I mean, October into the early part of November wasn’t great. But it’s also true that what’s happened in the last 10 days has definitely stimulated a level of activity that we weren’t seeing three or four weeks ago. So we find ourselves an awkward point for the earnings call because I could feel really good about seven days where I could look at the last month or two and say, well, it’s sort of mixed or as you did, you can look at it over years and look at, well, what’s the normal sort of progression. So I think we’ve given a fairly cautious estimate of where sales may land in the first quarter. And it’s influenced a little bit by what you said. I don’t think we’re in a place where we feel like we have to go chase unit activity right now. We’ve got compressing cycle times working in our favor.
We’ve got a rock-solid balance sheet. We’ve got a lot of runway left in the fiscal year. So this just doesn’t feel like a window where we needed to win the day, win the week, in order to set ourselves up for the year. So I’ve touched on three or four different ideas there, but I mean each of them sort of come back to definitely not giving a guide on orders at super ambitious. We’re giving a guide that’s very rooted in some of the tougher weeks of the last 2 months.
Alan Ratner: You answered every part of my multipart question, Allan. So thank you for that. Second topic would love to discuss our mortgage rate buy-downs. You’ve talked a lot about the mortgage choice program that you guys have. There’s a lot of focus being spent on mortgage rate buy-downs right now across the industry, there other homebuilders devoted a lot of time on their calls talking to their national programs. They’re offering what the exact rate is. And I know your situation is different. So is there any way for you to give us a little bit of data or insight into kind of what the average rate your buyer actually is getting based on the incentives you’re providing or what percentage of your buyers actually are choosing to put the dollars into a rate buydown just to kind of give us a little bit of a comparison point to where you guys stack up versus the rest of the industry?
Allan Merrill: Yes. I can give you a little bit of color. I can’t give you the same granular data because obviously, we don’t have a mortgage company. But couple of interesting things, I think. First of all, we are obviously well aware that many competitors offer on a finite number of home for a short period of time, a specific incentive in their mortgage rate. We tend to operate a little bit differently, which is which is the community in the home. Now let’s talk to two or three of our choice lenders. And what’s fascinating is talking to our sales consultants and actually personally talking to some of our buyers, they go through a fairly elaborate and it’s maybe an elongated sales cycle, but they go through a long process of really thinking about, “hey, do I want the 321, do I want a permanent buy down?
How do I feel about where rates are going to be in the future? Importantly, can I qualify at the fully indexed rate. So a temporary buydown is really the focus, and I want to save the cash or am I more interested in the permanent? And I think seeing different programs and different offerings from different lenders, and each lender knows that other lenders are also talking to that buyer, it’s interesting. It isn’t as simple as, hey, we have an X percent rate on this home for that price. It is more dynamic than that. But what ends up happening as a result is I think we get customers feeling a little bit more comfortable that they’re not getting jammed and they’re not missing something. It’s not like, oh, there was an obvious trick to the whole thing that we didn’t understand, because they’re getting that transparency across multiple lenders.
I can tell you that more of our buyers opt for permanent buy-downs than temporary buy-downs a larger share due. But I can also tell you that in that October time period as rates pushed up two and through eight, we actually saw that start to move more towards the temporary buy-downs from which I can surmise that buyers had a more higher degree of confidence that this is a little bit of a — if not a top, it’s a high watermark or a higher watermark and there’s a higher probability. I’m going to be able to refinance this rate. And so the temporary makes more sense than the permanent buy-down. But I mean that’s kind of the type of thing I can tell you, getting into specific rates. I mean, for sure, I mean, we can — we’ve got rate sheets from all of vendors and we can talk about what a quarter point on a permanent buy-down relates to.
But then what’s the credit characteristic of that buyer, what’s the loan to value, there’s just too many variables to get into it at that granular level. I will just tell you, I’m so happy every day to know that every one of our buyers is seeing multiple proposals and they go back and forth, hey, show me your 321s. All right, show me your one by two. Show me your one by twos, Show me what your permanent would be. Well, hey, I got a better permanent over here. Can you match this permanent? That dynamic is awesome in an environment like this.
