Course 34111: Entrepreneurial Selling,

Fall 2008

Craig Wortmann

My Home Buyer Club

Sales Plan

Jeb Ory and Kelly Schwedland

10 November 2008

I pledge my honor that I have not violated the GSB Honor Code during this assignment write-up.

2

2008-09 Sales Plan

My Home Buyer Club utilizes buyer

enhancement and credit

optimization services to increase

the pool of potential homebuyers,

helping Builders sell more homes.

In an ever-changing economy, many potential homebuyers are reluctant to make

the leap to homeownership, partially due to formidable credit score requirements

and housing market insecurity.

We understand that a Home Builder’s financial success is dependent upon finding

qualified, responsible homebuyers. So, we equip homebuyers with the tools needed

to ensure their responsibility and security for “Successful Home Ownership”

3

Overview• Three major parties are represented in My Home Buyer Club’s target environment:

- The Seller (Home Builder or Builder), - The Lending Institution (Lender), and - The Homebuyer (Buyer)

• All parties need to agree on a final price and terms for the home

• MHBC can help bridge the gaps that often arise between the parties, making the closing process faster, more efficient, and more successful (figure 1a)

• MHBC’s principle client is a Home Builder who wants more business *

– Builders use MHBC’s programs to increase the pool of qualified buyers, expanding their potential customers.

• MHBC secondary client is the Lending Institution

– Lenders appreciate MHBC services because they can be rapidly deployed to the other pools of buyers that Lenders interact with, which can often be much larger than the original Builder market (See figure 1b)

• Lenders in-turn refer other Lenders within the organization (Chasm-crossing)

Specific• MHBC sells programs to Builders and Lenders*

• Builders and Lenders use MHBC products to increase the available pool of qualified buyers, their customers

• Lenders use products to help residential resale borrowers into homes

• Lenders refer other Lenders

Builder

Buyer

Lender

Lender

Lender

Lender

Lender

Lender

Buyer

Buyer

Buyer

Sales Process

Builder Buyer

Lender

MyHomeBuyerClub

1a

1b*While MHBC’s products are designed to be used by new home buyers,

MHBC pursues an agency sales model, selling services to Builders and Lenders

4

Description of Service

MHBC administers the following services, on behalf of the builder or lender:

“Buying a home”• Home ownership education

– Empowering buyers with knowledge

– Pre-mortgage counseling

• ScoreCorrectTM Credit Report Optimization Service

– Credit report review and optimization

– Most comprehensive method of reviewing all aspects of credit report (better than simply contesting late payments)

“Owning a home”• Delinquency counseling

– Ongoing communication and education programs with new buyers

– Post-purchase counseling (if necessary)

• Mortgage payment protection program

– Involuntary unemployment insurance (IUI) to protect up to 6 months of mortgage payments if the buyer loses his job

– Coverage up to $1,600 per month

– Program underwritten by a top insurance company

• Rainy Day program

– During the first year of ownership, the Rainy Day fund provides payment protection in the event that unexpected financial difficulties cannot be afforded

My Home Buyer Club (MHBC) sells services designed to improve thecredit-worthiness and mitigate the default risk of prospective home-owners.

While MHBC’s products are designed to be used by new home buyers, MHBC pursues an agency sales model, selling services to Builders and Lenders. Builders and Lenders use the products to create larger pools of buyers to whom they can sell more homes.

5

Overview of Resources

Personnel resources• Sales Manager (Andrew)

– $12,000 salary per month + profit-based bonus

– $1,200 T & E per month

• Director of HBC Sales (Rick)

– $12,000 salary per month

– $25/ closed sell commissions

– $6,000 T & E per month

• National Account Manager (KP)

– $4,000 monthly salary

– $50/ closed sell commission

– $1,200 T & E per month

• Outside sales representatives (TBC)

– $200/ closed sell commission, fully commissioned

• Total monthly salaries = $28,000/ month

• Total monthly T & E = $8,400/ month

6

Overview of Resources(cont’d)

Marketing materials• To sell to builders

– Sales flyer: explains basic program benefits for all involved parties (Appendix A)

– 1-pager: Infographic that illustrates how the MHBC process works (Sales Tools - Presentation Map)

