REAL ESTATE

How Is It Done?: How does Webb sell new, single-family detached homes in South Orange County for less than $200,000? Especially in a tract where the same models in earlier phases sold for more?

First, all Kaufman & Broad buyers in Orange County are given a pricing-policy agreement to sign in which the company says it does not guarantee that the value of the homes will rise. That keeps sales agents from promising the moon and the stars when they can’t deliver, Webb said. It also keeps buyers in the first portion of a development from complaining that they were snookered if similar models in a later portion go on sale for less. (Other companies with price waivers are William Lyon Co. and Shea Homes.)

But there is more to it that that.

“We bought the land two years ago, so we got it at the right price,” Webb said.

And, he confides: “We also went back to our subcontractors and worked with them to lower their rates, so we have lower construction costs. And we now are willing to take less profit per unit than in the past in order to move the product so the homes don’t just sit there.”