Over the years, in addition to being a boulevard
retailer, sales manager for two manufactucred housing factories in
California and Oregon, and later a developer, I had a number of
occasions to negotiate with retailers and
retailer/developers.
This article is a compendium of a series of
questions a retailer or retailer/developer should ask the
prospective vendor of homes or services.
It was originally published in 1999 in the Journal
of Manufactured Housing in a 3 part series. With minor updates
for recent industry changes, I provide it for consideration by
all.
101 Questions to ask when
Selecting a M/H Manufacturer or Supplier
Although this list of questions applies primarily to
HUD Code built homes, then may also apply to RV Park Models and so
called "modular" homes or those built to BOCA, SBCC or UBC
codes.
As a reputable home retailer or developer/retailer
and responsible businessperson, you want to sell your home buyers
the best homes and accessory structures at the best prices, with the
best factory warranty support, at a profit which provides you with a
respectable return on your efforts and investment.
Boulevard retailers have traditionally chosen to
stock home products with a wide range of prices
to appeal to the
widest range of home buyers, to "capture" as many of the prospective
buyers
coming on the sales lot as possible. They rarely
limit their displays to a single price range or size
of
homes.
For the in-community retailer, the range of home
prices is intentionally somewhat more limited.
Most of the
higher priced homes offer good to excellent materials and
workmanship, and their
factory warranty support is usually
acceptable to most retailers. However, this is not always
the
case with medium and lower priced home lines.
Lower prices do not necessarily mean poor materials
and workmanship nor does it mean the
manufacturer can slack off
on providing you and your home buyer with adequate
warranty
support.
Note that actual prices range for "low," "medium,"
and "higher priced" homes will be
determined by various market
conditions. A "medium" priced home in one market, may well
be
considered a "low" priced home in another.
1. Are you clear about the structural, electrical,
plumbing, and interior features of
the
product, as the minimums apply to your project?
2. Have you compared them with other manufacturer's
products?
One of the best places to make actual comparisons
between different homes is at trade shows.
On those occasions,
you can go from home to home with a checklist of various
home
construction or decorating features and compare them
directly. Otherwise you will have to
depend on the
manufacturer's literature and what they have chosen to include in
their list of
features and options. If you can't go to a
trade show or get the information from their sales
literature,
you may have to visit some retail sales lots to compare various home
products.
3. If the home construction or other features are of
lesser quality than other home
or
accessory structure features, is there an adequate reduction in
price?
4. Do you know what lumber grades, type of sheathing,
thickness of walls
and
insulation, roofing materials, etc. is used?
Typically, higher end homes feature construction
materials and techniques that are not always
apparent
visibly. And, depending on your target market, may or may not
be important. Some
features are "overkill" for some
buyers. A lower priced home without these features if
not
important to your target buyer, may be more
important.
Knowing about these construction features can make
you a better retailer by helping your home
buyer understand how
and why they can make a stronger, safer, and longer lasting
home.
5. Are you aware of the various capacities of the home,
e.g., water heater,
electrical
service, refrigerator size, air-conditioning system capacity,
etc.?
Don't sell a home with a 30-gal water heater to a
family with four girls, or a large multi section
home to a family
in Texas with a 2.5 ton air conditioner.
6. Are you familiar with the brand name and reputation
of appliance and
fixture
suppliers?
7. Does the manufacturer give you direct access to
appliance and fixture
suppliers
for warranty support?
Dealing directly with the appliance manufacturer
instead of having to go through the
manufacturer's service
staff will save a lot of time and trouble for you in providing
your home
buyer with the fastest and most responsive
service. Most manufacturers' service departments
will be
happy to assist you in doing this.
8. Do you know the home's physical characteristics?
9. What is the actual house length? Is the manufacturer
including the hitch or
tongue
in
the length measurement?
10.
What is the actual home width? Does the width include the
eaves or overhangs?
If you don't know the exact physical dimensions, you
aren't going to be able to effectively plan
for its installation
on a homesite. This is especially true for some homesites in
land lease
communities, where zoning and land use ordinances
strictly dictate setbacks.
