Stay away from please-buy-my-house freebies
If you've gone out to shop for a new home lately and been offered some outrageous freebies, run don't just walk away. You may be wondering why builders are offering cars, vacations and other incredible incentives to get you buy one of their homes at an inflated price. That's because they're paying interest on unsold homes (many of these homes were contracted by people who already decided to walk away) and they need to get rid of them. But, the catch is that they're trying to keep the inflated house prices in place by giving you these incredible incentives.
Instead of taking these incentives, if you do like the builder and his homes, contact a real estate agent and find similar homes on the resale market. There are lots of almost new homes, and often homes that have never been lived in, being sold by investors who hoped to flip them for a profit and can't now that the real estate bubble has burst.
All around me in Florida are brand new homes that have never been lived in standing unsold at prices $50,000 to $100,000 less than the ones the builders are offering. Better yet by buying a resale home you don't have to pay the extra impact fees Florida counties charge, which can total thousands of dollars at closing, because those fees are only paid by the person who buys the new home from the builder.Isn't it amazing all the free stuff you can get for a few hundred thousand dollars?
I'm sure you'll find similar resale situations anywhere builders are offering these mind-boggling incentives. CNN writes about a builder in Seattle who's offering free airfare to anywhere in the world plus a six-night stay at a Four Seasons hotel if you'll buy one of his unsold houses. Another builder CNN features is a New Jersey builder offering a two-year lease on a Mercedes-Benz when you buy one of his unsold homes.
You can get some good deals out there now, but they won't be from builders. Rather than take advantage of outrageous builder incentives to encourage you to pay more for a house than its worth, save thousands in mortgage interest by buying one of those almost new homes at bargain prices on the resale market. Remember when you buy at an inflated price and get a freebee, you'll pay for that freebee for years in mortgage interest on that inflated price.
Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure."