The Builders Blocks by iMpro, LLC

We are making some major adjustments at the Builders Blocks.  After completing our first year we have sat down and reviewed our progress and seen where we can improve things even beyond where we are and we are very excited about seeing where this goes.  There is no doubt that things are still challenging out there in the marketplace.  But there are also some bright spots.  Those that have adjusted in the right direction are seeing results and staying busy.


What do we mean by "the right direction"?  In any industry there are pockets of opportunity that just need to be discovered and then explored.  And then by adapting your message to that "opportunity" you can potentially capture that market successfully.  It does take some research and some creative thinking as to how to position yourself but it can be done. 

There are plenty of examples out there of businesses that have taken advantage of this method approach.  In some cases they have found a niche to fill but others have looked at where they are, what they do better than most and then changed their message to clearly differentiate themselves from others in their same market.  In some cases they aren't doing anything differently but the perception is that they are. 

As individuals, we can do the same thing.  What are you good at?  What are you passionate about?  What do you really like to do?  A good friend of mine and his wife love to go on cruises.  In fact, at they got older they would take a cruise every three months.  It was their therapy and then one day they decided, "this is crazy...this is our passion..." and before you know it they started booking cruises for their friends and now book cruises for people all over the country because they truly "know cruising..." - the best lines, the best times of year, the best places to go, the best things to see...etc.  And they share things that most people don't even know and so when others take their cruise they walk away a with full and rich experience.  And when you talk to them you feel that passion, you just sense you are talking to more than a travel agent.  And especially in an age where the "travel agent" is going away because of the Internet and the ability to book things cheaper on line, Charlie and his wife have brought back the good old days of "personal service".  They have filled a niche very successfully.

There are plenty of niches to fill and Charlie and his wife have found theirs.  Stay tuned, we have more to come over the coming weeks...

Adjusting To Today

Many of the builders we have talked to over the past year seem so wrapped up in the negatives of what has been going on in the home building industry since 2008 that they can’t see beyond it.  We have all read and listened to the media talk about recession, depression, and the downturns almost to the point of ridiculous.  If all we do is listen to and think about and talk about the negative sides of things, there is a good chance those negatives are going to overwhelm us.  And the more you tell yourself that something is negative the more negative it becomes and in most cases the more negative you become.

We have all known people that seem to have trouble, difficulty, negatives, and bad luck following them selves around wherever they go.  Every time you meet them on the street there is another crisis, another disappointment.  It never seems to end.  And the truth is it probably never will, depending upon how deeply entrenched they are in their negative thoughts.  And as one knows, the longer they are in those negative thoughts the more feelings they have attached to them and feelings then become real and then the cycle is really hard to break.  And then what happens?  If you do try to break the cycle you think about those feelings and try to avoid them which means your mind is still on them.

Have times been tough for many?  Absolutely!  And there has been good reason to be cautious and think things through a bit more than maybe was done in the past, but at some point we have to move forward.  We have to sit back and look at things as objectively as we can so that we can honestly evaluate where we are, identify what options there are for us to turn things around and then determine what makes the most sense for us.  If we don’t do that then where are we?  Does it make sense to just accept what the media has to say and bury our heads and do nothing?  Does it make sense to just keep doing what we have always done in the past and just hope they are wrong or that business will just take care of itself? 

Only those that have big pockets can afford to sit back and just wait things out but the truth is they don’t do that.  One of the reasons they have big pockets is because they can see opportunity where many don’t and have the foresight to take advantage of it.  The one thing they don’t do is just ‘sit on their duff’.  They look for the right situations and then move on them.  It might be an opportunity to buy up some property they feel is very much undervalued.  It might be a time to acquire some rentals with interest rates still low and homes definitely priced right.  Or they might consider buying them to flip.  The key is they look for the opportunities because they are out there. 

So although things have been challenging, there are those that have adjusted accordingly and they are doing quite well.  They are just doing it differently than in the past.  They have seen through the negatives, found the opportunities, and made the adjustments to fit.

