Every new home builder does builder incentives because they want to control the building transaction and be in the loop on every stage of the process.
Here are 3 things you need to understand about builder incentives and how they work:
1. The different new home builder may have different incentives.
2. The same builder may have a different incentive in different subdivisions.
3. Builders may get more aggressive with their incentives at the end of the year – in order to hit their numbers.
Hi everyone, this your Tampa Bay Realtor and new home expert Lance Mohr. In this video I want to talk about builder incentives because we’re in a very hot market in the Tampa Bay area and I know a lot of real estates markets are very hot and I get a lot of questions on this incentive so some lenders refer them as CENTER INCENTIVES, some say they are FLEX MONEY whatever they are.
So this is when you got to a builder and you are talking to the builder and they say if you use our lender, if you use our title company we are going to give you X dollar amount in incentives that you could either use in the design center or use toward your closing cons. Now again, some call it flex money but what happens is, let’s just say you are buying a home with Lennar do doesn’t make it any difference who the builders are ABC XYZ but we use Lennar. So you go into Lennar and there’s a $15,000 dollar incentive but then you go right around the corner. Maybe a mile away there’s another Lennar community and they are only offering $7,500 dollar incentive. Then you go another mile away and maybe they are offering a $10,000 dollar incentive. Here’s the thing, when the builders are doing really really well and the subdivisions are going really really good, there are a couple things they could do. They could raise the prices or they can lower the incentive, maybe do both, maybe they raise the price and then they lower the incentives. You need to look at each subdivision even thou if it’s the same builder but certainly if it’s different builders. They have different incentives.
So, let’s use the scenario I gave, let’s say you go to one and the incentive is $15,000 and let’s say they really had a good month and they sold a lot of homes before so they are at their sales meeting the manager comes out and say “hey we did really good, we are going to lower the incentive for $15,000 to $10,000 and then you go right around the corner and maybe there is a $7,500 and they did not quite hit the numbers. Maybe they are supposed to be selling out of five homes a month let’s just say they only sold 3 or 4. Well, they might want to pick up sales a little bit so what they will do is they increase the incentive so maybe they go from $7500 up to $12,000. Now to make things a little weird because we are in November a lot of times builders they want to do one to two things. In this time period, they want to get a home closed before the end of the year. Most builders, they’re fiscal year end is December 31st, not all of them but most of them. So, the other thing they want to do is they want to get homes under-contract. So a lot of time they’re going to be offering specials, additional incentive over and above what they are normally offering because they want to get everything locked in and ready to go before the following year turns over. Anyhow, I just wanted to do this video because I wanted to let you know because I know this is pretty confusing. I’ll take buyers out and we’ll look at one home with one builder and then we’ll go literally a couple miles down the road in the incentive with the same builder it’s completely different and I’m trying to explain to the home buyer that it really depends on more factors than just the same company. I mean there are a lot of different factors that play into this.
So I hope this helps and again you know, get a real estate agent that understands new homes and they should be able to explain this to you in your area. You don’t know anybody in your area let me know. I could refer someone in your area who’s a new home expert. Have a great day. I wish you the best of luck. Give us a call (813-317-4009). You can also visit my YouTube channel https://www.youtube.com/Tampa2Enjoy for more informative real estate videos.