– Program contracts: legally binding documents to formalize agency agreement between builder and MHBC

– PowerPoint presentation: used to train builder’s marketing representatives on how the MHBC program works

– Website: shows the builder how easy it is to sign-up a buyer (complete forms & print contracts automatically)

• Marketing materials for Builders and Lenders to explain programs to buyers

– Yard Signs: designed to promote the builder’s subdivision and homes with the use MHBC products

– Banners (4’ x 8’): more promotional signage

– Script & sales tools for Builder/ Lender to use with Buyer

– Buyer flyers: marketing material for Builder/ Lender to leave with buyers (Appendix A)

– Website: builders use the Website to sign-up new buyers to MHBC program (Appendix B)

– Contracts: MHBC provides a contract to execute Builder – buyer agreement

Material development $10,000

Material production quantities $10,000

Software development for pipeline monitoring = $2,500

Total marketing budget, year 1 = $22,500

Bonds required• Many states require businesses to have certain licenses to conduct business.

The typical way to satisfy these licenses is to purchase bonds that cost, on average, 10% of the license

• Estimated at $2,500 per state

• Estimated 5 states for year 1

• $12,500 for first year

7

Resource Allocation

Title Director of sales Sales Manager

National Account

Manager Outside sales repsQuantity 1 1 1 3 Monthly Base Salary 12,000$ 12,000$ 4,000$ Commission/ close 25 50 200 Monthly sales target 5 5 5 5 Extended monthly commission 135 - 270 1,080 T&E, monthly 6,000 1,200 1,200 Tech budget, monthly 125 125 125 Monthly subtotal 18,260 13,325 5,595 1,080 Monthly sales expenses 38,260$

Marketing Materials Development cost Monthly expenditureSales flyer design 1,500 50 1-pager design 1,000 50 Program contracts 1,500 50 Powerpoint presentation 500 25 Website 20,000 200 Yard signs/ banners 1,500 200 Script 500 75 Buyer flyers 1,000 150 Software refinement 2,500 Subtotal 30,000 800 Monthly expense 2,567$

Legal Cost Est. States/ 1st year Extended legal costs Licensures by state 2,500 5 12,500 Monthly expense 1,042$

Total monthly expenses 41,868$

8

First Year Forecast

Total market Base 100 Better 100 Middle 100 (Best

Potential home builders in target market 200 100 100 100

Builder conversions/yr (est.) 200 12 12 100

Builder conversions/ month (est.) 17 1 1 8

Close rate based on Alpha test

Sell Price of MHBC products

Annual closes, target market (2007) Aggregate 382,882 N/A 93,669 93,669

Average Annual closes per target sized builder 1,944 513 946 946

Average MHBC closes/ builder/ month 19 5 9 9

Linear forecast ($1,500 per close) 69,984,000$ 769,500$ 1,419,000$ 17,028,000$

Actual projected income/ month Base 100 Better 100 Middle 100 (Best)

Month 1 7,695$ 14,190$ 118,250$

Month 2 15,390$ 28,380$ 236,500$

Month 3 23,085$ 42,570$ 354,750$

Month 4 30,780$ 56,760$ 473,000$

Month 5 38,475$ 70,950$ 591,250$

Month 6 46,170$ 85,140$ 709,500$

Month 7 53,865$ 99,330$ 827,750$

Month 8 61,560$ 113,520$ 946,000$

Month 9 69,255$ 127,710$ 1,064,250$

Month 10 76,950$ 141,900$ 1,182,500$

Month 11 84,645$ 156,090$ 1,300,750$

Month 12 92,340$ 170,280$ 1,419,000$

First 12 month Revenues 600,210$ 1,106,820$ 9,223,500$

12%

$1,500

9

Selling tools

Trailer:

• My Home Buyer Club utilizes buyer enhancement and credit optimization

services to increase the pool of potential homebuyers

• Our goal is to give Builders and Lends the tools necessary to equip each

homebuyer with the tools needed to ensure their responsibility and security

towards successful home ownership

Sales Presentation Map:

Pre-

Purchase

Counseling

Credit

OptimizationMonthly

Follow-up

Post-

Purchase

Counseling

Rainy Day

Fund

Access

Involuntary

Unemployment

InsuranceMarketing

Materials

Buying

a Home

Owning a

Home

Relax, We Have You Covered

10

Selling Tools

(cont’d)

