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Friday, February 22, 2008

"I Never Thought I'd Build"

Snowing like crazy up here today in Sullivan County - from what I've heard, the City is getting some snow too. One of the first good storms we've had all year.

We used to sell finished homes. Well, to be honest, we used to try to sell finished homes. Over the course of the first 3 years, we would buy up some small parcels of land, design a house, build the house, and then market and sell the house. Like an old guy in India said to me - "it's easier to buy then to sell" - , and in our case, it was easier to dream the design and build the house, then it was to find a buyer up here in the middle of nowhere. Because we had less than zero $$$, everyday we owned the house took us closer to the bankruptcy precipice. Well, anyway, those days are over - we are not imminently going out of business (although it is always only one big bad decision away), and we don't have any houses on the shelf anymore. Lisa and I even went so far as to furnish our unsold homes - it's interesting what you can do on a limited budget - actually, almost more interesting than a 'sky's the limit approach'.

We have had so much interest in our homes over the last 14 months that we no longer have any finished homes for sale - they get snapped up during the construction process. Again, what used to happen was we would start to build and when the house started to take shape, more people could visually the house, and themselves sitting by the fire, and snap them up.

Then it even progressed past that, to where customers starting buying from houses on the drafting table - and the refrain was always the same ' I never thought I'd be building a house.'

For the most part, our customers are youngish. Professionals in their 30's or 40's, quite busy with their jobs and lives, so the thought of engaging in a building process never entered their mind while searching for that getaway home.

"Building' is a scary endeavor, and has left more than a few participants licking their wounds long afterward. It takes a lot of time, a lot of energy, it's expensive, it's full of financial surprises, and it's never done soon enough. Combine that with being 2 hours away from the job site, and the recipe for disaster is apparent.

Catskill Farms has taken the best of the process, eliminated the pitfalls, and created a process that works for our busy demographic. The primary reason it works is because we are honest - we live up to our word, and fulfill our obligation. We also take care of the gray areas - the area that is most annoying for people building homes - 'this isn't included', 'that's not in the contract', etc... We definitely use those phrases, but very hesitantly and only in obvious situations. I'm from Lancaster PA, and even though any businessperson who is around for any length of time has to make hard decisions, for the most part, we shoot straight.

I think the keys to our approach are illuminating (and also a trade secret, but all of our imitators are out of business by now) -

1. We take money out of the process. Most build projects require the homeowner to remit payments 10/20/30 times during the process, so every conversation at the job site is clouded by who charged too much for an extra or is asking for payment when the milestone is only partially reached and/or who is late paying a bill. These discussions and subsequent grandstanding can really delay and disturb progress and schedules. In a Catskill Farms build, money is discussed at the beginning, and at the end when we sell the house. In between there may be some minor upgrades and allowance reconciliation but by no means is it front and center of every discussion. So the process is more fruitfully centered around design and dreams and products and choices rather than the $25,000 owed to the builder but not yet released by the bank.

Of course, we don't survive every process looking perfect, but I am well aware that the new homeowner who went from dream to sleeping in their bedrooms or lounging in front of the fire in less then 5 months really has it a lot better then they even acknowledge or know.

2. We stay on budget. If someone wants a $300k house, and we agree on the big picture specifications, at the end of the job it costs $300k. It's unheard of in building, and the reason it can happen is because, as I mentioned earlier, we just take care of the grey areas. We also give good allowances, so our customers have lots of options for tile, stone, kitchens, paint, siding, roofs, vanities, and faucets without runneth over the budget. In sum, our goal is not to squeeze a few extra pennies or dollars out of the customer. Many times though, we would be well within our rights to do so. Move this, change this, add this, can you do it this way. Why we can do it, with no extra sweat off our backs is because we are a young successful company and feel its worth every extra penny we spend to finish the job quickly, with quality, and add another architecture gem to the Sullivan County landscape and move onto the next one. Only rarely, maybe once, did we have a customer who upgraded something well outside our allowances and refused to pay for it. So lesson learned, it won't happen again, and we moved on.

Just as important is the customers role in the process. Serious attention to what they want to spend, diligent processes to find product either within their allowances or amenable to their cash flow, and making decisions on time, - i.e., knowledge that this is a unique arrangement that takes their serious participation to succeed - or, more simply, it takes 2 to tango.

3. To borrow a term from the industrial revolution, we have vertically integrated, eliminating the middle man everywhere we can (is this supposed to be 'middleperson'?). The architecture cost is 1/4 of hiring an architect, the higher transaction and financial costs of building new are non-existent, most times there is no real estate fee involved since we are doing our own selling, and the weekly change orders and re-designs are done for free each weekend I meet with the homeowners at the house.

4. We have created a process we call 'custom-lite' - meaning Catskill Farms and the prospective homeowners collaborate on a design under way, collaborate on the house placement on the land, collaborate lightly on the lighting design, and collaborate more fully on the fun stuff, - tile, fireplace stone, paints, stains, kitchens, counter tops, interior doors and door knobs, faucets, etc... Because Catskill Farms is now the veteran of more than 2 dozen country homes, we have figured out how to tailor our process around the busy lives of our customers so they don't feel like they have another stressful fulltime job. Our clients are talented with a good design sense, and so are we - which makes for unique homes.

5. Mostly, we can pull this off because, while not perfect, we are competent, work hard, stay focused, and through thick and thin have our clients best interests placed ahead of everything else.

6. However, all of this is hogwash without the basic truth of our homes - we are able to build new homes that have a soul - an almost impossible goal. The clients who say 'I never thought I would be building', have looked and searched and dreamed of that old house with memories and generations tatooed in the bones of the structure. Catskill Farms, with the help of some very talented clients, has been producing new construction that feels like it's been there a long time. And when you can do that, there is no reason to buy an old wreck of a house where every weekend is a new problem.

The best compliment we get, and we get it alot, is when someone mistakes our new homes for a 'great renovation'.

Still snowing, 5:34 pm, most of our 70 homeowners probably thinking about picking up their cars and coming up to their getaway.