We are offering buyers a refund of anything over 1.5% back on new construction from our fee that is paid to us by the builder. From the beginning our goal has to been to provide value to our clients by recommending they rent versus buy during the bubble, discouraging investors from purchasing low cap-rate property, warning about short-term bubbles due to tax incentives, warning buyers of condos regarding HOA issues etc. We have found a new need in the market for those considering new construction.
Most buyers are at a disadvantage on new construction and are often not properly represented or educated in these types of purchases. Many buyers do not know that if they want representation they need to bring their representation the first time that they visit new construction. As a result buyers walk in and are given information from the builders reps only, make a decision, and never have access or are educated with information that may lead to a different decision — perhaps a better decision for the family.
In addition, many of the builders give their reps extensive training in high pressure sales techniques that that we find objectionable. Because many buyers do not have proper representation, many buyers do not realize that the new construction property they buy may not look much like the model without spending thousands on upgrades, the costs associated with landscaping, or the effect that Mello-Roos on their cost of ownership.
Furthermore, builders, particularly in Irvine, have done an excellent job of creating a false sense of urgency amongst buyers by not over building, with excellent multifaceted marketing approaches, the use of waiting lists, and other techniques. Ultimately, we have an extensive initial consultation with buyers. We have come to realize that many buyers that are interested in new construction don’t contact us. They walk-in to model homes without realizing they can have representation on their side. Furthermore, for those buyers that we are working with that convinced that new construction is the right choice for them; we’ve found that assisting buyers with new home transactions is less work than re-sales thus enabling use to offer the rebate.
We find that the builders are not highly negotiable because the builders have done a good job of keeping demand even or slightly higher than supply in Irvine for the most part so the fee refund that we can provide along with some upgrade incentives that are often offered are the limit the discount that they can achieve, without us they may get a few upgrades but little beyond that, and no rebates. Beyond our hefty rebate, we feel that there is value in the information that we can provide. We have already prepared new construction fundamental valuation reports for clients that compare new construction to nearby resales on a cost of ownership basis. We help buyers compare what they can buy new versus resales on a cost of ownership basis, provide advice on the loan process by helping buyers compare lender’s rates and fees, assist buyers negotiate for upgrades, and finally explain to buyers that occasionally deals fall out and that their most leverage will happen on standing inventory, which is relatively rare in Irvine. We believe many buyers make a better decisions with representation.
If readers are interested in new construction and they contact us before they have registered with the builder we will accompany them to the registration and refund them anything over 1.5% offered by the builder, pending we have not been working with them extensively to find a resale. We believe that many buyers may choose resale, however, many will buy new, but they will make a more educated choice and by working with us will save money that would otherwise go to the builder.