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July/August 2010 /// “THE POWER TOOL FOR BUILDING YOUR BUSINESS.”
The Premier Magazine for the
Arizona HomeBuilding Industry theHBmag.com
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DEFENSIVE ROOFING
Not All ‘Radiant Barrier’ Products Offer the Same Level of Performance
This Issue’s Builder Profile:
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PROTECT YOUR CORPORATE BRAND Three Rules for Preventing Bad Press Generated by Social Media
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FORTÉ HOMES One of Arizona’s Largest Custom Homebuilders Looks Ahead p.7
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Forté Homes
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IN THIS ISSUE /// July/August 2010
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Publisher’s Note Focusing on Strengths Builder Profile: Forté Homes These Custom Homebuilders Are Looking Ahead Although tougher lending guidelines, investment buyers and “strategic” foreclosures are still affecting new-home sales in the Valley, this builder predicts a slow but steady increase in sales over the next two years.
On the Cover This 5,400-square-foot Forté custom home was built in Calabrea in the Ahwatukee Foothills, and includes a spacious interior courtyard and a wine room. July/August 2010 /// “THE POWER TOOL FOR BUILDING YOUR BUSINESS.”
The Premier Magazine for the
Arizona HomeBuilding Industry theHBmag.com
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Protect Your Brand Three Rules of Social Media Marketing Businesses must have a presence 24/7 as part of a deliberate social media optimization process to ensure that its corporate audience is larger than that of any customer who may come through their doors.
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Applying Sunblock Not All Radiant Barriers Are Alike Choosing the right radiant barrier product for roofing gives homebuilders an opportunity to make their homes greener and homeowners happier.
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DEFENSIVE ROOFING
Not All ‘Radiant Barrier’ Products Offer the Same Level of Performance
This Issue’s Builder Profile:
[plus]
PROTECT YOUR CORPORATE BRAND Three Rules for Preventing Bad Press Generated by Social Media
One of Arizona’s Largest Custom Homebuilders Looks Ahead p.7
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Forté Homes
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Everyone loves a café. Now, everyone can have one.
GE Café™ is GE’s first new line of appliances in 15 years, and it’s an exciting new sales opportunity. With stainless steel exterior and robust styling, builders and new home buyers will want to make it the centerpiece of their new home. For remodelers and their customers, the GE Café will easily transform any kitchen with restaurant-inspired design. At long last, everyone can afford to have an inviting café – right at home. www.geappliances.com/café Come see our fine GE Appliances at Westar Kitchen & Bath at the Tempe, Scottsdale, Peoria and Tucson locations. Phone: (602) 271.0100
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VOLUME 7, ISSUE 4 July/August 2010
HB TM
The Premier Magazine for the
Arizona HomeBuilding Industry FINALLY! A TRUE HOME IMPROVEMENT AND REMODELING RESOURCE LIKE NOTHING ELSE IN THE VALLEY!
PRESIDENT Trifon M. Kupanoff, Jr. PUBLISHER Michael A. Kupanoff EDITOR Tammy LeRoy EDITORIAL INTERNS: Travis Duprey, Trey Warren CREATIVE DIRECTOR Neal McDaniel WEB DEVELOPER Theo Tigno
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Showcase Your New Home Communities. Be a part of Arizona’s only local new homes website and increase your market share!
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PUBLISHER’S Note /// July/August 2010
“What are your company’s strong points ... ?”
H B SEEN. Help us keep our subscription list current! If you or a colleague would like to receive HB at no charge and are not currently on our subscriber’s list, go to www.homebuilder-az.com and click on “Subscribe.”
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Profile:
According to Merriam-Webster’s, the word forté means “one’s strong point.” The owners of Forté Homes, our builder profile in this issue, believe their strengths lie with the company’s business philosophies and its people. What are your company's strong points, and how are you taking advantage of those strengths?
As Arizona homebuilders navigate through the changing dynamics of today’s market, HB will be here, bringing you timely and relevant information to help you make sound decisions for your business.
Preven errors and delays
This Issue’s Builder
Like you, we at HB are encouraged by increases in summer home sales in the Valley, and we are confident that the next wave of home buyers is already on the way.
