What Are Builder Incentives?
Builders sell homes which are a complex, long-term purchase. For specific homes or lots in a project, at certain times they may improve terms in some way to incent someone to buy the home promptly – in other words “Incentives.” This video categorizes and summarizes some types you might encounter.
Broadly speaking, there are
1) Incentives that offer value to the buyer: like a televisions, vacations or even car leases.
2) Incentives that add value to the home like “decorating allowances” to upgrade carpets, floors or appliances.
3) Incentives that reduce buyer’s short-term costs or the overall price of a given home such as cash contribution to closing costs or waiving lot premiums.
And (4) incentives that save buyers time. A builder might have an arrangement with a preferred lender who is already familiar with their project – which could save you time in the mortgage process.
Evaluate incentives objectively; would you BUY that TV, vacation, carpet or car?
What does the up-front cash cost you when financed over the life of the mortgage?
And how do preferred lender terms compare to terms from other lenders?
Arm yourself with market knowledge.
Don’t let emotional decisions compromise your long-term finances.
And get advice from a trusted, knowledgeable source like your real estate agent or certified new-home cobroker.