Homebuilders offer low price guarantees
By Melissa Wirkus
The slowing housing market has pushed many homebuilders
to offer outrageous incentives and promotions to lure-in
potential buyers.
Everything from new appliances to reduced closing costs
has been offered to consumers if they purchase a newly-built
home. The overpowering surplus of un-bought homes that
are for sale on the market are causing home builders
to go to great lengths to get these homes off their
hands.
Now, more than ever homebuilders are finding the best
way to entice a buyer is not by offering fancy upgrades
on kitchen appliances, but to lower the overall price
of the home.
An August 30, 2006 article by Tomoeh Murakami Tse of
The Washington Post, “Home builder’s new
incentive: A flexible price,” discusses the new
selling strategies and tactics of homebuilding companies.
“And now, in the latest sign of the cooling home
sales market, a luxury home builder in Rockville has
begun resorting to the kind of tactic usually reserved
for screaming electronics discounters -- the Lowest
Price Guarantee.”
“To ease buyers' worries about declining prices,
Mid-Atlantic Builders will adjust its sales contract
if the price it is charging for one of its houses falls
from the time a customer signs an agreement to 45 days
before settlement. So, the thinking goes, jittery buyers
shelling out $500,000 to more than $1 million for one
of the builder's single-family houses can rest assured
that they're not sinking money into a depreciating asset.”
Many people are very weary about buying a home right
now since the market is currently not in a very good
state. Builders have realized the only way to ease a
potential buyer’s
fears of buying in a cooling market, is by targeting
the actual price of the new home.
“While builders and developers have for months
been dangling tens of thousands of dollars in incentives
to prod hesitant buyers -- free upgrades, help with
closing costs, plasma screen TVs, vacations, cars --
Mid-Atlantic's latest marketing strategy is unusual
in that it leaves the most important line in the contract,
the selling price, somewhat open-ended.”
“Builders, Mid-Atlantic included, offer such enticements
because they are reluctant to upset previous buyers
by cutting their base prices. But in some places around
the country, builders have begun cutting those prices,
too.”
The majority of homebuilders around the nation have
reported that sales have slowed in recent months.
Although people are still looking at homes,
it seems as though most of them are holding off on buying
for the time being.
It may be because they are waiting for prices to drop,
or they are just hesitant to buy because of the current
market
conditions. Whatever the case may be it seems as though
the potential buyer is not interested in worldly goods
or material items, but just the plain old cash.