Apparently it is the in thing to do these days. One thing that selling a model early in a project does for the project is it instantly provides a closed sale. Closed sales are of great value at the outset of a project because they set a price range for the project from the outset. That willing buyer pulling the trigger at that price is considered proof that their list prices are reasonable, and these inside sales comps are always given more weight overall than sales from outside the project. A closed model home sale will get used as a comparable sale in subsequent appraisals until it becomes too dated to use.

Of course, when using a model home an appraiser is supposed to take into consideration the effect on value of the furnishings and other non-realty property included with the sale as well as all the options and upgrades. The point remains that, beside reducing their carrying costs, selling model homes and then leasing them back for a year or two is almost all poisitive for a builder.

Seeing as how they’ve apparently already sold some homes in this particular project I guess the “closed sale” aspect doesn’t apply. But the “reduced standing inventory” argume still does apply.