Spring Is in the Care

Since January in Spokane we have seen some significant trends that indicate that people are starting to explore the idea of buying or building or sprucing up their home.  At the Builder’s Blocks where we feature custom builders and their quality subcontractors giving buyers the opportunity to see the builders work we have seen the number of people viewing our videos grow significantly indicating that either people are finally waking up to the BB in general or just getting some ideas or dreaming a bit.  Either way it indicates the market is stirring.

The Builder’s Blocks started the last week of May 2010 and like most anything new, there was an adjustment period as people go introduced to a new medium for viewing homes.  But even through the winter months, we have steadily increased in viewership and starting in January our builders/subcontractors saw the number increase significantly.  So far the reporting for February (results are always 2 week in arrears) we have already surpassed January which was a record month.

Is the market about to turn around?  I am not convinced of that.  There is every indication that we still have a ways to go.  But that does not stop people from looking and reigniting the dreams.  And not just looking but starting to look for answers.  What are their options?  What is there available out there?  What might they have to spend to get their home ready for market?  What homes are selling in our area and for what amount and what does that mean in relationship to their home?  What steps can they take today to get ready for making a move in the near future?

I have talked with several real estate agents in the past few days and even they are saying the same thing – there is something in the air.  Could it be people getting anxious to leave winter?  Spokane has a number of Home type shows that actually started in February with several more coming over the next two months so there is most likely a natural tendency to start thinking about the house and maybe some sprucing up or exploring ideas for those needed repairs.  But based on the past couple of years there is something more going on here.  There is definitely a change in the activity and maybe, just maybe, builders will be able to get some of that spring back.

I enjoy spending an hour or so every Sunday watching HGTV and some of the Interior Decorating Shows.  I especially enjoy one that has a designer come in to spruce up a home that has been listed with little activity and it is amazing how different the homes can look with very little investment.  In fact, there is a budget set for each “spruce up” at $2000 and yet once they are done you would think that they spent in some cases $10-20,000 for new granite counter tops and all new furniture and yet with a little bit of paint, a slip-cover or two and some simple drapes one can completely change the make up of a room very economically. 

Often it is the clutter alone that needs some attention since we all seem to hang on to “stuff”.  Clearing some of that out makes the rooms look larger and helps people to visualize themselves living in the home and specifically how they could make a particular room work for them and their family.  But it never hurts to give a little facelift even if it is just you and the kids.  Change can be good for everybody.

Is it that time of year?  Maybe so!  Spring IS in the care.

You Can’t Just Do Nothin’

Many builders are discovering that the days of Word of Mouth have either passed by or are about to.  More than ever, it is important to keep your name and business in the minds of the public.  People are still buying homes but just not as many as before.  So builders have to adjust and find creative ways to keep business active.  Otherwise they might as well close up shop.  There are fewer buyers in today’s economy and the few that are buying are doing their research and so by the time they reach the builder, they are prepared having done their homework.  And, they have most likely widdled things down to the few builders they want to talk to.

How are they researching?

90% of new buyers are going to the Internet to do their research and looking for recommended builders.  Then they are going to the builder websites to see their work and to get an idea of who they are.  So if you aren’t on the Internet then you are at a big disadvantage.

The simplest way to resolve this is to get your self a website.  And not just any web site.  You are competing with billions of websites out there and so it matters how your site looks and how it feels.  That can make or break you as far as getting to the table with those buyers.  It does not have to be fancy (far too many sites use flash which is virtually ignored by the search engines).  It looks good but it does not drive traffic.  But you do need something that looks very professional and shows off your work.  And be selective as to what you show.  Photographs that are too far away might not show the detail and look just like any other house.  And make sure you take down signs, move garbage cans, pick up litter before you snap those shots.  People want to see the homes, the features and in you want them presented in the best light.

Then, you need to interject some personality.  Just having a gallery of photos will get you so far but if you don’t engage the customer so that they find you interesting, knowledgeable, personable…they will find someone that will and you can bet that is who they are going to hook up with.  Even on the Internet, you have to realize that you have to give people reasons to call you and in such a way that you are not trying to just sell them.  And how do you do that? You provide quality information that is helpful, reflects your knowledge and expertise, and makes people feel comfortable in taking the next step.

