I just about threw up in my mouth after reading this article on Bloomberg news on “Homebuilders Using Financing Incentives To Defy Price Cuts”
The article reads like free advertising for builders, but seriously lacks the true story. The article examines the “incentives” that builders are offering to home buyers who use their preferred mortgage company, and implies scare tactics that only the builders mortgage company will close the deal on time, saying “Few things are more frustrating to the homebuyer than having to push back a closing by a few days or weeks because the outside lender wasn’t ready with the mortgage.” I cry foul…
Builders are reporting record profits – No builder is giving away anything! They simply price it into the overall cost of the home, then offer teasers to lure unsuspecting home buyers into their trap. Increase the margins on the home price by $20,000 – then give a buyer a $10,000 credit for closing costs by forcing a client to pay more with “their” lenders isn’t a deal.
Most buyers would be better off telling the builder you’ll get your own financing and to cut the homes actual price to a no incentive price. Sadly, most new home buyers are blind from the glare of their shiny new object (the home) and end up smiling over the “deal” they received. Needless to say, the builder is left with a tidy profit.
REMEMBER: “There’s a sucker born every minute” – P. T. Barnum (1810–1891), an American showman.