Low land prices enable couple to become developers

Some would say Brian and Karen Brunhofer must be fearless. In this very difficult housing market, the former Pulte Homes executives have founded a new home-building company, Deerfield-based Meritus Homes, and recently opened their first subdivision, Creekside at Inverness Ridge.

But the truth is they are not fearless. They are simply canny businesspeople with lots of experience and chutzpah. At a time when the housing market was tanking and builders were rushing to unload their inventories of land, Karen, who left Pulte in 2007, was involved with a group investors that was buying up that land at bargain prices.

“In most cases, we were buying land for less than the cost of the infrastructure they had already put in,” Karen said, “and we were only buying parcels that were in great locations where land was in short supply and high demand.”

Then, when Brian left Pulte in 2009, the couple was in the perfect position to finally follow their longtime dream of starting their own home-building firm because they literally had hundreds of home sites at their disposal. The Brunhofers partnered with Karen's investment partner, Gary Janko of the Janko Group, and the three launched Meritus Homes.

“Like Brian and me, Gary realized we could make the market work, not just in our favor in starting a new home-building company, but in our customers' favor, too,” said Karen. “Because we were able to acquire these properties at such a tremendous value, we can pass those savings along to our buyers.”

The plan is for Meritus (which is derived from a Latin word meaning “having earned or deserving of”) to offer move-up single-family homes and townhouses in Chicago's North, Northwest and West suburbs. It currently controls home sites in Inverness, St. Charles, Naperville, Lake Villa, Lindenhurst and Addison.

What is your dream home?

Karen and Brian agree that they would love a livable Nantucket-style home on the ocean in Cape Cod or somewhere nearby.

What is your favorite home amenity?

Here Brian and Karen diverge. Brian loves big kitchens that open onto big family rooms where you can “mix laughter and food with family and friends.” Karen prefers finished basements with their wonderful wine cellars, wet bars and theater rooms.

Their backgrounds and respective responsibilities:

Brian started his career with the Ernst and Young accounting firm in Detroit. One of his clients was Pulte Homes and he eventually went to work for them, spending 11 years with Pulte, first in Michigan and then in Chicago. Karen spent 12 years with Pulte, first in Michigan and then in Chicago, as well.

When they arrived in Chicago, Brian became president of Pulte's Chicago operations while Karen was president of the Del Webb operations. When the company reorganized in 2006, Karen became president of the northern half of the Chicago operations for both Pulte and Del Webb, and Brian was president of the southern half of both operations. When Karen left Pulte to join the investment group, Brian became president of all of the Pulte and Del Webb operations in the Chicago area.

At Meritus, Brian handles field operations, home construction, sales and marketing, while Karen is in charge of land acquisition, financing and joint venture opportunities.

“Karen and I each have different skill sets that complement each other in this business,” Brian said. “Just like at home and with the kids, it's divide and conquer.”

Their philosophy:

“We want to provide our clients with not only a great quality new home, but also a great home-building experience. We want it to be fun and exciting for them,” Brian said.

They will also take pride in meeting their customers' individual needs with creative ideas. Meritus will be a nimble and attentive company that strives to understand what their customers are looking for and then is able to provide it. If someone wants a second-floor laundry room, for instance, they will look at the home plans and see if it is possible to add it somewhere.

“We will make sure that we are truly listening to our customers,” he said, “and then we will keep those requests and concerns in mind when we design our next community. You have to know how people are living to recognize the evolving trends.”

The details:

Meritus Homes has opened its 27-home project in Inverness Creekside at Inverness Ridge. It is aimed at first and second-time move-up buyers, as well as at downsizers.

Creekside is a 210-home community that was originally developed by Toll Brothers and KB Homes, Karen said. Her investment group purchased KB Homes' remaining 27 lots during the market downturn and now Meritus has chosen to complete this community as its first foray into the market.

Eight floor plans are available in this gated, maintenance-free community.

The plans range from a 2,600-square-foot ranch with the base price of $489,900 to a 3,700-square-foot two-story home with a base price of $549,900. Exteriors will all include brick or stone and many will include Tudor or Craftsman-style architectural details.

A variety of interior design options are also available, which will allow buyers to personalize their homes. These include fireplaces, tray ceilings, deluxe laundry rooms, art niches and wet bars. There is also a wide selection of flooring, countertops, lighting, cabinets, appliances and hardware to accommodate any tastes.

“This community possesses all of the attributes we want to become synonymous with Meritus Homes,” Brian said. “From its lush, natural surroundings and award-winning schools to its lifestyle-driven floor plans and desirable location, Creekside at Inverness Ridge offers everything we've always dreamed of offering homebuyers. You only get one chance to make a first impression.”

What is the best part about being a builder?

“It is so tangible,” said Brian. “You can see the impact you have on a customer and it is fun to be a part of a very emotional experience for them.”

Karen enjoys “being a part of the biggest purchase most people will ever make,” but she also thrives on putting the deals together and seeing a piece of empty land become a community.

What do you like about the small company versus the large, publicly-traded company?

“Working on a smaller, more local level is very rewarding,” said Karen. “It has been a great experience which has demanded a lot of discipline. We have our hands in everything because we don't have IT and marketing departments to hand things off to.”

“I find it very energizing to be in our own small company,” Brian said. “We are rolling up our sleeves and doing things that we haven't done in a few years. For instance, when we were hiring a director of construction, we got almost 1,000 resumes and I went through all of them personally and interviewed about 30 people.”

Meritus has a small team that is intimately involved in all of the key details of running the business and that is rewarding for the Brunhofers.

What are the biggest changes you have seen in the building business?

The motivating factor to buy a house has changed for many people, Brian said. In recent years buyers purchased a home as a short-term investment, thinking they would sell it at a profit and move in a few years.

“Now people are reverting back to the way people thought years ago,” he said. “They are buying houses because they want to live in them and because they consider them to be a smart, long-term investment.”

Karen added that the financial picture has also changed.

“It is difficult for builders to get financing to start projects and it is also difficult to find financing for the people who want to buy your finished houses,” she said.

Future plans:

“Eventually, we would like to be building a couple hundred homes a year,” Brian said, “and we would like to develop our own land, too, and sell lots to other builders. But it all depends on how the market evolves over the coming years.”

In the meantime, they are planning to open a second community sometime in the middle of 2011, although no formal announcement has yet been made and they aren't revealing where that community will be.