Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 4, 1990 TAG: 9003052389
SECTION: HOMES PAGE: D-1 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: LENGTH: Long
Location, of course, should be a primary consideration. So should your satisfaction with the home itself.
Once you have zeroed in on an area that you like, check out all the new developments and see which ones offer the best quality, design, floor plans and amenities.
If you really want to be thorough, you can ask salespeople at each tract for the names of other projects the builder has completed and then visit homeowners in those communities to see whether they have had good experiences with both their builder and their homes.
Also ask yourself whether each new tract is laid out smartly. Can you enter the development and get to your house easily, or do you have to make your way through a maze of streets to find your front door? Are there enough street lights, trees and open space to make you feel comfortable and secure?
If you're looking to maximize your home's appreciation potential, it's usually best to avoid buying the most expensive home in the tract, said Joe Gallagher, an executive with builder Leisure Technology.
Consider buying one of the mid-priced or least-expensive models. Its value will likely be pulled up by the value of the more expensive properties that surround it. It is what real estate experts call the "theory of progression."
There is one exception: If you are buying a home in a recreation-oriented community chock-full of golf courses, lakes, parks or other amenities, it is generally best to pick the unit that has the best view you can afford.
People who move into these communities put a high priority on such items and are usually willing to pay a premium for a good view or closer proximity to the golf course or lake.
Exactly what kind of concessions you can get - and how big those bonuses will be - often depends on how many finished homes the developer has available.
If you go to a tract where there are relatively few homes for sale, you might get some type of "builder's close-out" bonus such as a price discount, but room for negotiating other concessions will probably be limited.
If you go to a development where the builder has several dozen completed homes, you'll probably have more room to bargain.
Most developers are reluctant to reduce their asking prices, but many are willing to provide upgrades at little or no cost.
"If you see something like upgraded appliances or mirrored walls in the model, ask if you can get them in your home for no charge," said Robert J. Bruss, a syndicated real estate columnist.
"If the builder has a choice between giving you a few thousand dollars in free upgrades or losing a sale, most will give you the upgrades."
Some salespeople will tell you that the builder is willing to make concessions the moment you walk into their office. Others won't offer any deals unless you ask if there's room to negotiate.
As with most other types of negotiation, even builders admit that it is typically not a good idea to seem too excited about buying the house. If the salesperson figures that you're hooked on the home, he'll probably be less inclined to lower the asking price or provide some other type of incentive.
It can, however, pay dividends to tell the salesperson all you can about your personal financial situation. If you like a particular home but can't sell your current house, some builders will offer to cut their asking price if you offer to cut yours by the same amount.
Other builders might offer a cash bonus to any real estate agent who produces a buyer for your current home, while others might provide a large rebate when you close escrow to help you through a cash crunch.
Whether it is price discounts, cut-rate loans, free upgrades or credits to use at the builder's design center, do your best to figure out the true value of the discount that you're offered.
For example, if you're offered a $10,000 price discount or $10,000 in credit that can be used for nice drapes or wallpaper at the builder's design center, it's usually better to take the price cut.
That is because most builders put a retail markup on their upgrades and design-center items. You might get $10,000 in fancier drapes and other items, but their wholesale value could be less than $7,000.
Also think about what you are willing to do and what you are willing to pay for. For example, builders sometimes charge several thousand dollars for a landscaping job, which is something you might be able to accomplish by spending a few hundred dollars on plants and a weekend of your time.
You can usually figure out savings provided by cut-rate financing with the help of a loan-amortization book. Or, the salesperson can help you.
Remember that most builder's discount financing programs last only for a limited time - typically from six months to three years. That is why it is so important to know exactly how the builder's loan program works: If you calculate your savings assuming that the builder's low rate will last forever, but later find out that it converts to market rate in three years, you won't have an accurate idea of how much you'll really save.
by CNB