Home Builder Profits will be Greater |
Saturday, 18 August 2012 |
OPINION
Home Builder Profits will be Greater
Homebuilders have gone where no man would dare to go --- the swamplands, the corn fields, the fertile cow pastures and the water-laden stock tank areas of rural America. They have stripped the lands of trees and sowed their unsightly-cookie-cutter box shaped homes, blighting the countryside with what many critics refer to as disposable housing.
The history of homebuilding is littered with controversy. The industry has successfully perfected the art of marketing illusions of not so well-built new homes with emboldened promotions that overstate values of worthless warranties.
Dishonesty proved to be highly profitable on the way to becoming giants of the home construction industry, but proved to be mere pocket change compared to its major roll played in the world market of big time mortgage fraud; proving that crime does indeed pay.
Once chief economic indicators, Pulte-Centex Homes and D.R. Horton became the overnight darlings of the industry, which created the fastest populated areas in the nation that now stand as unsightly foreclosures and reminders of deceit without accountability.
As Investment Bankers and Wall Street Tycoons are called to answer before Congress, their homebuilding counterparts are conspicuously absent to explain their massive lending fraud that played significantly in the collapse of the nationâs economy.
With federal government financial incentives and influence, the finest lobbyist and attorneyâs money could buy, they have become the leaders of how to continually sell defective products and gain enormous profits.
When it comes to defying all good business principles of producing durable and lasting products, the homebuilding industry has truly excelled. While other businesses fail due to bad products, negative press and their infamous reputations, homebuilders have thrived on the idea that if you make it easy for customers or just build it, they will come, regardless of quality.
Formula for homebuilding profits and overall success:
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Hire the best lobbyist money can buy.
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Aggressively pursue privatization of government oversight and regulation.
- Continually influence government incentives (money) and innovative financing techniques to qualify new homebuyers.
- Target a market that never was â a market of those who cannot afford homeownership.
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Target first-time-homebuyers, minorities and young people in their early 20âs.
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Cut building cost whenever possible, especially site preparation and foundations.
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Build in volume with little attention to quality.
Build a house that appears more grandiose and bigger than the buyerâs parentâs home. After all, air space doesnât cost more if the land is cheap and unsuitable for any other use.
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Purchase the cheapest materials in volume.
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Use the cheapest possible unskilled labor.
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Become an industry leader by building enough substandard homes and eventually the lowest standard will become the generally accepted industry standard.
- After the home has been sold, ignore all warranty claims.
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Specify Mandatory Binding Arbitration on pages 2â6 as the only resolution for warranty disputes.
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Dedicate 15 pages of the 30 page warranty to âHomeowners Maintenanceâ responsibility.
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Stipulate on pages 22â30 of the warranty that most components of the house are âExclusionsâ.
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Keep structural costs and warranty services low and the executive bonuses will be greater.
Looking at the bottom line on builders financial statement; ignoring the massive amount of bad press and complaints, who can argue with the giants of the Homebuilding Industryâs formula for success, except their long list of victims.
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