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Secrets to Buying A Model Home

Written by Dena Kouremetis on Thursday, 01 October 1998 7:00 pm
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It's new, but it's not new. Then it's used. Well, kind of. But it has expensive hardwood floors, gorgeous landscaping, cute decorations in the kids room and a fireplace in the master bedroom.

So you're thinking of buying the model home. How is this different than buying any other new home? Is there anything you should watch out for, and is it really a good deal?

Purchasing a model home is somewhat like the purchase of a re-sale home although in this case, no one has ever lived there. The home is "used" for market purposes, but in most cases a purchase of this kind ends up being a pretty fair deal for the buyer. (It can also create a slight bit of envy on the parts of your new friends and neighbors.)

Builders proudly display their models as samples of their construction prowess, putting their best foot forward for the buying public. A great deal of the builder's budget is buried in their model home complex and their formal presentation, as you might well imagine.

If the model home is in a desirable location, there aren't many negatives I can think of in buying it; just a lot of extras that you may not have been able to add under normal circumstances. The builder usually puts these extra care and a great deal of money into the upgrades and it has installed to show potential buyers their "opportunities" to enhance the basic plan and its standard features. From custom paint, walkways, enhanced front and full backyard landscaping, patios (sometimes even pools! ), and even fancier lighting fixtures, model homes may boast almost every upgrade option the builder has to sell, and then some. You may classify the "then some" upgrades as what builders fondly call "decorator items." These are items usually not available to the average production home buyer. Things like custom paint colors, special decorative moldings, custom window treatments, wallpaper and furnishings are not customarily found in the builder's design center.

Model homes are usually sold "as is." Even if the carpet and pad are of exceptional quality and weight, they have no doubt seen many feet in their course of duty, and repeatedly clean to keep them looking new and fresh. Builders will usually do a touch-up and general clean to the model in preparing it for its live occupants, but there is damage that may have occurred that you should not assume the builder will repair, unless it is specifically promised by them. Pressure spots and damage caused by furniture and props would be difficult to fix, and I would doubt that most builders would commit to addressing them.

To pin down the specifics of a model home purchase, ask the builder to list each upgrade to the base version of the floorplan and the value it would assign to it. Builders will usually discount the total figure to get a fairly quick sale on their model homes when they are down to just a few production homes left to sell.

To clarify what is included in the purchase price of the model, ask the sales consultant to enumerate them on an addendum to the purchase agreement, so that there are no unrealistic expectations on your part. You may also ask to have listed what repairs will and will not be done by the occupancy date, so that this is clear to both parties as well. Because model home walkways are usually linked to one another, find out how they will be treated.

The terms of a model home purchase are usually more creative than those contained in the usual production home contract. The builder may arrange a purchase-leaseback , asking the buyer to close escrow on a home by a certain date, but accept a fixed monthly rental payment from the builder until it is finished using it for marketing purposes. This is usually the principal , interest, taxes and insurance, along with a commitment to pay all utilities and maintenance on the property until you occupy. During this period, your tax man loves you (you are now the landlord), the builder now has a paid-off model home, so you and the builder both come out winners.

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