By Stacy Case
As the housing market cools, the competition is really heating up. That means more and more homebuyers are expecting a little something for nothing. That doesn't mean that builders should slash their list prices, but it does mean they need to get creative.
"If that builder is not willing to get creative," says Bryan Edwards of Hughes-Edwards Construction (Hendersonville, Tenn.), "that builder is a) going to go out of business, b) he's going to be sitting on his inventory for a long period of time, or c) he's just got a lot of money to weather the storm. I don't know a lot right now who are able just to sit and not do anything."
Analysts say that offering non-price incentives is the best way to attract prospective buyers and generate referrals in a down market. The National Association of Home Builders says more than 40 percent of its builders are offering free upgrades, such as stone tile floors and iron balusters on the stairways. From furniture to blinds, interior design is one of the hottest giveaways attracting buyers. Free security systems and even country-club memberships aren't out of the question. Also popular are getaway trips for the whole family and plasma TVs — just to close the deal.
"That's done via gift certificates," Edwards says. "No cash is transacted."
Homeowner Trim Beasley remembers well the day his builder called. "He said 'How would you like a sauna?' I'm thinking, "Well, gosh, I don't know if we'll use a sauna.' Then he said it was free, and I said, 'Great! Put it in.'"
A lot of upgrades center on the kitchen, where granite countertops and commercial-quality appliances help cook up business. Another option is paying some of the closing costs.
"The way you do that is you provide them a credit back — no cash, but you provide them a credit on their settlement statement," Edwards says. "This allows them to get into the house for less money."
Some builders even pay the first month's mortgage or offer to absorb some of the financing points. "The builder has to go at this from the standpoint of what's the homeowner going to get out of it," Edwards says.
For the homebuyer, it's the great giveaway. For the home builder, it's smart business.
After 14 years in the television news business, including CBS News, Stacy Case is spreading her career wings. Her lifestyle cable network experience includes reporting and producing for HGTVPro.com; serving as host of DIY Network's Building Blocks and hosting and producing the Shopping Mom segments for Fine Living Network's American Shopper.
| 