11. What is the actual roof pitch? How important is it
to your project?
12.
What is the sidewall height? Some manufacturers build homes
with a higher
roof
pitch
by lowering the sidewalls, and "inverting the wheel wells."
13.
What is the width of the eaves and overhangs? When extended if
shipped loose
or
back?
These physical characteristics of the home not only
increase its favorable appearance, but offer
many advantages to
the residents in meeting adverse weather conditions.
14.
What is the "I" beam or frame spacing?
There are no standard spacings. Pre pouring
piers for home setup or stem walls for a perimeter
foundation,
will require you know these dimensions in advance, unless you want
to wait until the
home arrives, and then measure it.
15. For home installation, is the manufacturer
clear about blocking and tie
downs,
foundation requirements, soil bearing requirements, etc.? Are
the setup
instructions clear and easy to read?
16. Is
the manufacturer willing to help you with any locally mandated
foundation
system requirements?
From time to time, various local governmental
agencies want the retailer and/or installer to
comply with their
special foundation system requirements. In these cases, it is
necessary that the
manufacturer assist you in
a. Either convincing the
locals that their requirements are not necessary
and
that the manufacturer's pre designed systems are adequate, or
b. getting them to provide you with a design which meets
the local codes.
17. Do you know what labor and materials are
required of you and your
installation
crews to complete the home or accessory structure so it is safely
habitable?
18.
Will the factory perform all or a part of the installation?
There is an industry trend in the direction of
manufacturer provided home installations, especially
in
"modular"s and higher end multi section homes. In some areas,
the retailer completes the
"rough set" of the home, and the
manufacturer comes in and completes all the interior work.
This
is becoming more common in tape and texture drywall
homes.
19. What are the range and depth of their home
sizes, floor plans, and options?
20.
Will the manufacturer build a "custom" floor plan, or modify and
existing one
to
meet
your home buyer's needs, at a reasonable price?
21.
Will the manufacturer build nonstandard or non listed options?
22.
What is the turn around time for custom work, or nonstandard
options?
Manufacturers generally don't copyrights their floor
plans, so they are not truly unique.
Theoretically, any
manufacturer can build any floor plan. With the exception of
size enhancing
features such as "tag" units, floor plan designs
are not tied to any one price range of home. A
good selling
high end floor plan, could be duplicated by a medium or low end home
builder and
could be just as successful.
Less expensive home manufacturers tend to have a
limited number of floor plans, and are usually
not as willing to
provide modifications or changes. Higher quality home
manufacturers tend to
constantly review their standard floor
plans, and modify them for home buyers' continuing needs.
If
they don't have a floor plan you or your customer wants, they should
be willing to either
modify an existing floor plan, or build the
home to a customer's specifications. Note that
the
willingness for a manufacturer to do this, is dependent on
the price range of the home, and their
ability to accomplish the
changes with minimal negative effects on production.
23. What is the credit policy for deletion of standard
features?
Manufacturers want to keep their profit margins
constant on their homes, so if you delete a
standard feature,
don't expect to receive full credit. Most will give you credit
for labor and
materials only, but retain their overhead and
profit. So, don't be surprised if you see a feature
item
listed as an option at one price, but credited at a lower
price.
24. Are my home prices the lowest
available? Is there a lower price for larger
volume
buyers?
25. Is
there any type of special pricing available for other
retailers?
Most manufacturers stick to a standard price list,
providing discounts for volume in their rebate
or home volume
incentive program. It is rare for a manufacturer to negotiate
"special" pricing
for a retailer, much to the dismay of larger
home builders just getting into the business. In fact,
in
some states, California for example, excepting for volume rebates,
makes it illegal for a
manufacturer to sell a home for less to
one retailer than another.
26. Does the manufacturer provide for a "factory tour"
program?
27. Are
you allowed to accompany the prospective buyer during the "factory
tour" or
does the factory provide someone for you to refer them
to?
Factory tours are a very effective way in which to
acquaint your home buyer with the quality of
home construction,
and "custom" decorate their new home. In my opinion, it is one
of the most
effective sales tools a retailer has at their
disposal. The distance from a manufacturer may make
a
difference not only in the use of the factory tour, but also may add
home additional transport
costs.