Hurdles• Not having long track record in credit repair space

– Solution: Go to key former clients from Genesis and Rainy Day Fund (affiliated businesses for MHBC’s partners) and

get them to use products. Get recommendations and references to highlight product benefits

• Conveying core features and benefits of products to stakeholders

– Builder gets a sale

– Buyer purchases with confidence

– Lender gets a better borrower (lower risk of default)

• Producing ROI data for stakeholders

– Need to close a few deals to do this

– Can prepare projections based on past experience with boosting credit scores and extrapolate how buyers with

higher scores have lower default risk

Objections• Price/ cost of services versus less costly competitors’ services

– Need to highlight comprehensive program

– Sell how MHBC addresses customer’s chief pain points

• Who else is using this product, and can we have a reference?

– See hurdle above

• What markets are you licensed in?

– Currently, only Indiana

– Need to conduct research on state-by-state requirements for licenses prior to calling on new accounts outside of IN

11

Selling Tools

(cont’d) -Pipeline

Builder Builder Contact Title

Phone

Number Email Mortgage Company St Mortgage Contact Title

Phone

Number Email Salesperson

Ryland Homes Ryland Mortgage AZ Chris Butzer Head Underwriter Bonnie Mifsud

Fieldstone Home Countrywide Lending UT Ginger Holmes Branch Manager Bonnie Mifsud

Hamlet Homes Sterling Mortgage UT Justin Brown Branch Manager Bonnie Mifsud

Garbett Homes Garbett Mortgage UT Jared Snow Branch Manager Bonnie Mifsud

DR Horton Greg Arcara Area Sales Manager AL Neil Jensen

Hansen and Horn Builders Ward Horn & Steve HornOwners IN Irene O'Gorman

Arbor Homes Steve Hatchel VP of Sales & Marketing IN Irene O'Gorman

Arbor Homes Curtis Rector Owner/President IN Irene O'Gorman

MI Homes Jarrod Klein VP of Sales & Marketing IN Irene O'Gorman

Hubble Homes Tina Lytle Sales Manager ID David King

Arbor Homes Steve Hatchel VP of Sales & Marketing IN Fred McLane

Maple Street Homes / Fischer HomesJohn Haas General Manager IN Fred McLane

Holiday Homes/Freedom Homes Housing Financial Grp IN Deb Thompson In-House Lending Manager Fred McLane

Mattamy Homes Craig Daugherty Owner NC Jim Martin

Mattamy Homes Tammy Stroupe Closing Coordinator NC Jim Martin

CP Morgan Todd Richardson VP of People Services and Legal Affairs IN Kelly Schwedland

NWI Vision Homes Keith Heckler Owner IN Kelly Schwedland

Fieldstone Homes Ana Duncan Marketing Director TX Richard De La Garza

Legend Homes Carlos Villezcas Area Sales Manager TX Richard De La Garza

Legend Homes First Choice Lending TX Luke Tilly In-House Lending Manager Richard De La Garza

Brighton Homes Prime Lending TX Liesa Crawford In-House Lending Manager Richard De La Garza

Meritage Homes Patrick Iglisky Sales Manager TX Richard De La Garza

McMillan Homes Ana Almanza Sales Manager TX Richard De La Garza

Ryland Homes Ryland Mortgage TX Jay Mcmanus Branch Manager Richard De La Garza

Armadillo Homes Memorial Park Mortgage TX Steve James Branch Manager Richard De La Garza

Armadillo Homes Ruiz Home Mortgage TX Karla Macias In-House Lending Manager Richard De La Garza

Obra Homes Emerald Captial TX Lourdes Ramirez In-House Lending Manager Richard De La Garza

Spanish Homes TX John Ugarde VP of Marketing Richard De La Garza

Various Builder in NC/SC/GA/FL Wells Fargo HM NC/SC/GABob Morrison Area Builder Manager Kellie Pisarski

Dominion Homes Centennial Mgtg (WFHM) OH Mike Biagi Area Manager / VP Kellie Pisarski

DR Horton DHI Mortgage CO Dewey Haley 4 State Area Manager Shawn King

Top 5 first call list

(See Appendix C for full list of target builders)