Another feature looks at radiant barriers for today’s roofing, and our Marketing Matters column shares three rules for social media you'll want to keep in mind to protect your company's brand integrity.
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Industry News: Local and national news for homebuilders
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HBBuilderProfile
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FORT É HOM E S THESE CUSTOM HOMEBUILDERS ARE LOOKING AHEAD by TRAVIS DUPREY
info link /// fortehomes.com
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HB Profile
“SINCE FORTÉ HOMES BEGAN BUILDING LUXURY HOMES, THE COMPANY HAS UTILIZED MATERIALS AND CONSTRUCTION T ECHNIQUES FROM ALL OVER THE WORLD TO CREATE STUNNING FINISHES, UNIQUE TO THE CUSTOMER’S PERSONAL TASTE . ” ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// One of the Valley’s largest custom homebuilders,
Obstacles to Overcome
Forté has been building luxury homes since principals John Perkins and John Cochran started the company in 1993. The company’s superintendents and project managers—all of whom were previously licensed custom homebuilders—supervise a limited number of homes in a small geographic area. This, combined with Forté Homes’ skilled support staff, brings a depth of experience to the Forté team.
Most of Forté’s customers are local move-up buyers including professionals and business owners. Intel has been one of their largest sources of buyers. “They are affected by the overall economy, compensation levels and job security,” Perkins says, adding that loan requirements are much stricter than in the past. “Not only are they buying an expensive house, they have to come up with more money up front,” he notes.
Since Forté Homes began building luxury homes, the company has utilized materials and construction techniques from all over the world to create stunning finishes, unique to the customer’s personal taste. The builders offer a variety of architectural styles including Southwest, traditional, contemporary, Mediterranean, Santa Fe, mission and prairie, and are experts in demanding lot situations including hillside conditions with multilevel designs.
The ability of a buyer to sell an existing house has been another problem in the current market. “Before, people were very comfortable with the prospect of selling their existing houses,” Perkins says. “They could usually get a home equity line of credit and start the construction of a new house without having to move out of their old house, because they were confident they would be able to sell it quickly. People no longer have that level of confidence, and that puts a damper on things.”
Like other homebuilders in the area, the company has seen its ups and downs. Forté built more than 50 homes and had 24 employees in 2007; they now count 10 employees and have been building fewer houses since then. Still, Perkins and Cochran say they have managed to stay profitable in a difficult economy.
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Cochran says one of the biggest challenges to selling high-end homes currently is strategic foreclosures. “It’s becoming an accepted practice for people upside-down in their house to short sale the house and take a credit hit instead of taking the value loss on the house,” he says.
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Perkins believes the Phoenix housing market has always been driven by population growth, which is mostly driven by job growth. “We are never going to have a thriving housing market again until we start to create jobs and people start moving here again,” says Perkins. However, Perkins expects the job growth situation to turn around. “It’s a desirable place to live and many people would like to move here who just can’t right now because there is no job for them. I think this is the biggest thing standing in the way of Valley homebuilders.” He also acknowledges that there is still some inventory left that has to work itself out. “Much too much of our market is short sales and foreclosures and investor purchasing, but that’s just the natural way it gets cleaned up,” Perkins says, adding, “We have a ways to go.” With all of the inventory that still exists being dumped by banks at below construction costs—costs no builder can compete with—Perkins notes that buyers are finding that those deals come with a cost. “It can be difficult to get the deal you want with these houses,” he says, “and even if you can, you will have to make sacrifices. You’re more than likely buying a remodel project.” Cochran notes that the industry trades have also been hit hard. “Many are out of business and the ones that remain are much smaller,” he says. “It’s the same for them as it is for us; you have to be competitive and innovative.” Although most builders knew the bubble would eventually burst, few predicted the extent of the crisis for the industry. “I would have sold my land before the market collapsed, but other than that, I would not have done things too differently,” Cochran says, noting that they were fortunate in some aspects.
