It satisfies Jack Furr and Chip Shelton, owners of Liberty Homes in Charlotte, to see their customers cry. Homeownership may be part of the American Dream, but for many people it’s just that – a dream. High prices, credit problems and the lack of a down payment make it near impossible to buy a house. Those who can afford a modest home resign themselves to accepting a cookie-cutter house with ho-hum amenities. Enter Liberty Homes. When potential homebuyers realize their dream can become reality – and that maybe that reality includes granite countertops – sometimes they can’t help themselves. The tears just come. That’s when Furr and Shelton know they’re still on top of their game.
When Amy Moore of Charlotte decided it was time to buy her first home she knew she didn’t want to commit to a big mortgage. After some shopping around, she discovered that Liberty Homes offered “a great product for the price.” And now? She has “the cutest home ever!”
That type of enthusiasm is exactly what Furr and Shelton have aimed for since 1998 when they began building homes that would fulfill the American dream for most anyone chasing it down. Neither man was a stranger to the construction business.
Shelton’s father, Charlie, and his uncle, Ed, are the founders of Fortis Homes, one of North Carolina’s first entry-level homebuilders. The pair later ran Shelco, a commercial real estate development firm.
“I grew up around construction,” Shelton says. “And my father has a tough work ethic. I worked at construction sites after school and every summer. And I didn’t get the cushy jobs in air-conditioned offices. Those went to my friends. I was out there digging out footings and sweeping floors.”
Shelton didn’t understand it then, but he sees now what his father meant when he told him that he’d have a hard time knowing if a job was done right if he’d never done it himself.
Furr’s father was also in construction and had a similar penchant for forcing hard work on his son. When Furr decided to take a year off school after graduating high school, his father, Reese, thought that would give him the opportunity to build his own house. With some gifted land, a co-signed loan and the help of his father and uncles, Furr spent the summer building his own house.
“While my buddies were out partying and having fun I was working to make the house payment and pay the electric bill,” Furr says with a laugh. “I showed up at mom and dad’s a lot for dinner because I could barely make enough to pay my bills. But my house was paid off when I was 28 years old.”
Furr worked in drywall for a while, looking for the right opportunity to start a building company. He felt there was a real need for affordable homes in Charlotte. He stared FDW Homes in the early ‘90s, building just a few homes the first year. They were snatched up faster than a free lunch. So he built a few more. They, too, quickly sold. He realized he was onto something.
Around the same time, Shelton was talking with colleagues about getting into entry-level homebuilding in the tradition of Fortis Homes. Howard Peabody, of Shelco, suggested he call Jack Furr. He’d never met Furr but he decided to give him a call and arrange a meeting.
“We sat down together and talked about what each of us could bring to the table,” Furr recalls. “We had similar, strong backgrounds in construction and we quickly realized we both wanted the same things. In February of 1997 we decided to team up in a 50-50 partnership. And we haven’t looked back.”
Filling a Niche
While selling houses wasn’t difficult for FDW Homes, finding lots cheap enough to keep costs down was beginning to be a problem. Back then, Furr sold a three-bedroom, two-bath home for $49,900.
Furr had teamed up with a developer, but after doing two subdivisions together the developer decided swimming through all that red tape just wasn’t for him. That’s when Furr decided to start developing the lots too. By the time he and Shelton began building as Liberty Homes the smaller homes Furr had been building were becoming obsolete. Even first-time homebuyers wanted more square footage. Their least expensive home was now up to $79,900.
The market easily supported the rising prices. What did stand in their way was the weather. Their partnership began during one of the worst El Nino weather patterns in recent history.
“I couldn’t wait to get out there and start building but it was raining about an inch and a half every day for weeks,” Shelton remembers.
“Chip is like a thoroughbred racehorse,” Furr says with a smile. “I was thinking he was going to get discouraged waiting for the weather to break. We were watching the interest ticking on our loans, we had equipment and subcontractors lined up and we were both feeling some pressure. But I knew once we got the pipeline rolling things would start happening for us.”
After El Nino moved out to sea, Liberty Homes took off. By now, there were more players on the entry-level home playing field. But Liberty Homes maintained a competitive advantage. The partners decided right from the start they were going to pick up the bulk of their profit in the sale price of the home and not place big markups on upgrades and added features. They wanted to incorporate some interesting architectural features, such as curved archways and fireplaces, and updated fixtures and appliances into the homes’ base prices.
“I compared Liberty with other builders and found that some of the standard features Liberty offers are upgrades with other builders,” Moore says. “You get a lot for your money with Liberty.”
Liberty Homes sold 35 homes that first year. Today, Furr and Shelton have expanded throughout Charlotte’s surrounding counties and are building in Winston-Salem and Charleston and Columbia, S.C. They still do a lot of their own “dirt work” as they like to call developing, but they supplement with retail lots to expedite building and keep it simple in areas that are hours away.
