The Housing Chronicles Blog: The story of builder incentives

Friday, July 4, 2008

The story of builder incentives

My most recent article for the Los Angeles Times focuses on home builder incentives, to be published on July 6, 2008, which you can find online here. For vetting purposes, the Times asked me to verify that I had no builder clients when the story was being researched, written or published, which is true. These days, such clients are few and far between!

When I first pitched it after learning that even builders are confused by what their competitors are doing and referring to other company's tactics as 'gimmicks,' the Times already had a buyer in Orange County willing to be interviewed about his own experience and photographed in front of his new home (which is always by far the toughest part of writing a story) so I thought it'd be easy.


Since this was a feature article, I couldn't bring any of my past expertise or opinions to it, but only rely on the facts and statements made by those I interviewed.

To make it as fair and balanced as possible, I contacted almost 10 entities besides the home buyer I interviewed, including the two builders in question, the Building Industry Association of Southern California, a real estate agent who represents buyers and has placed clients in new homes, a design center manager for a third builder, the research companies JD Power & Associates and MarketPointe Realty Advisors and, finally, the Dept. of Housing and Urban Development plus the County of Orange.

However, I've been a bit concerned about this story lately, because it didn't quite turn out to be what I wanted, which was a more balanced story on the pros & cons of how and why builders use incentives to move unsold homes (which can be great things when used prudently), but ended up questioning their very validity.

And why is that? Because I couldn't get either of the builders I contacted, nor the trade group which is supposed to represent them -- the BIA of Southern California -- to comment and, I had hoped, tell their side and explain how incentives benefit the buyer.

For one builder, after being forwarded to several people, I eventually submitted detailed questions in writing to their VP of Media Relations in the hopes of getting a similarly detailed response. For the other, I was referred to their Division President for Orange County after talking to the CEO's office.

And the response from both? NOTHING.

And why was the BIA also MIA on this? Is anyone home?!

For example, I'd imagine that had the builders responded, they would have said that the benefits of incentives for consumers include making homes more affordable through interest rate buy-downs or reduced closing costs, allowing buyers to upgrade to a larger model, move into a more upgraded home than they would otherwise, etc. I'd imagine that builders today treat buyers on a case-by-case basis and that one buyer's experience should not cast a pall over an entire organization. But because that's my assumption and not a fact in evidence, I couldn't write it.

Still, I couldn't simply kill the story because spokespeople were hiding under their desks, as that would then question my own objectivity as a published writer as well as my reputation in general. The story still had to be written, and simply state that they didn't return phone calls and emails to comment. From a PR perspective, I think that's always a mistake, but of course that's also their choice.

Frankly, I was very, very disappointed by the lack of response, and perhaps I was being naive by assuming that they'd be more willing to talk to me on the record versus a staff reporter without past experience in the industry.

Whether that's true or not, I had expected these public builders to explain their business practices regarding incentives during a very difficult time in the industry. They had a great opportunity to do so, but instead they passed.

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