“We had some specs on the downside but we still made money on them,” he says. “We sold two specs last year—one for $1.73 million and one for $1.47 million—and we made money on both of them where everyone else was losing money.” As soon as the downturn began, Forté cut back on building specs and model homes.
The End of the Tunnel Lewis and Cochran are able to see some positive aspects of the crisis as well as light at the end of the tunnel. Lending, for example, is beginning to normalize. “It is trending back to a little bit better rates and more lenders in the game for jumbo loans,” Cochran says. Low interest rates have helped as well, although there are political challenges in keeping them low. “There has been talk about taking away or reducing the interest deduction, and if that happens, we will be severely disrupted,” says Cochran. He is especially concerned it may be eliminated for high-end buyers; his customers. Because of these and other political challenges for the industry, Cochran stresses the importance of the NAHB as well as local associations, and he believes all builders should be members. With all of the disruption, Lewis and Cochran are optimistic about the company’s future as well as that of the local industry. “What’s going well,” says Cochran, “is that [home prices have] gotten back to affordable.” He notes that land prices have come down between 50 percent and 80 percent, which is definitely helping the market. “Even if we took a hit holding it,” Cochran says. “Combined with lower construction costs, this may induce new customers to buy custom homes.” n Travis Duprey is an editorial intern for Arizona HB magazine.
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HB Marketing Matters
PROTECT YOUR BRAND Three Rules of Social Media Marketing by MAURICE A. RAMIREZ
Social networks such as Twitter, Facebook and YouTube have put the power of the media in hands of the entrepreneurs, information marketers and college students who have learned that they can be a media source for audiences large and small. Even the nightly news and the traditional print media will sometimes share their stories. With this shift in the “power of the press,� business owners should be mindful of three rules of social media marketing to help ensure that their businesses are not damaged by press generated through social media.
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HB Marketing Matters
In high school science, we learned that nature abhors a vacuum. Nowhere is this more true than on the Internet. If your company fails to comment on a newsworthy event, the social media will rush in to fill the void regarding your corporate brand. Whether it’s iPhone, Coca-Cola, Disney or an unknown convenient store on the corner in your town, if something noteworthy happens, someone must comment. And it’s not only words but also images that can send a message about your business. With the advent of internet enabled cell phones, YouTube enabled smart phones, and location enabled Twitter, everyone is not only a news reporter but also a video historian. Nothing is more powerful than eyewitness testimony, both in a court of law and on the six o’clock news. Many regular bloggers, regular Twitter broadcasters and regular YouTube posters have followers. And their followers have followers. The average reach of these individuals is over 20,000, and their audience is reliable. This means that corporations cannot simply broadcast a message in the social media only when something happens; corporations must have a presence 24/7 as part of an ongoing plan and a deliberate social media optimization process that ensures that the corporation has a corporate audience larger than that of any client or customer who may come through their door.
Social media is a cultural phenomenon based on a conglomerate of social norms and behaviors that span age groups and demo-
graphics. As a result, for many companies, the rules are difficult to negotiate. But one of the rules that is constant across all social media platforms is that the first story told is the first story believed. Further, in the social media, the first story about a major event—whether positive or negative—will be retold, retransmitted and shared among social media users.
These three rules of social media marketing apply to businesses large and small. Turn on the news any night and you will see companies that have failed to follow these three simple rules—whether it’s a cruise ship with a passenger falling overboard and 124,000 tweets telling the story of how they left him behind, or a major amusement park with the most anticipated themed ride in a decade breaking down and trapping riders for 45 minutes—generating 50 YouTube uploads.
The first story told is also the most likely story to make the transition to traditional media and become news. Hence, it isn’t enough to respond when a message appears on one of the popular social media platforms. Instead, when an event occurs, a business must have a prepared statement ready to transmit immediately through an established social media optimization program to ensure that the corporate message is the first story told.
