The Perfect Balance of Cost & Customization

For co-founders Derek Wilder and Paul Schwinghammer, starting a home construction business was the logical step for the former business consultant and real estate broker, respectively. Today, Hallmark is one of the Midwest's largest and most successful firms.

When working as a CPA at international consulting giant Deloitte, Derek Wilder specialized in business consulting for construction companies. While working on a job, he met real estate broker Paul Schwinghammer. Between Wilder's financial skills - he received a degree in accounting from Anderson University in 1990 - and Schwinghammer's real estate expertise, they identified a niche in the market that wasn't being addressed: affordable custom homes on your lot.
“It seemed like there were many track builders in subdivisions that didn’t allow you to customize your home,” Wilder said, “and then there were a lot of high end custom builders where customization was unlimited, but at a very high price. Paul felt like there was a market in between, and that was the direction that we headed.”
Since founding the company in 1992, Wilder, CEO, and Schwinghammer, President, have built Hallmark into one of the largest custom builders in the Midwest. While it is a full-service builder, its focus is building affordable custom homes on a clients’ lot.
The two have found a great balance within the company. Wilder works with CAD systems, marketing, accounting and quality-control programs and is continuously improving and developing them to propel the business forward. Schwinghammer is the authority on the jobsite, accessible to customers 24/7 and answering any questions construction managers and customers may have. He also works heavily with their sales consultants across the state at their five model locations as well as reviewing every jobsite before a customer moves in. 
“I go through each home with a fine tooth comb, crawl into crawl spaces and the attic and go over the house as if I were going to live in it myself. I make my own list for construction managers to clear prior to handing over the keys to each and every owner,” Schwinghammer said.
Besides their attention to detail, it is the tight focus of the company and the customizable options that really set them apart from other builders. “There are  some builders that will build on a customer’s lot but won’t allow the customer to customize the house,” Wilder said. “Then, you have custom builders that focus on one county and will let you customize a house, but they only build a few a year. You have other builders that build all over the Midwest but they won’t let you change anything. Finally, you have national builders that might let you change a few things, but you have to build in their subdivision.”
“Our business model is really different than others,” Schwinghammer added, “and has really focused on allowing customers to make changes and customize whatever kind of home they want and because of our scale we are much more affordable than builders that only build two or three a year.”
As a full service firm, it’s not just building a client’s home that Hallmark focuses on but the entire process from dreaming it to moving in. The sales staff works with a client to determine the type of house they are looking for and gets a basic idea of the design. Then they send those ideas to the CAD department, who draw a series of drafts for the client to review. Once the design is finalized, the plans go back to the CAD department for final construction details.
“A significant difference between our company and the competition is that we do everything turnkey as opposed to requiring our customers to subcontract out a portion of the house,” Schwinghammer said. “Some on-the-lot builders will build the house but not do certain things like the septic system or the well or the exterior concrete, whereas we do it all as a packaged deal.”
While the economy has impacted the industry as a whole, Hallmark has ridden the brunt of the storm remarkably well, changing and adapting their financing practices to meet the changes in the industry. Before the economic downturn, many builders were using large lines of credit to cover the construction costs of a project. Once the project was completed the customer would obtain a loan that would cover the sales price.  Eventually, banks across the nation either stopped extending builders’ lines of credit or they revoked the line altogether.
“It really hurt the industry,” Wilder said. “Many builders had sales that could have kept them going, but they couldn’t stay in business because their financing was revoked by the banks so they didn’t have a way to build the homes with their current business model.”
In the light of these changes, Hallmark found ways to adapt and has worked diligently to prosper in one of the most challenging economic environments since the Great Depression.
“We had to reorganize our financing by helping our customers obtain the necessary construction financing on their own and carry it through the process,” Wilder said. “While we didn’t really see a drop off in demand for people wanting to build homes, there was a huge drop off in sales, primarily because many people weren’t qualifying for loans.”
Today, Wilder and Schwinghammer spend more time working with their in-house loan specialist, Connie Herring, in order to help customers make their dream homes happen.
“Connie has spent a lot of time modifying the way we were doing financing and the way we were supporting customers by trying to help them procure financing,” Wilder said.
The company also has kept their fixed costs low over the years and has recently spent considerable effort enhancing their online marketing and customer outreach.
As a result, Hallmark has seen a 37 percent increase in sales from 2009 to 2010 and sees more growth in their future.
In the fall of 2009 Hallmark was tapped to build a house for ABC’s Extreme Makeover: Home Edition where they built a high-end, custom house in approximately 106 hours for a deserving family. “We were honored to be selected by ABC,” Schwinghammer said, “It’s gratifying to know that we could help make a positive difference for a Hoosier family.” Wilder added, “It’s not just the family who  had a positive experience, the real excitement came in knowing how much the people who volunteered on the project were changed. It was great to be a part of something bigger than yourself.”
In looking toward the future Hallmark’s plan is to continue to stay focused on their niche of affordable custom homes. “Our goal is to continue to expand into other areas of the Midwest and look forward to continuing to serve our customers in local communities,” Wilder said. CLT