Anxious Home Builders Pile on Incentives to Attract Home Buyers.

With the housing market looking increasingly frail, home builders and real-estate agents are going to new extremes to attract buyers, dangling lavish incentives and slashing prices.

While the Triangle area, which includes Raleigh, Durham and Chapel Hill, is not affected by the housing market downturn in the lower price ranges below $400-500k, the inventory of homes above $500,000 is experiencing some of the national slowing trend.

In Raleigh, North Carolina home builders are offering to pay two years of property taxes and insurance- worth as much as $150,000 on houses priced as high as $2.5 million- for buyers of completed homes in upscale areas of Research Triangle Park, NC.

Home Builders in neighboring states are offering as much as $100,000 off the cost of upgrades ranging from granite countertops to a conservatory. Some real estate agents are offering to pay some months of mortgage payments on estate homes.

Across the country, the theme is the same: Home builders and home sellers are juicing their efforts to unload single-family homes. Among other things, they are offering buyers cash discounts of as much as 20 percent, throwing in a pool, and agreeing to finish the basements, garages, and other spaces at a cost of several thousand dollars- incentives much richer than builders were offering as recently as six months ago, when the downturn didn’t look as bleak. In the Triangle area, home sellers are offering trips to Paris and other exotic areas.

Tips for purchasing in a Buyer’s market
How to get concessions from home builders:

• Buy a finished home: builders want inventory off their books and they may cut the price substantially.
• Have a pre-approval letter: This shows a builder you have financing already in place.
• Close quickly: Wrap up a purchase within 30 days; builders want to sell before the next bank payment is due
• Avoid contingencies: Don’t make your purchase contingent on selling a home or finding financing. A contingency removes most of your negotiating power.

These tips apply to any market conditions, however, in a seller’s market the concessions will not be as great.

What Home Buyers Want: Top Preferences when purchasing Home

More home buyers want extra garage space with two or more spaces in their homes, according to the “2007 Profile of Buyers’ Home Feature Preferences,” which was released by the NATIONAL ASSOCIATION OF REALTORS®.

The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.
NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.

What They're Shopping For

Other priorities for today’s home buyers include:

• Air conditioning: three out of every four respondents surveyed ranked this as “very important.”
• Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.
• Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.
• Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.
• Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.

Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.

Regional Preferences

What home buyers want in the South, however, is not always what buyers in the West want. The survey identified some of the following regional preferences in home features:

• Home buyers in the South and Midwest viewed central air conditioning as a priority, with 91 percent and 81 percent, respectively, saying this feature was very important.
• Sixty-six percent of buyers in the South thought a walk-in closet in the master bedroom was very important, while 61 percent of Midwesterners valued an oversized garage.
• In the Northeast, the highest percentage of buyers placed a premium on a backyard or play area (53 percent), followed by central air conditioning at 41 percent.
• Two-thirds of buyers in the West want oversize garages (66 percent), followed by central air conditioning at 59 percent.

Raleigh/Cary NC One of Fastest Growing Metro Areas

The census bureau has identified the Raleigh/Cary North Carolina area as one of the 10 fastest growing metro areas in the US.

According to census bureau figures from April 1, 2000-July 1, 2006 the population has increased 24.8%.

This explains why the housing market in this area is NOT a buyer’s market. Prices are continuing to increase and it is difficult to find a good 1700 square foot home for less than $275,000 to $300,000.

The Triangle is NO Buyers Real Estate Market as Media Implies

National media would lead everyone to believe the entire county is in a real estate slump. Not so here in the Triangle of North Carolina. While nationally many areas were artificially inflating real estate prices, the Triangle experienced a steady healthy growth. Those markets are the ones experiencing difficulty at present.

The Triangle real estate market is continuing its steady growth, as people are relocating to the area in tremendous numbers. Relocating buyers need to be aware that just because this is the South it does not mean you are going to be able to find something for $100,000. The average price in Wake County (Raleigh/Cary) is $250,000 and $300,000 in Orange County (Chapel Hill). By national standards, you still get a lot more house for your money in the Triangle than in most other metropolitan areas.

The Triangle real estate market is still very much a Sellers market. So don’t expect to come here and be able to negotiate $1000’s off the listed price of a home.

Why Should I have a Home Inspection on a New Construction Home?

Just because it is a brand new home does not mean the builder has not missed important issues that may be costly for you to repair when discovered in the future.

Question: Don’t the city and county inspectors inspect the home for defects?

The municipal inspectors do not look for the same things that a Home Inspector looks for. You have several inspectors looking at different aspects of the home. None of them look at the home as a total system. You may have a framing final inspection before the plumber comes in to install plumbing and cut through a main floor joist. The municipal inspectors do not go on roofs and do not crawl into crawl spaces. Many times they only spot check certain items because of the demands on their schedules with the building boom that exists in the Triangle area.

You can not rely on the municipal inspectors to catch all the problems with a home. Only, by hiring your own Home Inspector can you be sure that all the issues can be repaired by the builder prior to closing.

Even the best builders rely on many sub-contractors and subs tend to do their work independently of other subs. One may undo something that another has done. We see duct work not attached, shingles missing from roofs, flashing not properly installed.