To succeed in the social media remember: Silence is not golden, businesses must be in the social media early, regularly and constantly. The first story told is the first story retold. To be the one telling your story and influencing others to retell your story, businesses must take ownership of the the message or someone else will fill the void and tell your story from their perspective. And finally, buzz is the bomb. Be sure the buzz surrounding your company is positive. n
Buzz is the bomb. A positive buzz means that there is positive message activity around your brand. But if the sentiment surrounding your message is negative, buzz can blow up in your face. Research shows that a negative message will be sent on four times more frequently than a positive message, doing four times the damage, influencing four times as many people not to buy. The easiest way to ensure that something good is said is to influence those who influence others to say something good about you. Again, this is done by having a constant positive presence in the social media even before anything noteworthy happens at your company.
Dr. Maurice A. Ramirez is founder of High Alert, LLC, is a renowned speaker on the importance of social networking, and a consultant who assists companies in aligning their business continuity plans with personnel and customer behavior during adversity. Dr. Ramirez is founding chairperson of the American Board of Disaster Medicine and a Senior Physician-Federal Medical Officer.
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HB TechKnowlogy
The U.S. Department of Energy recognizes that installing radiant barrier products can reduce a homeowner’s monthly energy bills—so choosing the right product gives homebuilders an opportunity to make their homes greener and homeowners happier.
APP LY ING S UNBL OCK Not All Radiant Barriers Are Alike by DAVID DREW In the summer when the sun heats up the roof of a home, a radiant barrier helps seal heat energy in the roofing materials so it doesn’t reach the air inside the home and the air conditioner doesn’t have to work as hard to maintain a comfortable indoor temperature. Energy bills go down, and comfort goes up.
LP TechShield helps block radiant heat in the roof from entering the attic, keeping the attic cooler, lowering energy costs and making the home more comfortable.
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Unfortunately, not all products that claim to create a “radiant barrier” provide the same level of performance. The most cost-effective form of radiant barrier is a thin layer of aluminum attached to the underside of the roof deck material. Aluminum holds its heat energy, barely radiating any of it into the air, making it an ideal barrier material. With new construction, a homebuilder can select roof sheathing that already includes a radiant barrier. In these cases, we recommend a
perforated(or incised)barrier that will block heat but not trap construction moisture in the wood. It is also possible to install a layer of aluminum to an existing home. The aluminum is simply stapled to the roof trusses or rafters. Installers should never apply the aluminum sheathing to the attic floor because the radiant barrier can lose its effectiveness in less than a year as dust accumulates on the surface. There may also be problems with moisture development and aluminum being too close to electrical wiring and fixtures. When correctly installed, radiant barrier sheathing and retrofit aluminum material will block up to 97 percent of the heat in the roofing materials from reaching the attic space. This can lower the attic temperature as much as 30 degrees and can reduce the cost of cooling the home up to 17 percent during the summer months.
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HB TechKnowlogy Sheathing Versus Paint
for an emissivity number. This number should be 0.1 or lower for a radiant barrier or 0.25 or lower for an Interior Radiation Control Coating (IRCC). And some require two or even three coats to meet the stated energy savings.
A variety of paint products infused with ceramic or aluminum powder promise to perform a similar function but with lesser results. These paints are and can be sprayed onto existing roofing materials. Homebuilders and remodelers are often tempted to select paint over retrofit aluminum materials because it is less expensive to install in an existing home. However, these paints do not technically qualify as a radiant barrier under today’s industry standards.
Homebuilders have a variety of options to improve the energy efficiency of their homes by applying aluminum to roofing materials. Although paints can offer limited protection at a lower cost, properly installed aluminum radiant barriers provide superior performance and greater reliability. n
The American Society of Testing and Materials International (ASTMI) states that a radiant barrier must block at least 90 percent of heat energy. No brand of ceramic or aluminuminfused paint met the ASTMI standard in testing sponsored by the Reflective Insulation Manufacturers Association (RIMA), although many of the seventeen products tested claimed to be “radiant barrier paint.”
David Drew, OSB Technical Sales Manager for Nashvillebased LP Building Products, is a nationally recognized leader in the field of residential energy efficiencies, specializing in radiant barrier technologies.
Only five paint products met a lesser standard of blocking at least 25 percent of heat energy. These paints are properly referred to as an, or IRCC, not a radiant barrier. Homebuilders can check the quality of a paint product by examining the label
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