Upsell Utopia

Mailboxes are looking chic in Southern Crafted Homes' developments. And they are just one of many custom features that it manages to move during the downturn.

“You're not going to drive through our developments and see the same mailbox in every yard,” says Jim Deitch, chief operating officer of the Pasco-based homebuilder.

The mailboxes are one reason Southern Crafted defies the market. Its revenues are up 13% this year, and by the end of the 2011 they are expected to beat 2010 numbers by about 50%.

The company is also building inventory to meet the growing demand. It expects the number of contracts in 2011 to increase 45% over 2010.

Southern Crafted Homes credits a commitment to conservatism with its survival through the recession, a philosophy showcased by rejecting sales to investors after 2005. “We have been in business for over 20 years,” Deitch says. “We've been through these cycles before.”

The approach kept Southern Crafted out of the basement, but survival didn't come without its wounds. “Business did fall off after the crisis,” says Deitch. The company operated at a peak of roughly $45 million in revenues before the crash and hopes to reach about half of that this year. (See “Southern Stability,” Nov. 6, 2009.)

But rough times are reversing for Southern Crafted in sales as well as price. Deitch says the company intended to drop prices 10% earlier this year to help boost demand, but it started getting contracts without the discount.

The company's average home prices are up 6% from about $273,000 last year to $291,000 in 2011. Stack this onto new contracts and it expects to hit roughly $20.1 million in revenues this year compared with $13.3 million in 2010.

Rejuvenated demand for custom homes in suburban communities is key to the rebound, Deitch says. And by staying out of the flipping frenzy, Southern Crafted limited its three developments' density, making them an attractive option for the families it targets. A home-owner won't be subjected to an impromptu peep show while glancing into his backyard.

As a homebuilder and development owner, Southern Crafted caters to each homebuyer, while maintaining the feel of a consistent development. “Our design office is down the hall,” Deitch says. “You want a room designed for a pool table? Let's go draw it up.”

Deitch and company uses the art of the upsell to bolster sales price. Homes purchased this year include $60,000 to $80,000 in options including pools, dual garages and custom mailboxes.

But aesthetic enhancements to the traditional suburb will only go so far in attracting buyers. With the real estate market still uneasy, price remains paramount with homebuyers.

However, Deitch pitches energy efficient features that may cost more initially but can save homebuyers in the long term.

When an interested party strolls into his Land O' Lakes office, Deitch sits them down and whips out his calculator. Whizzing through calculations, Deitch plots monthly utility payments on a $200,000 house that doesn't have the energy efficient features Southern Crafted boasts. “It doesn't take a brain surgeon to figure out that something's wrong here,” he says.

Although he may spend more time on a potential sale, he says a short orientation in energy efficiency can turn a nearsighted buyer into a long-term one — and a customer.

“When you can show people total cost relative to initial cost they tend to make the right decision,” says Deitch.

With the prevalence of green building, Deitch says these sales require less convincing. “Educated consumers are the best consumers for us,” says Deitch.
Southern Crafted Homes uses its salespitch mostly to sell its three developments, which are are in various phases of completion.

Its 180-lot Devonwood community is about half sold, its 308-site Stonegate development is more than 75% sold, and it has sold 22 of 110 lots available in the two phases of its Quailwoods development.

In addition to building out its own communities, Southern Crafted is building homes in others' developments to establish a growth option for the future. The homebuilder also plans to look for land to start a new development in Tampa Bay.

Some may take the growth as a sign to expand to other markets, but Southern Crafted is comfortable staying in the area. “Other companies were dipping their toes in the water to get a taste of the market in other regions,” says Deitch, “But Tampa Bay is where we want to focus.”

If the growth trend continues, Southern Crafted Homes could be back to pre-recession levels by the end of 2012. Explaining the company's success, the Marine Corps veteran touts his product with the subtlety of a drill sergeant: “If you want inexpensive housing go rent an apartment,” Deitch says, “because we sell homes.”