The first builder I noticed offering "Pricing Guarantees" was The Park At Courthouse, An Arlington Condo. I thought the idea was brilliant. A promotional plan that would give buyer's some security in their preconstruction purchase, in case prices dropped.
So in theory, if you bought a place for $400,000 and a few months later, that exact or similar unit dropped to $390,000, you would get notice that your unit is now $10,000 cheaper for you.
This was even featured in The Washington Post (thanks to me) on Dec 2006 Read Article. Supposedly they have already made 3 price corrections for past buyers. 
Now comes the MISSING ASTERISK.
1) They won't say the amount of the price corrections (we asked). This leads me to think that they were probably just token $5k or $10k adjustments and more used for marketing future units. The ability to say "we have dropped 3 times" sounds good. But if you don't disclose the amount, it is just marketing in my book.
2) Seller subsidies don't count! Let me repeat that. SELLER SUBSIDIES DON'T COUNT in the guarantee.
Example:
- Joe buys for $400,000
- Builder drops prices to $395,000
- Joe gets a $5,000 reduction
- Builder keeps prices at $395,000 and offers $20,000 in closing costs for newer sales
- Joe gets NO REDUCTION or Extra closing costs. The "guarantee" doesn't apply!
Joe effectively is paying $20,000 MORE than the other unit, even though there is a "guarantee."
3) Free upgrades don't count!
Example:
- Joe buys for $400,000
- Builder drops prices to $395,000
- Joe gets a $5,000 reduction
- Builder keeps prices at $395,000 and offers $20,000 of upgraded kitchen and bath
- Joe gets NO REDUCTION or upgrades. The "guarantee" doesn't apply!
So what is my point?
1) If you bought here or another place with a similar offer, talk to a lawyer before you close on your unit. It might cost you $500 or $1000 but save you over $20,000!
2) Use a Realtor when you buy units like this. We might not know everything, but knowing some things like this can save you $20,000. The builder either pays your Realtor to represent you, or they give a bonus to the sales staff. The cost to you is the same.
3) Make sure your Realtor writes into the contract that the guarantee should be based on NET and include all subsidies and upgrades as provided by an audit (write in the ability to check their books).
Ray, an agent with FranklyRealty.com wrote more about this Park At Courthouse, Arlington Condo
Don't miss the comments! And make sure to sign up for future blogs.
- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com 703-827-4OO6
Please report all typos, I don't like looking stupid.
Other keywords. Io Piazza , Phoenix, zoso, carlyle square station square clarendon virginia condos condominiums
;)
Links;)
Tags (Tag Cloud);)
Archives
As a person with much builder experience, builders are no different than any seller in some ways. They don't "owe" a client incentives that were not in place at time of purchase- period. That this builder is lowering the price should be enough. Under your thought process, all resales under contract (but not closed yet) would have a cma at closing, and get reductions based on up to the minute price changes. I don't think that that would fly, do you? Their books are absolutely NONE of your, or your customers, business.