A friend of mine bought a house near what will be our new primary over the weekend. He got $75k off the sales price like we did.  As with any real estate purchase, you have to confirm your numbers.  Just because they’re taking money off, it’s not necessarily a good deal. 

The sales person at the model had 2 homes that had fallen out of escrow and were back on the market.  Even though they were offering huge incentives on both, one was a deal and one wasn’t.  We asked her to pull the sales contracts for the last several homes like these that had closed.  Low and behold her super-discounted sales price on the one home was still higher than any recent contract she could produce for us.  The home she wanted us to take was $280k after all discounts.  Other homes of this model recently closed for $263k and $271k. 

“But the home for $280k is a model” she pleaded.  So what!  Sure it has extra bells and whistles, but many people don’t care about that, and appraisers certainly don’t give you credit for the African wallpaper on the walls, the designer paint colors in each room, the cute curtains that would match only the model furniture that is now gone.  When we tried to explain our strategy of wanting instant equity so that we could re-fi into a more favorable mortgage, it was like we were speaking a different language.  According to the sales person, we had tens of thousands of instant equity because they were taking money off.

Now there were people flooding that sales office all day.  Word was out that huge incentives were being offered on any contracts that had been coming back over the last couple of weeks, and Sept. 30 is also the end of the builder’s fiscal year, so incentive is the operative word!  We knew someone would probably buy that house that day.  Finally she told us to put in an offer and she’d see if it would get accepted by the boss.  So my friend told her he would pay $250k.  After arguing with us some about the low-ball offer, she agreed to call the boss.  She said she knew it wouldn’t be accepted.  We razzed her a little about how you can solicit the answer you’re looking for by the way you ask the question.  She could tell her boss that she had a rediculous offer and maybe he would agree, or she could tell him that she received an offer that she’d like to accept.  She understood what we meant and even poked fun at a TV commercial that dramatized the exact pursuasion technique we were talking about.

So she gets the boss on the phone and what does she say?  Something like “I have this low ball offer and I’ve already told them no but they made me call and ask you just to confirm.”  The phone call lasted maybe 10 seconds and of course the answer was no.

We spent about 5 hours in that office that day and I could go on and on with examples of craziness that we witnessed.  At the end of the day, we all agreed that the builder is corporate America, interested in one thing only, and that is money.  The fiscal year end means revenue targets must be hit and stockholders must be happy.  They were holding out for the greater fool.