Buying a home is more than a financial investment; there’s also an emotional component. Builder incentives and seller concessions are sales tactics to encourage you to make an offer on a home.
It is easy to be drawn in when a builder or seller offers assistance—or a fun incentive—to purchase their property. When you’re deciding on your down payment and estimating your monthly payments, any help is welcome.
However, while financial assistance, a free vacation, a sunroom addition, or a new car are enticing reasons to consider one property over another, buyers must keep a long-term focus in mind and a skeptical eye on these kinds of builder incentives and seller concessions.
If you truly want a property for other reasons aside from the incentives and concessions, it may make sense to make a serious offer.
However, if you’re more interested in just taking advantage of a seemingly cool deal, then you need to keep looking for a home you truly love and dig deeper into the details of the deal.
Why are incentives offered?
Builders of new homes offer incentives to buyers at various times during the development cycle.
In the initial stages of selling a new community, builders often offer incentives to pre-sell homes. When a community is almost sold out, builders may provide incentives in order to sell their final few homes.
Sellers of existing homes may offer concessions to buyers, particularly if they’re trying to sell an unusual home or if market conditions favor buyers.
If you’re looking for a home in a seller’s market and are offered a concession or incentive by a seller, take it as a red flag and ask why the seller is so eager to offer a deal.
Common builder incentives and seller concessions
Builders often offer to pay closing costs or for optional features such as a finished basement, a sunroom addition, or stainless steel appliances.
To get the incentives offered, buyers usually must work with the lender recommended by the builder as well as the title company chosen by the builder. If you choose to work with the builder’s preferred service providers, you still should shop around for a loan and compare title company fees to be sure your deals are fair.
Some sellers may stoke interest with offers of a free vacation or car. Keep in mind you may have to pay taxes on these items—and you’ll be responsible for insuring a car, too.
Sellers also can offer to pay closing costs, buy down your interest rate, or pay homeowner or condominium association dues for a few months. Remember to evaluate whether the price of the home has been increased to offset these concessions.
Remember, a good REALTOR® can help you analyze the true market value of a property and any concessions.
Your lender still needs to know
Loan programs have rules about how much a seller can contribute towards a buyer’s purchase. If you’re considering a deal in which the seller or builder will pay some of your closing costs, you must discuss this with a trusted lender.
When you work with experienced and responsible professionals, you can feel confident any incentive you accept is just a bonus on top of your decision to buy a home you can comfortably afford and love.
Original Article From: www.Realtor.com | Written by: Michele Lerner
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