How are new home builders driving people and sales to their new developments in today’s marketplace? New home developers are facing a tough market this year. Recently, I visited several new home developments here in Oregon and found Builder Incentive Programs and much more.
Interest Rate Buy Downs
One of the most common incentives that I have noticed are interest rate buy downs. They have been around even in good markets but today here in Oregon they are very aggressive. Where the most common ones once were mostly available only for three to five year loans great deals on a thirty-year fixed loans are more common, at least here in Oregon. Here in Oregon the Villebois Development is offering 3.875% on thirty-year fixed loans with Wells Fargo Bank as the lender.
Foreclosure and Bankruptcy Sales
These can be great opportunities! Check them out. Your Realtor can guide you to bank-owned homes as can many websites. In some areas of the country bankruptcy sales are also taking place. One word of caution, as these builders may now not be in business they may not be around to honor the quality of the workmanship and warranties. See “Whole Home Inspection” below. In Oregon and Washington, Legend Homes and Pacific Lifestyles Homes are in bankruptcy liquidation, to see what they have left visit http://www.newhomesale.org/
New Home Builders are Offering Real Estate Brokers More
Many developers in today’s market are offering special bonuses to real estate brokers. Recently, I attended a brokers open house and received a special coupon good for 4% commission of the sales price. I recently surveyed the Salem Oregon new home market (WVMLS) of brand new homes and found that the majority were paying brokers 3% of the sales price with a few offering 4% and a few offering 2.5%. I recently surveyed the Portland Oregon new home market (RMLS) and found a few offering 4%, most offering either 2.7% or 3% and a few offering as low as 2%. If your real estate broker is getting more on the sale perhaps they can help with closing costs or other expenses. What they can do will vary by broker and state law.
New home developers don’t like price reductions. Price reductions effect the appraised value of all the other homes they still have for sale or plan to build in the development. They would rather build smaller homes with fewer upgrades, pay points in interest rate buy downs, pay real estate brokers more or provide help with down payments than sell the homes for less. Speak with your Realtor about common upgrades that the developer may put in for free. Personally, I have often been able to get air conditioning added for free.
Using your own Realtor
When looking at brand new homes be wary of signing up at the new home development. They will often try to deny you the right to your own Realtor representation because you signed in. So don’t ever sign in! The home developer will force you to work with their own on-site real estate broker who will be obligated, as per their fiduciary relationship with the developer to get you to pay as much as possible for the new home and every upgrade in it. You need and deserve your own Realtor who will show you homes in multiple developments and show you resale homes. In today’s market often some of the best deals can be found in resale foreclosed homes. Some of these homes have never been occupied and are great bargains with more upgrades than the brand new homes being offered today. If you need a list of available new homes and developments ask a local Realtor or use a Realtor website.
Whole Home Inspection
My experience is that one should always have a whole home inspection from a licensed home inspector when buying a new home. Sometimes you will buy nothing more than peace of mind as the brand new home will be perfect. In representing many new home buyers, I have seen home inspections in brand new homes uncover poorly installed and leaking jetted tubs, lack of required insulation, lack of required water pressure, and poorly installed garage doors to name a few.
Seller Funded Financing
Late last year HUD put an end to seller funded financing. According to the FHA Annual Management Report, “as of October 1, 2008, no seller-financed down payment loans could`be originated. These loans, with nearly three times the default rate of other FHA loans…” See link below for full report. That said, some new builders seem to have programs where non-profit organizations are aiding home buyers with down payments. I have seen some programs that match buyer down payment on a 10 to 1 ratio which means you bring in $750 and they give you $7500. Income and other restrictions often apply. In Oregon the Portland Housing Center is a good place to start to find out about help increasing your down payment. http://www.portlandhousingcenter.org/
Rating: 3 out of 5