I’m not trying to fool anyone. Sometimes, the builder incentive issue isn’t something that I can compete with, and I tell people that up front.
To save face, builders don’t like to lower selling price. It affects neighbors, attitudes and comps, etc…. SO what they do is keep selling price the same and increase incentives. It might be prepaid assn fees, or contribute to closing costs, but what I explain to people that I cannot compete with is when builder offers $50,000 in upgrades, that is $50K at their RETAIL. You might be able to get the same work done for $15K (or less) BUT…
One problem is that even if you bought the base model, you cannot get a lower selling price because builder doesn’t want to SELL for less. It also doesn’t make sense to take a brand new base model, buy it, and then start ripping it apart to save money on upgrades. You may void some builder warranties.
Builders play other games like saying if you take our financing, you only need a $5K deposit, but if you want outside financing you need a larger deposit, or have to pay for upgrades UP FRONT. etc.
You are dealing with huge public companies that understand business. You can get a fair deal, but you aren’t going to take advantage of Home Builders, Car Dealers or Casinos regardless of what their employees tell you.
It’s definitely worth checking around, but the builder’s know how to play the game. What you may not know is that the builder may own the “preferred lender” and may even own the escrow company. Somewhere in small print they will disclose their affiliation.
Another HUGE issue with upgrades is the actual appraised home value, regardless of incentives. Lenders don’t always lend on upgrades reatil or prepaid assn fees.
$50,000 “retail” in upgrades might add $15k-$20k to home value. Even if a buyer agrees, the lender may not accept the
appraisal.
Many people think that builders HAVE to lower prices soon…
It’s not so simple. You are dealing with HUGE public companies that have some deep pockets after the last few years. It’s just a game of cat & mouse. Some builders are going to go bust after the boom, others will offset losses from other areas of the country…. They can manipulate accounting numbers for awhile. The true losers become the stock holders.. Management still gets their salaries (and pron bonuses!) Lots more can be said about this.
