Monday, December 13, 2010

Jagoe Homes honored nationally

By Joy Campbell, Messenger-Inquirer
Published: Sunday, December 12, 2010 12:04 AM CST
Jagoe Homes has been named national Builder of the Year for 2010 by Professional Builder magazine.

Owensboro brothers and partners Bill and Scott Jagoe are featured on the cover of the December issue available Wednesday.

The Jagoe Homes team has focused on processes over the years, and that has allowed the company to deliver more value than customers saw years ago.

And they've done it during a national recession while continuing to beat industry benchmarks for net margins.

That's Bill Jagoe's take on what caught the attention of the magazine's evaluators.

The company was in contention with eight to nine companies nationwide for the honor.

The builders were surprised to earn the title even though they have caught national attention before with "six or seven articles written about us in national publications over the last two to three years," Bill Jagoe said.

The Jagoes confirm what the magazine article points out -- that the Owensboro region is not typical of the national housing market.

"We didn't have the fast appreciation of homes and the flipping, and our foreclosure rates were not as high as other areas," Scott Jagoe said. "Foreclosures have increased, but they didn't double. In some areas they doubled and tripled."

In addition, while Owensboro has suffered significant unemployment, the region has not had the staggering job losses that other parts of the country have endured.

"For every new job that's added, there's a home built," Scott Jagoe said.

Even though the company has been cost-effective for many years, the continued work to streamline processes over 10 years or more has resulted in eliminating unnecessary steps and waste, the Jagoes said.

"When you pull out costs or waste, you can add value back in," Scott Jagoe said.

At a time when homebuilding is less than robust across the country, Jagoe Homes' market share is increasing, the brothers said.

Just a couple of years ago, 2.1 million to 2.2 million homes were built annually in the U.S. About 400,000 were built this year.

Many companies either retracted or closed up shop altogether. Bill Jagoe estimates there are at least 40 percent fewer builders today than before the recession hit.

In 1985 when the Jagoes started the business, the company built from 30 to 40 homes in that half-year cycle.

This year, it will finish about 280 homes selling in the range of $130,000 to $450,000

The number of homes built has gone up and down with the market. The company completed its highest number, 365, in 2003-04.

Today, Jagoe's builds primarily in Owensboro, Bowling Green, Newburgh, Ind., Evansville and Louisville. Annual revenues are about $47.3 million.

Jagoe Homes stays on top of its industry through market research and consulting, the brothers said.

Examples of value-added items for homeowners are EnergyStar certifications and sodded lawns -- which are included in the price, the brothers said.

"There are 15 items required to get a home EnergyStar-certified, and they add cost," Scott Jagoe said. "But we added EnergyStar without costing the homeowner an extra cent."

The Jagoes are fourth-generation builders. Both remember starting on job sites with their father at age 12. Scott was tasked to pick up trash. Bill said his first job was working with a bricklayer.

Both are Daviess County High School grads. Bill went on to Murray State University, and Scott earned a degree in real estate and construction management from the University of Denver.

Jagoe Homes has 56 employees. Counting subcontractors, it takes from 300 to 350 tradespersons to build a home, Bill Jagoe said.

Scott and Bill Jagoe say they likely will increase the amount of building on-site in the coming year.

The company also is developing the 650-home Deer Valley subdivision on U.S. 231. That project was shelved for three years when Jagoe's seized an opportunity to build in Lake Forest, Bill Jagoe said.

The streets and storm/sanitary sewers are now under construction.

Other opportunities also have surfaced including development of Paradise Garden in Newurgh, he said.

The Jagoes expect to expand within their markets and continue with the successful business model the company has developed. That includes bringing trades partners into the process and ensuring that they understand the expectations.

"We always seek out the best possible financing for our customers and shepherd them through the process," Scott Jagoe said. "We have five to six lenders we work with."

"We make the process easy for our customers. We took out the things that were clogging the system up," Bill Jagoe said.

Both Jagoes said they are starting to hear from builders across the country who want to see what they're doing.

They said they expect to continue to learn from their colleagues as well.

Joy Campbell, 691-7299, jcampbell@messenger-inquirer.com

On the Web

* Jagoe Homes - www.jagoehomes.com

* Professional Builder magazine - www.housingzone.com/pb/pubhome/