28. What is the manufacturer's reputation,
length of time in business, size
of
operations?
29. Are
they a public or private company?
30. Who
are the owners or majority stockholders?
31.
What is their commitment to your market?
32.
What is their commitment to the industry?
33.
What is their financial condition? Have you seen a copy of
their latest
Annual
Report. There is lots of good information in there, if you
know how to read it.
It may take a little time and effort to review a
manufacturer or supplier's history and financial
condition, but
it will be worth it in the long run. Their length of time in
the business, and
financial strengths if "long and strong" are
going to make them much easier to deal with. They
will have
well-trained staff, and will be able to provide you with well built,
reliable home
products for your home buyers.
34. Are they a responsible member of an industry
trade association?
35.
What does the Attorney General or Better Business Bureau say about
their
business
practices?
36.
What do other reputable retailers say about the way they do
business?
37.
What is the structure of their warranty support?
38. Is
it provided by in-house technicians, or is it delegated to a third
party?
39.
Will they let you reimburse you for performing perfunctory warranty
work under a
pre approved "work
order" approval system?
40. Is
the manufacturer willing to pre ship materials which predictably
will be needed
for
warranty and service work?
41.
What kind of retailer relationship does the manufacturer
offer? Do they offer a
franchise?
42.
Will the manufacturer give "territorial" protection based on a
minimum stocking
level and minimum
yearly home purchases?
Establishing a viable relationship with a
manufacturer is critical to providing the best in quality
housing
for your customers. Communication with the sales department in
terms of pricing,
options, delivery scheduling, etc. need not be
difficult for a retailer or retailer/developer. As
your
volume of purchases from a given manufacturer goes up, so
does their willingness to provide you
with good support.
It's one reason why some retailers will handle a single product
line, rather
than splitting their inventory among several
manufacturers. And, you will be able to get "higher
up" in
the percentage volume rebate program, through higher volume of
purchases.
43. Do they require you to be exclusive
with their products? Or, do they have
a
minimum number of homes which may be
in inventory at all times?
44.
What kind of marketing incentives to they offer?
45. Is
there a "rebate" or volume discount program?
46.
What percentage is paid on what dollar volume?
47. On
what invoice costs are the rebates paid? Do they exclude
certain costs from the
rebate
calculation?
48.
When are the rebates to be paid?
49. Can
you combine sales from multiple sales centers?
It is interesting to note that in some states,
virtually all homes are "purchased" through a central
buying
group, which allows all the participating retailers the
highest possible percentage rebates,
since all purchases are in
effect made by a single retailer. Individual retailers
who don't buy
through the group, only get the rebates based on
their individual purchase volume.
50. Are there any "offsets", such as payment of
the invoicing on time, or complying with
the manufacturers customer support program?
51.
What kind of advertising and promotional support do they offer?
Unlike some consumer products such as automobiles,
the public in general has little knowledge
of how a home is
"positioned" in the marketplace. There is virtually no brand
name identity in
the mind of the public, as advertising dollars
are too small for them to be created. So,
some
manufacturers have programs for establishing company owned
model centers where sales leads
from the general public are
gathered, and provided to their various retailers on a territory
by
territory basis. In addition, some manufacturers will
pay a portion of your advertising as
"cooperative ad"
reimbursement, if pre-approved with their logo, indicia, or and
other
information or if you use their pre-designed ads.
52. Will they provide you with sales leads? Is their
website designed to "capture" sales
leads?
53. Do
they pay a part of cooperative ad costs?
54.
What kind of sales training is offered?
Several larger and more progressive manufacturers
offer regular sales training for their retailers.
It is a
"double edged sword". Not only does the salesperson get some
advanced ideas on
handling prospective buyers and lots of
information on the home products features and benefits,
but it
also introduces the manufacturer's staff to those who will be in
effect, representing them to
the general public. This is an
important part of building a strong
retailer-manufacturer
communication link.
55. Do they have educational seminars, for your service and
support staff?
