As indicated by Nate on one of our threads some builders are getting creative with their marketing now. Offering incentives, inducements and new "assured sales programs." All I can say is read the fine print on these, and while you’re at it have your own lawyer go over the contract as well.
One prominent builder offers a quasi "guaranteed sale program." In this case people might think the sale of their home is guaranteed, but in reality, if your home isn’t sold by the time the new one is ready then they put your new one up for sale too…If the new one sold first bye bye deposit.
Speaking of deposits… When you are using a builder those deposits are not the same as the trust deposits in a "Real Estate Brokerage’s" trust account. Most often deposits with builders end up in their general operating account.
I have very infrequently heard of situations where the builder will return the deposit. A blog reader I met with the other day received his deposit back after several months because of the 22 (I think it was 22) cracks in the foundation. They hired their own inspector who helped them identify the issues, so when they asked the builder what would they do they got their cheque back.
You can bet your bottom dollar that builder is going to finish the home and hopefully sell it to someone who doesn’t get an inspection. Which brings me to another point… Whether you are building a custom home or buying a new spec home get it inspected. Most people think it’s a waste of money but with the stuff I’ve seen on new homes over the years it’s just as important to have a new home inspected as a resale home. Insist on it.
I wonder if they’ll do a "Year end blow out sale for that property."
I was one of those people who built with the secure sale program and I strongly recomend people get their own real estate agent. We were told our house was going to sell for a certain amount and that the real estate agent would keep us updated with any market changes and keep an eye on when our new home would be ready. Well our home sold for $15,000 less then they had said and only because I kept my eye on the market and decided to sell early. The real estate agent never contacted us about the market decline I called her. Once the house was put up the pictures were horrible and the service terrible. The “secure sale program” never benifitted us. Next time around I’ll hire my own real estate agent.
Sheldon & Fellow Posters,
How can the builder honestly commit to this type of new guarantee out on the streets for a new home?
I have seen numerous ads from other new home builders offering similar guarantees.
http://www.daytonahomes.ca/media/07-10-05%20DHOMES%20LD%20PriceGuarantee_7.73×12.5_LEDUCREP.pdf
We could see a pretty wild government bailout if Daytona were to get trapped with a drop in market prices and ended up going bankrupt. Like Sheldon said, those refunds would be coming out of the deposits they’ve taken and you’d see a lot of happy new home buyers losing their down payments.
We approached a builder with a spec home for sale recently in Southern Alberta. We offered him 3.5% below his asking price. He refused, as he had recently dropped his asking price 5%, and thought that he should get full asking price of the new dropped price. After giving it a day’s thought he offered us 1% off his new price. There are other spec homes for sale on the sale street with a different builder which we are going to check out. With this kind of so-called ‘deal’, I feel fairly confident as a buyer right now to sit back and wait it out for a bit. Wouldn’t you?
If I was a buyer I’d rent and save for a 6 month block to see how this market adjusts. Sellers are still in this Euphoria about housing prices. I think we’ll be in a much different place in 6 months. And hey, if we’re not, and prices have stabilized than buy then.
And don’t be brainwashed into thinking that sitting on the sidelines and renting over the next “short-term” is “wasting money”. A Single family detached home in Edmonton right now is basically $400,000. Even if your paying rent of $1250/month, that’s only $7,500 for a 6 month period. Which would get you into spring. All it takes is a housing price correction of -1.88% and you’ve made back all your rent on waiting. I think that’s a pretty smart play for sitting on your hands. Considering that the SFD price fell -1.04% last month and -3.21% the month before.
Just my thoughts, O
I would never buy a new home built during a boom.
Never.
The quality and materials used are garbage, and the ability of most of the workers to put the thing together properly is minimal in may cases. This is due to builders cutting costs (mid and low end builders are cheap pricks) and the new construction staff are inexperienced and just learned which end of the hammer to use to hit the nail with.
“The quality and materials used are garbage”
I agreed with you Carioca.
I built my house four years ago with the OK Builder. My comment is: My house is acceptable.
My friend built one a year ago with a good Builder. My comment is: Oh! My God! How can you resell your house to others?
I’ve watched SHF and condo’s being built in the last 24 months…..and one of my clients is a high end $5MM+ custom home builder……we’ve had interesting conversions about tradespeople and materials.
I’ve got personal friends who bought in the last 12-24 months and they are having nothing but issues with workmanship, amongst other things. When you’re in a hurry….it seem quality always slips.
For those who imply that the new construction was built shoddy…..Consider….
The quality of a new home with a reputable builder is code. The code is set by the government. Your new home must be inspected at various satges and be built to code.
Builders were not bldg any faster through this up swing. On the contrary, construction was slow as they waited for the tradespeople.
Materials and techniques are much better today then 20 years ago.
Usually the people with this theory are the people in older homes, not in newer homes. And yes every now and then something is not quite right, but no more (most likely less) than homes built in previous decades.