Look at other builder sites and see what you like and what maybe ‘bugs you’ such as not knowing where to go on their site.  And step back a bit from your industry and look at the sites from a regular consumer standpoint.  Is it easy to understand without using all sorts of industry acronyms?  Can you easily move from one point to another?  Is the site appealing?  Does the site encourage you to come back?  And is there enough there for someone to want to come back?  And is the site memorable in any way?

And what about the colors?  Remember one thing: what we like sometimes is not what the consumer likes.  There are color patterns that encourage and there are color patterns that turn people off.  You can do some research on colors and moods they reflect by Googling a bit and it could be time well spent. 

As mentioned, and it warrants being said again, recent studies have found that 90% of buyers now do their research on the Internet well before they ever call an agent.  The days of agents sitting in the office and taking calls is long gone.  Buyers are smarter, better informed and they come prepared.  Builders need to adjust accordingly.

Let’s Talk Buy Down

In a recent discussion of industry experts for a segment on the Builders Blocks, the subject of “buy downs” become interest to everyone.  It centered around getting builders to discount their properties to the buyer and whether that was a good idea.  If you look at many areas of the country builders are offering significant upgrade packages or they are offering buyer incentives such as extending last year’s tax credit equivalents.  But as mentioned in one of my earlier articles, since everything to do with qualifying for a loan revolves around the “payment” as opposed to the actual purchase price, the buy-down makes a lot more sense.  Now for those not familiar with the “buy-down” it is cash sum paid in advance to the lender to reduce the interest rate.  In essence it is paying interest in advance so that you can get a reduced mortgage payment.  And since the payment is the number you get qualified for it makes a lot of sense while at the same time maintaining the value of your home.  If the builder gives you a discount off the purchase price, then your home will be valued on that amount but your interest rate will not go down.  And it means that if the interest rate goes up you might not even qualify for what you are trying to purchase.  So the buy-down should be discussed with your real estate agent, the builder, or whoever is on the other end of the transaction.

There was an excellent example used to illustrate this logic.  If you were given the choice of qualifying for a $300,000 home versus a $200,000 home with the payment being exactly the same, what would you choose?  I would be very surprised if anyone were to pick the $200,000 property and that is pretty much the choice you are being asked to accept when we are talking about a buy-down (of course it depends upon the interest rate and the amount we can afford to spend on the buy-down but the point is still the same).  This at minimum illustrates the point that the buy-down needs to be discussed so that you have the full picture in front of you of the situation when you are looking at buying or building a home.  It just makes good sense.

Getting savvy and knowing what is out there as options to help you make better decisions is critical not only for today’s market conditions but at any time you are looking to improve your living conditions.  I would do the research and as a part of that, I would suggest you check out the Builders Blocks (http://thebuildersblocks.com) and view some of the discussions I have mentioned that you will find in The Sax Man folder which cover from buy-downs to 1031s to savings by going green and a number of other alternatives to consider when making a purchase.  You can find agencies that will help you get informed, you can talk to a realtor, and of course, any lender will have information on most of the above or know where to send you.  You could save thousands of dollars and get exactly the home you want.

Why Is This a Great Time to Build?

Just about everywhere you turned the past couple of years you heard cautions about today’s economy and the fact that buying a home might not be such a good investment any more.  Well, I have a completely different take on all of that.  Now I am not an economist nor am I an investment counselor but I know one thing, a home is a critical part of my family’s stability and I want the best home I can afford for the money.  So with that in mind, even if the naysayers are correct and that a home as an investment is not what it used to be (I completely disagree by the way) it is still important to my family.  It is where my children will grow up and where my wife and I will live out our years as we enjoy our grandchildren.  So in my mind, if I can take advantage of today’s economy to improve my position for my family I am going to jump on it.