12

First Touch Plan & Risks

First-Touch Plan• Arrange meetings with top 3 prospects (friends & family connections) from sales pipeline

– Chris Butler, Ryland Homes/ Mortgage, Head Underwriter

– Tina Lyle, Hubble Homes, Sales Manager

– Steve Harchel, Arbor Homes, VP Sales and Marketing

• Sales Manager & Director of Sales will personally visit top prospects

• Pitch MHBC program and products to top prospects

– Carefully record what works, what doesn’t

– Fine-tune marketing materials based on early feedback

• Establish pilot programs with interested top prospects

• Goal is to have 2 subscribed Builders by end of month 2.

Risks• Not identifying the right Builder

– There are more than 200 home building organizations in the United States, the top 200 of which range from $56B to $21M in annualrevenues

– If MHBC does not identify high-value targets within the general Builder population, much time could be wasted

• Not identifying the correct contact within the right Builder

– Many Builders have regional offices as well as corporate offices—creates challenges in marketing MHBC to corporate office or satellite offices

• Not being able to convince the Lender to participate in the program

– Lenders could already be using similar programs

• Not being able to convince the Home Buyer to participate in the program

– While MHBC’s products are designed to be used by new home buyers, MHBC pursues an agency sales model, selling services to Builders and Lenders. Builders and Lenders are responsible for explaining the program to Buyers

13

Benefits/Needs

Benefits to lead a Builder or Lender to buy MHBC programs• Builders like MHBC programs because…

– They help them sell more homes

– They help them make more money

• Selling homes at appraised list prices

– The programs improve the quality of prospective home buyers

– They save money by giving you free attention-getting marketing materials

– They can better forecast future home construction by having a timeline for new qualified Buyers

• Lenders like MHBC products because they…

– Create more borrowers

– Reduce the borrower default risk

• Buyers like MHBC because we…

– Increase their ability to qualify for a loan

Typical needs this solution addresses• Marketing materials help attract more potential buyers to Builder subdivisions

• MHBC products help boost credit scores of prospective buyers, increasing the pool of available buyers

• Pre-purchase counseling focuses on budgeting, limiting deal “fallout,” which can occur when a Builder discovers that the Buyer can’t follow through on a loan

• Builders can sell more empty houses because they have a larger pool qualified of Buyers

• Lenders can now write more home loans because they are dealing with more qualified Borrowers (Buyers)

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Appendix A

Sales Sheets

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Appendix B

Website creative

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Appendix CMost Probable 100 Target Builders

76 87 Westport Homes 721 192,788 129,78077 88 Ball Homes 695 191,367 125,10078 N/A Mattamy U.S. Group 663 274,510 119,34079 96 Grand Homes 644 358,696 115,92080 89 Castle & Cooke 636 616,352 114,48080 72 Fulton Homes 636 355,346 114,48082 N/A Wilshire Homes 634 318,612 114,12083 108 Magellan Development Group 632 822,785 113,76084 63 ICI Homes 622 491,961 111,96085 113 Shugart Enterprises 621 159,420 111,78086 112 S&A Homes 612 336,601 110,16086 98 Gemcraft Homes 612 328,431 110,16088 74 Bill Clark Homes 605 242,975 108,90089 121 Rausch Coleman Homes 600 145,000 108,00090 103 Darling Homes 599 404,007 107,82091 75 The Rottlund Co. 594 267,677 106,92091 100 Ole South Properties 594 159,933 106,92093 92 Lakewood Homes 593 251,265 106,74094 N/A Desert View Homes 585 123,077 105,30095 110 West Hills Development 559 347,048 100,62096 76 Park Square Homes 543 342,541 97,74097 N/A Great Southern Homes 530 162,264 95,40098 93 Brown Family Communities 522 298,851 93,96099 119 The Knight Group 514 0 92,520