A very important part of a manufacturers job is to
see that the retailers installers and service staff
know about
their home products. A knowledgeable retailer staff or support
person can be an
asset to the manufacturer and to the home
buyer. This can effectively created through a
manufacturers
regular training sessions.
56. What kind of sales materials are available?
Will they reprint their floor plans
using
your retailer name and address
information?
Having high quality sales materials for prospective
buyers isn't something a lot of retailers have
the time or
expertise to get done. Progressive manufacturers have such
sales materials, and
provide for either custom printing for
individual retailers,
57 Do they have a website? And how
is it supported? How do they send you
buyer
inquiries?
58.
What kind of pre-designed advertising artwork is
available?
59.
Will they give you access to their advertising design
agency?
60.
What kind of technical assistance will they provide when you get
your first products?
Especially for multi section homes, many
manufacturers will send a service staff member to be
present at a
retailers first home installation, which serves to eliminate
questions which may occur
and solve unanticipated problems before
they occur.
61. Will the manufacturer assist you in
the initial installation?
62.
What is their current backlog? If you ordered a home today,
when will it be
delivered?
63. Are
they willing to commit to a maximum delivery schedule on home
orders?
64.
Does seasonal weather in your area affect home shipments? What
can the
manufacturer do to mitigate
weather related problems?
In areas where severe weather, home shipments can be
problematic. High winds, freezing road
conditions, rain,
snow, sleet, hail all can contribute to home damage when being
transported from
the factory to the homesite or the retail sales
site. In order to make production schedules, it is
not
unknown for a manufacturer to ship a home when it should
be. And, how do they protect the
homes for adverse shipping
conditions?
65. How much notice do they give you of price
increases?
66. Are
they willing to protect you on home pricing?
It is possible for a home manufacturer to inform a
retailer of an increase in cost after the order is
placed, but
before the home is shipped, just as in any otherwise agreed to,
vendor-vendee
relationship. Since a retailer may be
contractually "locked" into pricing with a home buyer, it
may be
wise to have previously agreed with the manufacturer how any cost
increases may be
handled.
67. Will the manufacturer allow you to
designate you own "custom model names" as
a
measure to help protect you against
competitive retailers predatory ricing?
In an area where several retailers or
retailer/developers are selling the same homes, smart
prospective
home buyers can compare pricing by comparing model numbers. By
asking the
manufacturer to use your unique model names instead of
numbers, this comparison may be made
more difficult. This
is especially true where there is a boulevard retailer and a
developer
handling homes in the same marketplace. For
obvious reasons, the developer may have a much
higher pricing
structure on the homes than the boulevard retailer, which may have a
negative
effect on the sales of homes within the
development. A prospective home buyer may want to
know why
a particular model sells for more in the development than it does on
the boulevard.
68. Who arranges for home transport, the
manufacturer or you?
69.
Does the manufacturer have it's own transporters?
70. Is
the full cost of transport included in the invoice?
You will note that although the costs of transport
are included in the invoice, this and some other
costs such as
the HUD fees, may not be included in your volume rebate.
71. Does the transporter have "excess" insurance
coverage?
In many areas, the minimum insurance the transporter
carries may not be enough to cover the
actual invoice price of
the home being transported.
72. What is the F.O.B. point?
73. If
an in-community retailer, will the manufacturer ship F.O.B.
the community?
Asking the manufacturer to deliver FOB your project
can save you a lot of time and money in the
event the home is
damaged during transport. If damaged, technically it has not
been delivered to
you and it is then up to the manufacturer to
sort out the damages and repairs with the transporter
and/or the
insurance company.
74. When does my home order go against my floor
plan credit line?
75.
When is the home to be paid for? At shipment? After
shipment?
76. Are
there any special shipping requirements getting the home from the
manufacturer
to my sales location or
homesite, such as flag cars?
These costs will vary with the location to which the
home is being shipped. And, there may be
some "curfews" in
force which disallow the home to be transported on certain highways
during
busy traffic periods. In addition, in some states,
homes are precluded from being shipped over
certain roadways
during the frost season, because of potential damage to the
roadways.
