News & Notes Archive - October 2006
Red flag alert:
Be leery of a dealer practice cropping up in some states — FOB–ing
I have been hearing stories of dealers in California telling home buyers they can save a lot of money on a home purchase if they hire their own general contractor (GC) and set-up crew to prepare the site and install the home. In some cases the GC can do both jobs—CA allows qualified contractors to perform both tasks under a license called a C-47. This is called FOB-ing, or Freight on Board, a term from the manufacturing industry describing any product that is at the factory and ready to be shipped by truck or rail. This practice may be cropping up elsewhere in the country.
The way it works for manufactured homes is, the dealer orders the home from the factory and it is delivered to the retailer’s lot or directly to the customer’s home site and turned over to the contractor who takes it from there. This can be a recipe for disaster.
In theory, this arrangement can work, but what buyers don’t realize is both the manufacturer and the retailer will be essentially off the hook for any problems caused by sloppy set-up/installation, any construction defects in the home itself and all warranty service. In fact, with so-called FOB purchases, manufacturers routinely require signed releases from all such warranty obligations before they turn over a new home to a transport service.
So, guess who gets stuck with little or no protection? Right, the home buyer. Even if the general contractor guarantees the work, things can get very sticky in a hurry. The contractor may claim that problems are due to poor construction at the factory, not from poor installation. And once the contractor has finished the project, follow-up service and repairs may be very slow, leaving the buyer no recourse but to go to court, and at great expense. It can become a nightmare.
Where FOB-ing can work is if the home buyer hires a reputable, qualified general contractor and purchases the home from him or her, not from a dealer, as if they were hiring the GC to build their home. The GC in turn orders the home through a dealer, and the factory, because they know and trust the GC, agrees to extend full warranty service to the homeowner.
This arrangement holds great promise, but until then, the best approach is to find a reputable dealer who is fully responsible for the set-up of the homes they sell, and who will follow through promptly on all warranty issues.
Recent email: Q & A about hinged roofs
John,
I have ordered your books and am currently awaiting their arrival. In reviewing your website I read the following excerpt:
“Roof pitch: 4/12 is regarded as a minimum pitch for a residential appearance to a site-built home. A 5/12 roof will usually be hinged. Higher pitched roofs will all be hinged.”
Can you tell me what it means when a roof is hinged and is that a good thing or a bad thing?
Thank you for your time.
Diane
Hi, Diane,
Good question. A hinged roof has two hinges running down the length of each side (like the hinge on a grand piano top), one attached to the top of the exterior wall and the other runs parallel about half way up to the roof peak. The roof lies folded more or less flat atop the section as its transported, allowing the house to get under highway overpass clearances. A double-wide, or two-section, home will have two hinged roofs sections. Once on site, installers unfold and tilt up the roofs on each section and marry them together, and attach them to fold-up roof trusses.
This is a common construction practice with higher quality HUD and modular homes and is perfectly acceptable—a 5/12 or a 6/12 roof pitch will certainly go a long way to rendering the home identical in appearance to site-built dwelling. The task requires an installer skilled in the task. It’s also an added expense. Figure somewhere around $7,000 to $8,000. Sometimes, however, if cheaper shingles are used (anything less than a 25 year life span), a slight rumple or discoloration, can be detected along the mid-roof hinge line. Ordering shingles with a 25 or 30 year life will resolve this.
Regards,
John
Interview: 15 minutes with...Joan Brown
Note: In my role as an industry observer and consumer advocate I speak with people at many levels of the manufactured home industry (MH) to gain insights I share with my readers to help them be better informed. Some I have interviewed for a one-page column that runs in an industry trade publication. In return the magazine runs an ad for the Grissim Guides. No money changes hands. I insist on this. Aside from book sales, I neither solicit nor accept a dime from the industry, and my readers have my assurance I intend to keep it that way. Here’s this month’s interview:
Joan Brown: Executive Director, Washington Manufactured Housing Association (Olympia, WA) and principal project director of the acclaimed MH industry media initiative, Northwest Pride, a partnership of the WA, ID and OR manufactured housing associations.