Now let’s look at the current economic situation.  Home values have dropped in most areas of the country.  Some have dropped dramatically and others have been less affected but still seeing home decrease in value.  But here is one thing to keep in mind:  it is not just your home that has dropped but the whole market has been affected.  So if I live in a $200,000 home and it has dropped by 10% then I have theoretically lost $20,000.  But the $400,000 home has also been affected and so that home has dropped by $40,000.  Now if I could find a way to move up to that $400,000 home, when the market turns back around, I could not only gain back my $20,000 but double my money. 

Now how can I do this?  Keep in mind that when you qualify for a home it is not based on the total value of the home.  It is based on the payment amount.  So if you have qualified for a payment of $1500 per month based on your family income, then what ever that $1500 will buy is what you will qualify for.  So what you want to pay attention to is the current interest rate.  We have not only seen homes drop in value but we have seen the interest drop at the same time in order to try to continue to stimulate the market.  So if we can get past the fact that the market has dropped by 10% and see it more as a buying sign just like we do with the stock market, then we can possibly “get your cake and eat it to.” 

Let’s say that your current interest rate on your current home is 6% and with today’s economic conditions you could get a loan at 4%.  That two percent drop could get you into significantly more home for a fraction of what it would normally cost because we are in a double dip economy with both home down and interest rates at all time lows.  So again, the key is to look at what sort of payment you can afford and then look to see what that sort of payment will get you. 

Now don’t forget a new home and even possibly a custom new home.  Builders are making great deals today to keep busy and so in some ways we have the potential of a triple-dip economy.  So why not "go for broke" if it turns out you can qualify.  That is my thinking because I still believe in America and have confidence that things as they always have will turn around and thrive and I personally don’t want to one of those sitting back later and saying “if only I had taken the plunge”.  And I don’t know about you but I have said that far too often in my lifetime.

Energy Star and Built Green

Energy Star and Built Green homes have become popular as of late and for good reason.  Energy Star appliances help your home to operate much more efficiently and built green as a standard has become so effective that homes are built so much more soundly than they were 15 to 20 years ago.  In one discussion we filmed with several building industry experts back in January, it was clearly stated that homes built today release about enough air on a daily basis to fill a normal balloon as opposed to similar homes built say 25 years ago release enough air to fill a “hot air balloon” on a daily basis. 

At first stated, to a person around the room, everyone was questioning that claim but that came from the current Built Green Association Chairman here in Spokane.  Think about that.  A typical home built 25 years ago or more releases enough air to fill a hot air balloon on a daily basis.  My goodness, don’t tell that to any air balloon enthusiasts, they might croak.  Now just imagine what that could relate to in energy savings.  And with oil costs and such going up right now at such a pace that could be very significant.  Then when you add Energy Star, you further reduce your energy consumption and now we are talking thousands of dollars saved annually.  I don’t know about you but that sounds good right now.

• Consistent temperatures
• Improved indoor air quality
• Greater durability
• Increased resale value when it comes time to sell

Here is Washington where we have cold winters this can make a huge difference.  And in the summers, although we don’t have the smoldering heat of the Southwest, we do have some fairly warm stretches with just enough humidity to make thing interesting and so controlling that air loss can make a difference.

Recently we filmed a 4,000 square foot home with floor to ceiling windows and 15 foot high ceilings and during the dead of winter with temperatures in the high 20’s their heating bill was less that $90.00 for the month.  Now match that up against your older home.

There are still builders out there that think Built Green is over stated.  But the quality builders either know they already meet the standards or they are getting on the program because they know that energy efficiency is not only important today but it is going to be even more important in the months and years to come.  

Check out the builders on the Builders Blocks

05-The_Buy_Down.mov

10-Real Estate vs Stock

The Sax Man Series

The Sax Man "Tellin' it like it is!"

 We recently embarked on a series designed to show the public opportunities that are out there where they can take advantage of the current market to upscale in their housing.  That can be from doing that remodel one has been talking about to actually making a move to looking upon this market as a perfect time to get into a rental or two and how that can work for you.

