Home Builders Add Incentives

Builders’ Incentives Seek to Draw In Homebuyers

Home builder incentives are on the upswing despite the fact that during the last year we’ve seen the housing market gaining traction. Its an interesting market, full of more frequent fluctuations than we’ve seen in the past.  Hopeful builders and sellers have watched a dramatic uptick in prices (rising 12.4 percent year over year in July, according to Standard and Poor’s home price index, that has slowed a bit but still continues to rise.

Meanwhile, hopeful buyers have sought to take advantage of low interest rates (though steadily increasing), and to get into a home before prices climb even higher. Lenders, in turn, had become a little more accommodating to buyers, though lending policies are still pretty stringent and private moneylenders are still the way to go.

Continuously rising prices, an overhang of unsold homes, rising interest rates and the Federal Reserve’s recent decision to temper interventions to stimulate the housing market have worked together to make some potential buyers hesitant about a home purchase. While homebuilder incentives shrank in the first half of the year, they are returning as builders seek to encourage new home sales and keep the interest of buyers. Some builder incentives include:

Home Feature Upgrades

From stainless steel appliances, to hardwood floors, to granite countertops, builders are offering appliance and material upgrades to offset higher home prices. This appeals to homeowners who may want these higher-quality items, but can’t stretch their budget to accommodate them and still afford a home in the size or location of their choice.

Cash Incentives

In some cases, rather than offer specific upgrades, builders will offer a certain amount of extra cash that buyers can use for any upgrade or custom feature of their choice. Some builders will offer to pay some or even all of the home’s closing costs.

Property Incentives

Buyers pay a premium for a lot with a favorable view, size, or position. For example, a larger lot that offers a great deal of privacy will have a higher premium than a smaller lot that backs up to a common area. Some builders will reduce or eliminate property premiums to encourage homebuyers to purchase. Others will include property improvements, such as decks, fences, pools, or custom landscaping in the home price as an incentive.

Financing Incentives

In some cases, builders are using financing to incentivize potential buyers. They may offer better interest rates on loans or even reductions on down payment requirements if the home loan is financed through their company. Often times they are connecting potential buyers with private moneylenders in order to alleviate some of the hassles associated with processing loans through traditional lenders.

Note that the incentives builders are willing to give completely depend on local market conditions, and on how badly they want to sell the home. However, knowing that incentives are available can give you one more tool to help you make the best possible decision when investing in real estate.

About Kent Clothier

Kent Clothier is President and CEO of Real Estate Worldwide (REWW), a highly sought-after speaker, the owner of three multi-million dollar a year Internet marketed brands, and proud husband and father. Kent is motivated by his love of family and freedom, creating products that enable people to live their lives the way they choose.

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