Monday, August 13, 2007

Homebuilder Cuts Prices; Recent Buyer Calls Foul

I always find it interesting when new-home buyers get caught in homebuilders' price-dropping extravaganzas:

Bankrate: My Home Value Just Got Whacked

Here's the gist: "I recently bought a new home and moved in less than three months ago," says the reader in the article above. "Since then, the builders have dropped the base purchase price by more than 15 percent on other homes in my subdivision! I am furious. Is there anything I can do about this?"

The answer from Bankrate's expert, as you might surmise, is "Not really. But thanks for writing."

Cynic that I am, I have to laugh inside, just a little, when I read stuff like this. What did you expect, Dear Buyer, when you bought that McMansion? That home prices always and only go up? News Flash: They don't. And when your subdivision's builder finds him- or herself holding a glut of inventory, and that inventory ain't moving, then something's gotta give. Odds are that your home's "value" is going to be hit somehow by that "give."

To get these places sold, builders might start throwing in amenities: Think gold-plated hot tubs, two-story tool sheds, and air-conditioned dog barns. I'm not an expert on builders, of course, but I suspect they'd rather do stuff like that than drop prices. Really — who wouldn't want a conservatory in their brand new abode?

AZ Central: Homebuilders Pile on Incentives

However, at some point, when the offers of Can't Miss Extras aren't working, then the next thing to drop is price.

In suburban Dallas, incentives on single-family homes abound, including price reductions of as much as 20 percent and free swimming pools. Steve Wall, president of builder Wall Homes Inc., says his company is knocking as much as 18 percent off the list price for inventory homes in the city's northeast suburbs.

So just because you paid $350,000 for your home back in January, it doesn't mean that the builder won't unload your home's twin, a block over, for $280,000 next week. Could that create a predicament for you? Sure it could. But them's the breaks.

Home-buying is just like anything else: You rolls the dice, and you takes yer chances.

As a great many folks are now finding out.


— Posted by Michael @ 10:02 AM


Wow. Since we've always bought existing homes (frankly, I have yet to go to anybody's Brand New House that doesn't smell like there's mildew under the builder-grade carpet or in the cheap wallboard) I had no idea that builders did this. But somehow it doesn't surprise me.

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