These days my "in-box" fills up every day with "Special Offers" from builders and developers giving away freebies, increased commissions and buyer incentives. Some are offering to pay closing costs, upgrades, extra rooms, etc. Others are thinking a little outside the box: One recently offered a 2-year membership to Freedom Boat Club to whomever bought one of their new townhomes in Johns Island!
Although these incentives may work to lure home buyers, I always recommend to my clients that they view them with some skepticism. It is also important to find out:
Although these incentives may work to lure home buyers, I always recommend to my clients that they view them with some skepticism. It is also important to find out:
- Have the developers increased their prices recently, just before "giving away" the discounts? (i.e. is it a "perceived" sale and not a real one)
- Have they been successful selling the subdivision, or are there any other issues that are important to know? (i.e. are there any widespread construction quality problems, problems with utilities or pending assessments on the HOA, etc.)
- Is the developer is a publicly traded company (these companies are driven by quarterly results and are able to effect larger discounts to get inventory off their books just in time for reporting to shareholders)
- Are the offers "gimmicks" or items of real value?
- At the nominal contract price, is it likely that the home will appraise given recent comparable sales activity?
- Is it a "spec" home - is it already completed or about to be completed? Builders are more negotiable on "spec" homes than on new construction, given they need to reduce their carrying costs.
Don't get me wrong, there are REAL BARGAINS out there (just recently a 2,600 sq. ft. brand new home in Summerville was being offered for $72 per square foot - you probably could not BUILD it for that price, without even counting the cost of the land!
Many national and local builders want to see their inventory homes off their books before the end of the year!Happy home buying!!!
1 comment:
How correct>>> "Perceived" is a dangerous word situation. Just as a retail shop has a sign in the window saying "Sale"; well of course everything in the shop is for sale, but is there really a bargain? Just like in mortgages, one has to be very careful to ask the "COSTS" OF THE LOAN and not just the rate. Home buyers should search for quality and a lender like Wells Fargo who has a proven track record. Buyers beware.
Thanks for the comments.
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