Real Estate is no doubt a good investment.  We just need to know how to see beyond ourselves at times and to take advantage of situations that can benefit us.

We have been discussing 1031's with Cris Anderson with Asset Preservation.  1031's offer us an opportunity to us tax deferred dollars to grow wealth.  And because it is real estate we can further grow wealth on other people's money.  He shows us how over time real estate will out perform stocks and savings.

Greg Britton talks to us about interest rates and how interest rates are actually what drives what you can afford.  So while interest rates are low it can really work to your advantage to get you and your family into that larger home to raise your family in.  And in today's market we have the double advantage of not only low interest rates but coupled with a down market.  So as Rob Henry pointed out, you can buy "double the home for only 35% more payment".

These are trying times in many ways but we believe in this country and in the free market system and although things can take time, they will turn around.  So you we suggest you stay tuned to the Builder's Blocks either on Comcast Video on Demand or at www.thebuildersblocks.com.  We release a new video with new ideas every week.  Check us out!!!

Jeff Gustafson, iMpro, LLC (Independent Media Professionals)
www.thebuildersblocks.com

Turning Things Around in Today's Economy

I spent the holidays with family this year in California to get some time with my grandson.  It is such a joy to see things through the eyes of the children.  One evening while there, my daughter and son-in-law got into a discussion with me about the economy and their situation.  Just before the housing collapse, the kids had purchased their home and almost instantly it dropped in value by $125,000.  This was coupled by some downsizing that ended up cutting my son-in-laws income by 35% and a raise-freeze by my daughter's employer.  As a result, they found themselves buried just as my grandson was arriving.

I don't think this is much different from many other people around the country as well as people here in Spokane.  They tried to get their home refinanced but after three months of paperwork they were found to not be eligible because they made too much income (based on the previous years tax records) and so they were stuck.  For several months they have had to pull from savings to make ends meet.

How does someone turn things around from something like this?  They did nothing wrong.  They didn't buy a home at the time that was beyond their means by housing standards and no special arrangements were made to get them qualified.  But now when they do need help because of no fault of their own they are up a creek.   Fortunately the kids are secure in their relationship together but a new baby and this sort of pressure will no doubt test every bit of that marriage. 

Again, how does a couple find a pony in this poop?  

This was the first I had heard about their difficulties and it has been going on for over a year.  But that is my daughter for you.  I talk to her monthly about things that are going on in her life and how the baby is doing but although she asks for advise on things, I don't always know the purpose behind the questions.  She doesn't try to keep me out of their business but she does try to work things through on their own.  She feels that it is "their" responsibility to ask, analyze and, if appropriate, apply - "you have enough to think about dad and you have taught me well..."

Their solution?

Tad has taken on every opportunity to work over-time where possible.  It has not made up for the 35% pay cut but it ends up close.  Then, he spends every Saturday helping to share cleaning duties around the home so that Kim can take care of her contribution.

Kim who is a marketing director for a senior care facility has started selling smocks for nurses to make some extra money.  Because she works with nurses and knows many others from other facilities she has done quite well without having to take away from her time with her son.  She set up a simple web ordering system, spread the word through her monthly gatherings with other directors at other facilities and then weekly places the orders with the manufacturer.  And everything is done during nap time on Saturdays.  Then to keep things personal to encourage people to continue to buy from here, she includes a nice "thank you" card in every order with a short follow-up email to make sure everything arrived in good order.  Then since she was a nurse herself for several years, she knows what they face in their work and sends tips and suggestions as well as reminders to reorder since she knows that nurses get quite busy and tend to forget.

The kids know that the market will correct itself and turn around.  So in their mind the time is not to complain and wallow in their situation but to actively do something about it.  Is it still tough?  Maybe at times, but by taking control of their situation and doing something about it they are rising above what has been laid in their lap.

I know that most of us have found ways to adjust to our personal situation.  That is what we do to get by.  And to be honest, it never changes.  We adjust to the good things as well as the unfortunate situations in our lives and we do the same with business.  There are ponies out there in the poop.