How far will homebuilders go to get their homes sold in this challenging market?

Pretty far, according to a recent article in the San Jose Mercury News. After all, it's logical to assume that buyers may be are hesitant to take the leap to buy a new home knowing that no one can predict whether or not their value might go down after escrow closes. Kind of like driving a brand new car off the lot.

So how can they convince buyers to sign on the dotted line? Some builders in the San Francisco Bay Area are offering price guarantees. Builders like KB Homes and Taylor Morrison are willing to lower the price of a home before the close of escrow if another home in the neighborhood sells for less in the meantime.

Another builder, Pleasanton, CA-based Signature Properties, takes it even one step further and even offer a "guarantee" in a few of their new home neighborhoods -- a 2-year guarantee that may give buyers more confidence when making a buying decision. Their deal is that if current buyers sell their new homes within a two-year period for less than the purchase price, the builder will refund the difference to them.

There are a few restrictions, of course. The price guarantee only works within those first two years, if their sales office is still open at the time of the sale, if the floor plan is still being sold and if the buyer can supply all of the original contractual paperwork.

Gimmicky? Could be -- but if it lends just a small impetus for consumers to get off the home-buying fence, these builders will be happy.

Published: May 14, 2008

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