Background: Born and raised in Olympia, WA (the state’s capitol). During high school held summer internships in state government (e.g., Senate page)—“My parents were active in politics so it was a natural fit.” Attended U. of Washington, meeting her future husband there, graduating in 1974 (a B.A. in political science). After husband, Stephen, obtained his MBA with an emphasis in computer science, the couple married and moved to San Francisco, then Dallas for his work with Ross Perot’s EDS Corporation as a Project Manager on main frame database management. When a subsequent EDS posting took them back to Olympia in ‘77, the couple decided to stay. Her husband signed on with a Seattle-based private consulting firm. Through her previous state government contacts, Brown learned the WMHA was looking for an asst. director. She landed the position, thrived, and in 1980 moved up to Executive Director. Only two other state association directors nationally have had longer tenures. In ‘86, working with her Idaho and Oregon counterparts, helped create Northwest Pride (www.northwestpride.org) a tri-state industry media initiative (currently 300 members) that pooled funding from NW industry producers to promote MH to the public through response-oriented television ads (and later, the web). The promotion was a great success, the first of its kind in the U.S., and continues to grow. Elsewhere, in 2004, the WA legislature, capping a 20 year effort which Brown spearheaded, passed a law that banned discriminatory treatment of MH by local governments, allowing MH homes to be sited anywhere single-family housing is allowed. The Browns have one son, Jeffrey, age 25.
- Q: Northwest Pride is a remarkable story. What sparked its formation in 1986?
- A: It started with our realization that the industry was spending its ad dollars advertising to itself, not to the ultimate purchaser, the home buyer. Suppliers were advertising to the manufacturers who in turn were advertising to the dealers who, outside of little nickel ads, weren’t doing much at all. And since, the trade associations in Washington, Oregon and Idaho all have the same builders and plants as members, we decided to approach the manufacturers as a group with a unified package to underwrite TV ads aimed at promoting manufactured homes in general, not specific brands. The idea was a rising tide raises all boats. Participation was voluntary.
- Our plan was controversial. Around that time the North Carolina association had a lot of cash available to hire a big ad agency to do the same thing, and the agency came back with a now infamous memo declining the job, saying “You’ve got to clean up your industry before we can advertise you.” That story was thrown in our face a lot.
- But our region’s largest Fleetwood dealer at the time, Gary Hughes, whose American Mobile Homes was the very antithesis of our objective, and who ran these wild ads—like, showing trucks on top of roofs—loved the idea and got Fleetwood to sign on to the project. They were a huge help in getting the ball rolling. The initial budget was $350,000 - a lot of money at the time. Our theory was to make the ad and the program as first class as possible—you won’t convince anybody your homes are high quality with a cheap ad campaign. We ran the 30-second spots for a month early in the winter when more people watch TV and then four-week flights again in spring and early fall.
- Q: How was the response?
- The first year we didn’t run an 800 number so there was no way to really tell. But the second year we added the number, and it came into our WMHA office. The first day the ad began to air we were all nervous. Would the phone ring? I remember someone saying if we didn’t get any calls, they’d put the word out at church (laughs). We got fifty-to-eighty calls that day and it’s grown ever since. Over these 20 years we’ve made 19 commercials and experimented with lots of new angles to see what works best.
- Q: What works best?
- A: You never know for sure, but you certainly know when you’ve hit a hot button. Once, in 1992, I was on vacation when a new ad aired. I called the office and everyone was in near hysteria. We were getting 300-to-500 calls a day. That finally forced the staff to convert to a computer database retrieval system (laughs). We still don’t know to this day why certain ads are so successful.
- Q: What’s in the information packet you mail callers?
- A: We have just converted to a DVD that contains a 9 minute feature presentation, a directory of manufacturers and dealers, web site information and printable check lists. It’s been very well received.
- Q: What are the latest figures?
- A: This year’s media budget is about $750,000. We’ve already run two month-long campaigns each. For 2006, year-to-date, we’ve logged over 4000 phone calls, up 32% from 2005. Email packet requests from our web site are up 115%. We’ve had nearly 46,000 unique visits to our site. And about 311 have sent in response cards saying they want someone to contact them—up 62%. Our marketing consultants tell us these results are outstanding.
- Q: Northwest Pride also periodically conducts focus groups. Any insights from them?
- A: Comparatively speaking, the Northwest is quite a sophisticated market. We’ve learned we’ve made huge progress in convincing the public that we can make an attractive product indistinguishable from site-built. But, when the focus groups were asked, If someone you trust were to tell you something about manufactured homes that would make you shop for one, what would that be?—in every group without fail, the answer was: they are well built and will appreciate. These findings convinced us to undertake a rebranding study to research opportunities to re-brand manufactured housing to address these concerns. When you look at everything, we’ve got it all going as a product, but we can’t seem to put the finishing pieces in place. It’s a great challenge.