By staying true to their philosophy of offering the most they can for the least money, they maintain a solid market share. They’re slated to close on about 275 houses this year.
Staying a Step Ahead
It’s easy to say you’re going to offer more than the competition; it’s harder to actually do it. But Furr and Shelton are determined to stay true to their vision, to keep bringing tears to customers’ eyes. Staying on top of costs and ahead of Charlotte’s many big players requires constant communication and a lot of pulse taking.
“Our strategy can change from breakfast to lunch,” Shelton says. “This market is so dynamic it’s hard to keep a watch on it. We just figure we have to work twice as hard as the bigger national companies to stay in the game.”
The partners insist their formula for keeping costs down is simple. They run a lean operation and develop strong relationships with suppliers.
“It’s not some super-secret strategy,” Furr asserts. “We ask our suppliers to offer us product at a price that works for us and then we, in turn, make sure they get paid on time and that there are never any issues. We try to remember that it’s not all about us. It’s about the relationships.”
Their relationship with Trane, which they’ve been partnering with since Liberty’s inception, allows them to offer top-of-the line energy-efficient hybrid heating systems that combine a traditional heat pump with a gas furnace. These systems can save a homeowner 30-40 percent a year on their energy bill according to Shelton. But Liberty takes it one step further and offers Trane’s new CleanEffects air cleaner as a standard feature too.
“These types of things aren’t glamorous and they don’t offer a whole lot of media appeal, but they’re important features for our homebuyers,” Shelton says.
Name recognition is key to their competitive strategy. Although the partners know they can offer less expensive fixtures and appliances that are comparable in quality, they want buyers – and their friends and relatives – to recognize the brands they use.
“Buyers do their homework nowadays,” Furr says. “They’re more educated. A lot of our buyers solicit opinions from their parents. When they hear names like Owens-Corning, Mohawk Carpet, GE and Trane it evokes confidence.”
The fact that homebuyers take the time to do research before they make their decisions may scare some homebuilders, but it works to Liberty Homes’ advantage.
“We have potential buyers come to us first and they’ll say, ‘we’re going to go see what else is out there,” Shelton says. “And we encourage them to do that. We know they’ll be back.”
Their focus on cost control extends to their employees. Their team is so loyal and committed that the partners say it even catches them off guard sometimes.
“I’ll have someone come to me and explain a better way of doing something that may save us a few dollars and I’ll think ‘wow, these folks are really focused on keeping it lean,” Furr says. “Chip and I laugh about it because we feel lucky to have such a great team.”
Luck has little to do with it. Shelton and Furr are not only accessible to their customers, they make themselves accessible to employees too. There are no insulating layers between them and their employees and they keep their doors open. The partners strive to create a relaxed atmosphere and avoid micromanaging.
“We’ve found that people tend to work harder when they feel empowered to do things their own way,” Shelton says. “And we’ve just got great people. I’d say that many companies our size could easily have 60 employees. We’re doing well with 25.”
Keeping in Touch
With a large national corporation, when a homebuyer has a question or problem they have to work through a network of contacts to reach a resolution. And they’ll never speak to anyone in the company’s upper echelons. When a Liberty Homes customer seeks a resolution, more often than not they’ll find themselves speaking directly to an owner.
“We feel it’s our duty to make ourselves available to our customers,” Shelton explains. “We try to respond on the cost of a change or contract acceptance on the same day. That’s pretty much unheard of in this business.”
Surprisingly, Liberty Homes doesn’t charge a change fee for changes made during the building process. Shelton and Furr don’t want to discourage buyers from adding their personal touches wherever they can. They pride themselves on providing excellent follow-up on issues that arise and a superior warranty supported by a full-time warranty department.
“We build houses and run our company with our customers in mind,” Shelton says. “We know our responsiveness and accessibility to customers and the way we stand behind our product are unique. It requires a lot of commitment, but it really makes us stand out.”
Emerging from a rain-soaked beginning, Liberty Homes has shown steady growth over the years and expects to top 300 closings in 2007 and the average home sells for about $135,000. Furr and Shelton are focused on controlling growth and limiting risk.
“Our growth will be dictated by the market,” Furr says. “Too many people think things can’t get bad. They can get bad. Really bad. I remember the Jimmy Carter years when interest rates were through the roof and you couldn’t give a house away.”
“Watching and listening to my dad taught me to keep each foot firmly planted as we climb up that ladder,” Shelton adds. “It’s a lot easier to fall from the lower rungs.”
The next big step Liberty Homes is taking is to enter into the move-up home range. Many of their satisfied customers are now ready for their next home and it’s only natural that they’d turn to a builder they already know and trust.
“I’m ready to move up to a larger home,” Moore says. “I will buy my next home from Liberty. I know it will be a quality home with features I’ll enjoy and I’m actually looking forward to the experience.”