Homebuilders: Buy Now, We'll Throw in a Car
John Morell
08/22/08 - 02:26 PM EDT
There are some beautiful floor plans at the Springtown Knolls development in Bucks County, Pa., for single-family homes in the $600,000s. And builder
Reshetar Homes offers a housewarming gift to fill your new garage -- a 2009
Toyota(TM) Prius.
"We've offered lots of incentives in the past like finished basements and custom lighting, but with this development a Prius seemed right on target," says sales manager Megan Reshetar. "Springtown Knolls homes are built with the standards of the U.S. Green Building Council, so if we were going to offer a car, it had to be a hybrid."
So far, only two of the 20 homes have been sold, but buyers don't get immediately in the fast lane for the highly coveted hybrids. Just like anyone off the street buying a Prius, there's a three-month waiting list for the $22,000 car after you buy a house at the development. "It's a basic model Prius, but you have the option to pay for upgrades to it," says Reshetar. "Our homes, however, are anything but basic..."
The idea of getting a new car is an enticement. "We've had a number of calls about it, it's definitely generated some interest," she says.
Developer incentives have been around as long as there have been more caves than cavemen. In the post-World War II era, developers often competed by offering the usual accoutrements to boost sales: furniture, appliances, even new-fangled window air conditioners. But during real estate boom years, of course, those incentives dried up and you were lucky to receive a new welcome mat when you sign the sales agreement.
The National Association of Home Builders found that 45% of its members offered incentives during 2006, which is when the current boom began ebbing. In 2007, the figure jumped to 56%. Estimates for this year are sure to be higher.
Among the popular enticements are flat-screen TVs, custom closets and iPhones. Other offerings include Caribbean cruises, airline miles, and even the ultimate in new home luxury -- a built-in Sub-Zero refrigerator. In lieu of these, some communities also allow you to choose a cash option, which can be used to pay down closing costs. Since developers seem ready to give away merchandise and cash, is it smart to play hardball and negotiate for a better deal? Say, perhaps, a flat screen in every room?
"You may be able to get a better deal, but it's also best to be smart about the market," says Todd Rich of New Home Trends, a Bothell, Wash., provider of real estate information that examines property sales in the Northwest. "You could push a developer to give up more of an incentive, but you've got an unknown factor that could be working against you, which is the interest rate."
In other words, while you're on the phone with the sales staff for a week or two in an attempt to pump up the quality of travertine stone in the bathrooms, mortgage interest rates may tick higher. And while you might get that extra incentive by waiting, the added mortgage interest will make sure you're paying for it for a long time.
"It's not like you're dealing with a car salesman who has a lot full of SUVs no one wants," says Rich. "Developers have an advantage. What they're selling will go up in value eventually. Homes are appreciating assets and you need to treat them as such."
But if you're in the market for a new house and a developer is experiencing slow sales, it's probably worth a try to see how much you can get out of him.
"I never gave incentives to buyers," says Ken Wilson, a retired developer in San Diego. "But if they were nice enough to pay my price, I gave them little extras like free carpeting and drapes. Tell (the developer) how much you like the house, how it would look great with this or that upgrade and then stop. He'll probably put out his hand and you've got a deal."
