedules are set in advance upon completion of inspections performed by the local building department. Once the building department approves a phase of work, the client receives a voucher to sign allowing fund control to wire the funds for that phase of work. The predetermined funds are then electronically wired into our bank account.
The benefit to our company is that we know the funds are securely held in an account and that we don’t have to worry about a client’s bank canceling a line of credit during construction. Another benefit is that we can complete the whole transaction by e-mail, so the days of chasing down a client to pick up a check are gone. When it comes to change orders, the client can deposit the change order money into the fund control account and we collect once the work is complete and the client approves the voucher.
We should have been doing business this way 18 years ago. Even in a booming economy, this seems to be the most professional way of contracting. We have just started the process but I am convinced this will really work well for our company.
Jason Larson, CR
Lars Construction Co.
La Mesa, Calif.