t=1">cash-back rebate after closing? How about both?
Here’s the deal – and we do mean “deal”: Home builders are trying to entice buyers with bigger and bigger incentives in a sluggish market. That’s good news for buyers, because the bottom line with incentives is you can get more house for your money. Add in a rebate and you’re getting more house for less money.
The skinny on incentives
Incentives became more popular in late 2005 or early 2006 as home sales slumped, said Stephen Melman, director of economic surveys for the National Association of Home Builders, or NAHB. By January 2007, 60 percent of the home builders surveyed said they were offering incentives such as upgrades and optional items at no charge – up from 40 percent a year earlier, Melman said.
In the booming Las Vegas area, where competition in the new-home market is stiff, recent incentives ranged from swimming pools to washers and dryers, landscaping and irrigation, exclusive club memberships and up to $25,000 toward upgrades or closing costs, according to the Las Vegas Review-Journal.
“Obviously builders are very competitive, so it’s good for them and it’s a good deal for buyers,” Melman said, since upgrades add value to a home.
Incentives are being offered primarily by larger builders rather than custom builders, he said, although there are exceptions. Some are cutting prices as much as 10 percent, the NAHB has reported.
About half of builders reported offering to pay all or part of the closing costs and fees to help seal a deal, up from 40 percent last year, Melman said. Some will pay a point or two on the mortgage to help buyers get a lower interest rate – a valuable incentive for first-time homebuyers who need to come up with a lot of cash at closing.
The scoop on rebates
Rebates can also be worth thousands of dollars, and getting one when buying a new home is simple.
“The popularity of rebates is growing as consumers are seeking value throughout the home-buying process, and also because of the fact that consumers are in charge,” said Vince Halama, vice president of sales for iNest Realty Inc., one of the companies offering rebates. “That empowerment really lends itself to a good buyer experience.”
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