100 95 Hubble Homes 513 196,881 92,340101 N/A Castlerock Communities 509 161,100 91,620102 128 Centerline Homes 503 419,483 90,540102 124 Dan Ryan Builders 503 302,187 90,540104 144 T.H. Properties 501 341,317 90,180105 116 Hills Communities 490 340,816 88,200106 132 David Cutler Group 480 647,917 86,400107 105 Pageantry Homes 478 288,703 86,040108 109 Kalian Co./Reeves Williams 467 173,448 84,060109 126 HPH Homes 464 228,448 83,520110 64 The Enterprise Cos. 460 471,739 82,800111 N/A Montalbano Builders 459 248,366 82,620112 101 Arthur Rutenberg Homes 446 865,471 80,280113 130 R&B Construction 443 0 79,740114 151 LGI Homes 434 135,945 78,120115 N/A Essex Homes Southeast 429 237,762 77,220116 N/A Lifestyle Communities 428 147,196 77,040117 91 Elliott Homes 425 569,412 76,500118 N/A Village Homes of Colorado 412 446,602 74,160119 123 Meridian Homes USA 410 207,317 73,800120 143 Landmark Valley Homes 407 113,022 73,260121 107 Highland Holdings 405 254,321 72,900122 122 Pringle Development 401 259,352 72,180124 N/A The Beechwood Organization 393 496,183 70,740125 N/A Home Creations 392 173,469 70,560

2007

Rank

2006

Rank Company (Click for more info)

2007

Total

Closings

Average

Home Price

Income

Potential At

12%25 27 C.P. Morgan Communities 2,677 151,662 481,86026 36 Jim Walter Homes (p) 2,594 184,271 466,92027 29 The Drees Co. 2,536 373,423 456,48028 23 The Villages of Lake-Sumter 2,403 265,918 432,54029 31 Highland Homes 2,362 334,462 425,16030 20 Mercedes Homes 2,357 307,170 424,26031 33 William Lyon Homes 2,182 506,416 392,76032 43 McBride & Son Enterprises 2,102 299,715 378,36033 N/A The Related Group 2,082 603,746 374,76034 39 McCar Homes 1,805 271,468 324,90035 65 MCZ Development Corp. 1,735 0 312,30036 35 Epcon Communities 1,734 179,931 312,12037 37 Ashton Woods Homes 1,687 294,606 303,66038 52 Centrum Properties 1,677 320,811 301,86039 40 WCI Communities (p) 1,657 567,290 298,26040 34 Choice Homes 1,567 150,606 282,06041 49 First Texas Homes 1,462 245,554 263,16042 44 Fieldstone Residential 1,366 296,486 245,88043 48 Bowen Family Homes 1,307 251,721 235,26044 46 Royce Homes 1,280 176,563 230,40045 N/A Engle Homes (Division of 1,258 330,684 226,44046 57 G.L. Homes 1,234 553,485 222,12047 N/A Gehan Homes 1,216 174,342 218,88048 45 American West Development 1,209 309,347 217,62049 62 Eastwood Homes 1,176 187,075 211,68050 28 Holiday Builders 1,152 204,861 207,36051 66 Ivory Homes 1,128 415,780 203,04052 38 WL Homes (p) 1,119 877,569 201,42053 56 John Wieland Homes and 1,106 552,441 199,08054 51 The Corky McMillin Cos. 1,101 447,775 198,18055 85 Trend Homes 1,093 282,708 196,74056 54 Scenic Homes 1,084 221,402 195,12057 53 Capital Pacific Holdings 1,045 377,033 188,10058 69 History Maker Homes 1,012 137,352 182,16059 79 Main Street Homes 1,008 132,937 181,44061 61 Fischer Homes 935 211,765 168,30062 73 Warmington Homes 928 603,448 167,04063 77 Novare Group 911 329,308 163,98064 N/A HearthStone Homes 899 173,526 161,82065 82 Comstock Homebuilding Cos. 886 300,226 159,48066 78 Polygon Northwest Co. 849 0 152,82067 67 CBH Homes 833 0 149,94068 41 Avatar Holdings (p) 780 373,077 140,40069 86 William Ryan Homes 779 274,711 140,22070 106 The Mungo Cos. 775 193,548 139,50071 118 Trammell Crow Residential 765 1,692,810 137,70072 97 Pacific West Cos. 764 223,822 137,52073 60 Dominion Homes (p) 754 196,286 135,72074 80 Armadillo Homes 741 165,992 133,38075 94 The Olson Co. 739 519,621 133,020