by L. A. 'Tony' Kovach
Trade media exists because there is a need to communicate facts and ideas relative to the industry being served. A robust online trade journal (e-zine) complements and supports what associations and good businesses within an industry do. Trade media arguably makes the industry served more money. But this column's focus is that trade media can address issues that are not as easy for associations and businesses to tackle.
Some topics are tricky for a business or association to present directly, because it might seem self-serving to their audience. But in reality the issues may be vital to all involved. Successfully communicating on such issues can have a bottom line impact for tens of thousands of businesses. Let's look at an example to make the point.
Having sold homes for years from boulevard (street) retail sales centers (dealerships) as well as in land lease communities, I know first hand how vital financing is in selling homes to consumers. Everyone involved in the factory-built housing industry wants more sales. So many want more - and "easier" - financing. Retail sales people especially want low rates, low down payments and easy qualifying. Seasoned industry pros know why you can't make "stupid" loans that are likely to default (hey, our nation is still suffering from the mortgage/housing bubble burst of 2008). A lender can explain to a sales person why rates on chattel (personal property, home only) financing are higher than conventional housing's mortgage rates. But if that sales person reads the reasons in a trade publication, it seems more plausible than if the lender alone says it.
Let's take the example a step further.
If I were a retailer or community owner that dealt with repossessions, among my top priorities, I would absolutely make it a focus for my sales team to promptly sell a lender's repo. Further, I would want to recover as much of that lender's loan balance and repossession costs as humanly possible.
The short answer is more financing available at lower rates. But let's drill deeper for the reasons 'why.'
Losses are a key cost factor in the pricing of manufactured home personal property (chattel, home- only) loans. The interest rate has to in part reflect the costs of making and servicing loans. Interest rates also have to account for costs for repossessions.
Approximately 60% of all manufactured home sales are financed via a chattel loan transaction.
When a lender takes a repo on a home-only loan, the loss can be 50% or more of the loan balance. Ouch.
If a lender loses too much money too often, they will no longer make manufactured home loans. As proof, recall that Conseco, Origen, Associates, GreenPoint, etc. - once major players in manufactured home lending - are all gone now due to high losses from repossessions. “Bye bye lender” means “bye bye financing” and good-bye to the home sales they would have financed had they been profitable.
Without home only lenders, where would the secondary resale market be? When a manufactured home owner wants to sell, they need that personal property lender too. Without that personal property lender, resale home values would sink dramatically.
When pre-owned home values sink, new home sales get tougher. Our value proposition to "good credit" customers diminishes. The list could go on, because of the vicious cycle of consequences.
The bottom line is that lender's success - chattel or land/home - is our long term success. So protecting the lender against losses - giving them a chance to make a reasonable profit - protects your ability to sell more manufactured homes today and tomorrow. Lenders could have lower rates if losses were lower. So you see many reasons for pushing for maximum recovery for a lender on a repo.
Now, almost everyone who has been around the block as an owner or senior executive of a manufactured home retailer or community operation knows the facts above to be true. That said...
So why do so many chattel lenders take a 50% or greater average loss when a repossession occurs?
So why have communities or retailers often tried to 'steal' a home from a lender by beating them up on the price of their repossessions? Ouch. Short term profits cost you long term sales and even more profits.
I know there are two sides to this topic, but the point is that for long term success, the lender has to be protected. If I want to be long term in retail or community operations, then I better safeguard my lender!
Now an industry lender can't readily proclaim what your just read, because they know that some will get angry at hearing or reading the first parts of the statements above. Lenders don't want to anger a customer – the retailer and community - neither do associations want to upset members. Yet, the facts are still facts! The disconnect in failing to communicate clearly on a vital topic like this one actually costs everyone in the Industry's mix long term profits.
But we at http://MHProNews.com/ - as a pro-industry trade publication - we can say it and have done so (just did it again). Do you see the point about being able to both complement and express what associations and businesses can't do as easily solo?
While we are on the topic of lending, I happen to believe the above is true and common sense. I've twice been heavily involved in sales of lender repossessions during major down turns. We did mitigate the losses for our lenders. I helped put policies in place that maximized lender recovery. I have the thank you letters from the lenders on their letter head to prove it. So I'm not just preaching some theory here. I've practiced what I preached here personally and professionally. So my argument that we cut off our own futures every time we let a lender take a big hit on a repo rings true both based on facts as well as on conviction and lived experience.
I could go through a host of such examples, but will make only two more quick ones.
Also, please read the column written by Doug Gorman, manufactured and modular home retailer - an MHI and MHAO member - on http://www.mhmarketingsalesmanagement.com/blogs/industryvoices/?p=997.
The ability for Manufactured Home Industry professionals to sound off on topics like the important ones above are more of the critical services that a good trade publication does for the industry it serves.
As a retailer, community operator, lender, insurance company, supplier, vendor, installer, transporter, manufacturer or association, I would be encouraging all levels of Industry people to read daily. That may seem self serving, but in fact it is a win-win for all involved because it is Industry serving.
By creating a free online place to communicate, there are also opportunities to enhance performance and share information about products and services. By sharing articles with inspiration, practical tips and ideas, there are even more real ways to make more money.
All that happens because we serve the businesses and associations who serve you.
Communications today is more important than ever before. We are constantly blitzed by online, TV, email, billboards, signs, radio, print and verbal communications. Without a solid, daily pro-industry voice that preaches the business to business (B2B) professionals' messages, factory-built housing information would soon be less than background noise. As much as we may admire or enjoy a monthly print publication, the news can be too stale by the time it arrives to impact on time sensitive issues.
By the way, in that blitz of information we are hit with daily from all forms of communications, we learn anew the importance of repetition. For realtors, the mantra is location, location,,location. For marketers, educators and communicators or all types, the mantra is repetition, repetition, repetition. One has to repeat a message many times in order for it to truly sink in.
Thousands daily read and pass along the links to news stories, OpEd or guest columns and featured articles here. Associations and individuals alike – thank you! - forward messages. Those are among the reasons why we have grown from 10,000 visits (i.e.: readers) our first month 2.5 years ago, to over 100,000 visits (readers) now. That is why some 700,000 plus page views monthly - more than all other 'like' venues for factory-built housing combined - and some 2 million 'hits' a month take place here at http://MHProNews.com/ (http://MHMSM.com/).
Your reading, your sounding off and writing - as Margaret Clark and Doug Gorman have done in the examples above - make this a unique resource.
Trade media communications offers an easy way to improve and grow results, and thus profits.
I like ROC USA's tag line, Better Together. It just happens to be true here too. The more industry pros who read, the more who sound of intelligently on issues that matter most, the more who support, sponsors and encourage this type of platform, the better off our Industry becomes. B2B Communications is vital to any industry.
We as manufactured housing professionals share a deep need to communicate with each other. The opportunity for mutual profitability and advancement depends on it. ##
(Editor's Note: L. A. ‘Tony’ Kovach is a member of MHSpeakerTrainer.org)