(ARA) – You’ve invested wisely and paid down your sensible mortgage. You’re ready to move up to a more luxurious home. But the buyers’ market has you worried about getting fair value and a speedy sale for your current house. The good news is, a custom-built home could be the solution.
Custom-home builders -- who build on demand for a specific buyer rather than construct a home and then seek a buyer -- are facing the same challenges as other home developers: a market with excess inventory and a dearth of qualified buyers. In response, custom and other home builders are offering buyer incentives. In fact, 75 percent of all builders and developers are offering incentives, according to the National Association of Realtors’ chief economist.
What does this mean for buyers?
“There’s never been a better time to build a custom home,” says Paul Schumacher, founder of custom-home builder Schumacher Homes. “After all, why buy an existing house, and then have to worry about changing this or redoing that to fit your family's needs? When you build a new custom home, it will be exactly what you want the first time you walk in the front door. The current real estate market has opened up opportunities for buyers who might not have been able to build a custom home before.”
From providing free upgrades to actually paying the first 12 months of your mortgage, builders are aggressively wooing buyers across the country. If you’re in the market to buy a house, look to new and custom-home builders to offer incentives like these:
* Schumacher, a custom-home builder operating in nine states, will pay the principal and interest of buyers’ loans for the first 12 months. Unlike deferred payments, the promotion effectively turns a 30-year mortgage into a 29-year mortgage, and also eliminates the burden of two mortgage payments for homeowners interested in taking advantage of the buyers’ market. “This incentive literally gives you a year to sell your current home, without the pressure of two mortgage payments or trying to quickly sell a house in today’s market,” says Mary Schumacher-Becker of Schumacher Homes. You’ll still need to pay your own taxes, insurance and PMI, however. Visit www.schumacherhomes.com to learn more.
* Free upgrades are a favorite incentive. From granite countertops and marble baths to whirlpool tubs, expanded decks or high-end cabinetry, builders comp costly upgrades to sweeten the deal for potential buyers. Doing so actually costs them little and can go a long way towards cinching a sale, as high-end, custom touches continue to be popular with new home buyers.
* Some developers are offering lifestyle enhancing incentives, such as free plasma TVs, health club or golf course memberships, prepaid credit cards and home improvement store gift certificates.
* Paying the buyers closing costs is also a popular incentive, one that new home builders have borrowed from the sales arsenal of existing home sellers. Since closing costs can add up to several thousand dollars, depending on the cost of the house, location and type of mortgage, buyers find this incentive particularly attractive. Having the builder pay the closing costs saves the buyers from having to come up with the cash or roll the amount into their total mortgage cost.
* Deferred payments are another sales tool developers are using, although they can be a mixed blessing for buyers. While deferring payments can allow buyers to avoid paying two mortgages, interest continues to accrue on the deferred payments and at the end of the grace period, the deferred amount will be added on to the balance of the mortgage.
* Other cash incentives include builders paying homeowners insurance polices or taxes for up to a year.
Overall home sales and new home sales continued to decline in January 2008, creating even more competition among builders for buyers’ loyalty. For buyers with good credit, there are more opportunities than ever to get into the custom home of their dreams.
Courtesy of ARAcontent