Don’t be fooled into thinking that celebrity endorsements of builders will get you a better home. ALWAYS, have a NEW HOME inspected!

Question: How many inspections should I have?

If you can find your home prior to the drywall being installed, that is the very best time to have your first inspection. A pre-drywall inspection will allow the Home Inspector to find things related to electrical wiring, plumbing and framing that would go unnoticed because they would be covered up when the drywall was installed.

Your second inspection should be completed after the Certificate of Occupancy has been issued by the county and all systems are operating i.e. water, electric and gas have been turned on. This enables the Home Inspector to operate all your appliances and systems to ensure they all work properly. This inspection should be performed prior to your punch list walk through with the Builder. All items found on your Home Inspection can then be included on the Builder’s punch list.

When you go to sell your home, items you were not aware of may show up when your Buyer has the home inspected. These could be very expensive repair items that could have been taken care of by the Builder when you purchased the home.

Always have a new construction home inspected!

Procuring Cause

Procuring Cause – The best kept secret most Realtors do not want you to know!
Be careful not to give up your right to choose your own Realtor who will represent ONLY you.
There has been an unspoken term in the real estate industry for many years that most home Buyers are never made aware of -- Procuring Cause. Also known in real estate circles as the Threshold Law.

Senario: You are just beginning to think about a new home. So you go out driving around one week end, just to get an idea of what is on the market. You find an Open House and decide to go in. You spend a lot of time looking through the house, asking the Real Estate Agent a lot of questions about the home and the neighborhood, revealing your excitement that this seems to be just the home you had envisioned.

You go home to think about it and decide you should have a Realtor who is working for you and your best interests. One who can advise you on price to offer and negotiate the price on your behalf. You find a buyer’s agent and tell them you wish to write an offer on this home. When your agent contacts the listing agent, they ask who your buyers are because some of the details sound like a couple she spoke with over the week end. Sure enough, she knows your name and intimate details of your situation.

The listing agent informs your Buyer’s Agent that she was in the home when you visited over the week end and that she is the Procuring Cause of the sale. She is fine with your agent writing the contract but because she was the procuring cause, she will not agree to pay your agent’s commission. Since Realtors earn their living from commissions, unless you agree to pay your agent outside the transaction, it is doubtful they would agree to represent you on this home.
You now have to make a decision. Do you want to use the agent representing the Seller only (you have no representation) or Dual Agency (the agent trying to represent both you and the seller) or walk away from the home altogether?

The morale of this story: don’t start looking at homes before you select an agent to represent you. Select an Exclusive Buyer’s Agent, who will never have a conflict of interest with Dual Agency. A Buyer’s agent who works for a listing company, could end up as a Dual Agent if you purchase one of their company’s listings.

Triangle Home Buyers BEWARE of paying too much for a home

Triangle Relocating Home Buyers BEWARE: Do not pay too much just because it looks like a good deal in the market from which you are moving.

I will preface this posting as strictly an individual Exclusive Buyer’s Agent’s opinion. This opinion is based upon no scientific studies or statistics just recent experience in the local housing market.

A disturbing trend seems to be developing in the Triangle home market. As many newcomers are merging on the Triangle, homes that are being listed thousands of $$$ above the comparable sales in the neighborhoods are being sold near or at the listed price. I cannot understand why anyone would want to pay so much above the market value of the property if they had been informed of the risk they may be taking should the market take a down turn.

There are only 2 explanations I can think of for paying too much for a home.
1- Buyers relocating from markets like the DC area, Massachusetts, California, etc. see homes in our market and think it is a fabulous deal. Yes, in their market maybe it would be, but in the Triangle market it is overpriced. Their Real Estate Agent should be advising them about the fair price for the property and not letting them pay too much for the property.

2- First time Buyers or inexperienced home buyers who have not studied the housing market and are not being advised by their Real Estate Agent of the comparable sales and advised of a fair market price for the property.

How to avoid paying too much:

Ask for the most recent (no more than 6 months back) comparison sales in the neighborhood you are considering. Compare cost per square foot, days on the market, and deduct any financial concessions (closing costs paid by seller) from the sales price. Your Real Estate Agent should provide this information without you having to ask as part of their service to you, the Buyer. They should also tell you what they think is a fair market value for the home you are considering.

It is not wise to pay more than the most expensive home in the neighborhood. It is also not wise to own the most expensive home in the neighborhood. Should you have to sell in a short period of time (less than 3-5 years) you could lose money. It also restricts you from making additions and upgrades because that would drive your value out of the range of the neighborhood and make it very difficult to recoup your investment.

Know for whom your Real Estate Agent is really working. If they work for the same company who has the home listed, they will be a “DUAL” Agent and will not be able to provide the above information.

Of course, as an Exclusive Buyer Agency, FOR HomeBUYERS, Inc. believes you should have an Exclusive Buyer’s Real Estate Agent working for you and all of the above information would be provided as part of our 100% Buyer Representation Service.

If you are a Relocating or an inexperienced home buyer, you don’t have to pay too much for your new home. Don’t get excited about the home because it seems like a good deal. Get the comparables and get the facts!