77. If a multi-section home section is damaged
in transport, how will the manufacturer
handle the rebuilding of the home section?
78.
Will the manufacturer rebuild it adjacent to the original
other section?
79.
Will the manufacturer accept the insurance company's check as
payment in full for
the damaged
home?
If one section of a multi-section home is severely
damaged during transport, what happens? Is
the section
re-transported to the factory for re-building. If so, will it
match the section not being
re-built? Who pays for the cost
of re-transport? By not being re-built along side the
other
section(s) will there be some additional setup
issues? Will the manufacturer accept re-
transporting all
home sections so the damaged one may be re-built in the context of
the other
units?
80. Is any special equipment such as a crane
required?
81. Are
special slings or setup fixtures required?
82. Who
supplies or specifies slings or setup fixtures?
Many "modular" manufacturers and some HUD code home
manufacturers will provide
installation services for the
retailer. If so, what do they provide as a part of the
required
installation process?
83. Is the home designed for "roller"
installation?
84. Is
the home shipped on caissons? This is typical for
"modulars".
85. Who
pays for the return of the caisson?
86. How
much credit is given for the return of the caisson?
87. Is
the home shipped on a returnable chassis system?
88. Who
pays for the return of the frame?
89. How
much credit do I get for the return of the frame?
Although all HUD code homes are shipped on a
permanent frame system, this is not true for
all
"modulars". Some have returnable frame systems, and
some leave the frame on the home as a
part of the
foundation. If there is a returnable frame system, find out
all about the procedures,
credits, return policies, etc. before
you select the a company to do business with.
90. Does the manufacturer provide support for
your participation in trade shows?
91.
Does the manufacturer have banners, literature, and other
trade show materials for
your use?
92.
Will the manufacturer provide factory sales representatives at my
participating
trade
shows?
93. How
many homes must be stocked to maintain my exclusive retailer
status?
94.
Where is the nearest other retailer selling the manufacturer's
homes?
95.
Will the manufacturer allow in-community retailers to be in
your market area?
96. If
you are in an in-community retail sales center, will the
manufacturer restrict your
sales
of homes outside your community?
One of the least understood parts of the
relationship with home manufacturers is their level of
marketing
support for retailers. Some provide virtually nothing, and others
have a high level of
support. Higher support levels tend to
be associated with higher priced home products.
97.
Will the manufacturer give the rebates on your home sales to
the local retailer, as
an
incentive for him to allow in-community home sales in his
territory?
In some cases, where a manufacturer is reluctant to
sell to a developer who is in a boulevard
retailers "territory"
(whether in writing or not) a "deal" can sometimes be made to allow
the
retailer to receive the rebate on homes shipped to the
developer, or at least let them count in the
dollar volume to
compute the rebates.
98. Will the manufacturer give the local retailer credit
for sales volume in terms of
qualifying
percentage from your home sales as an incentive for him to
allow
in-community home sales in his
territory?
99.
Will the manufacturer guarantee fixtures, carpeting, drapes, and
appliances shipped
will be the same as
you are showing in your model center?
After setting up a model display center, it is nice
to know that the features you are showing in
your homes are the
same as currently being shipped by the manufacturer. If not,
make a deal
with the manufacturer that when they change a feature
item, that they will support updating your
model center.
This is especially important for those developer/retailers who plan
to have their
model center on display for several
years.
100.
What is the length of time for the same fixtures, carpeting, drapes,
and appliances to
be shipped which are
identical to my model homes to be guaranteed?
101. Will the
manufacturer pre-ship in fixtures, carpeting, drapes, and
appliances
advance of product line
changes?
Note: Some of the questions as they relate to
"modular" and panel systems, were inspired by an
article in Panel
Systems magazine.
This is intended only as a guide in your selection
of manufacturer or supplier. It is not a
complete
checklist, but is intended to stimulate your negotiations to provide
you with the best
quality homes, support and service for your
deserving home buyers.
Edward Hicks
Consultants Resource Group, Inc.
P.O. Box
2795
Brandon, FL 33509
(813) 661-5901
Easteddie@aol.com
www.mobilehomepark.com/
www.factorybuilehome.com/
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