Housing Giants - November 24, 2008 - (Page 26)

f e at u r e Builders offer incentives in the hopes of moving inventory, but the effectiveness is not all that great, says Dave Seiders, NAHB’s outgoing chief economist. “For price reduction, about half say it doesn’t seem to be effective. It is sort of disappointing. It shows the perspective home buyer psychology at the moment.” It is when incentives don’t work above board, say some experts, that some builders get creative, and even so desperate that they cross the line in order to boost the bottom line. He says in all of his years of working, which included stints at Pulte Homes and Beazer Homes since 1995, he personally has never encountered any problems of fraud arising because paperwork was not filled out accurately. “Any incentive that the builder gives should be documented in the beginning in the lender paperwork and shown on the HUD,” he advises. Two or three years ago, offering a buyer chattel — those items they could take with them sold, such as a free TV, a car or a Caribbean vacation — was more popular. Sure, it’s in part because buyers today prefer to negotiate the price down or they want free upgrades for the kitchen or a better interest rate. But the main reason it is less popular is because the banks aren’t allowing it, says Tom Daddario, a sales manager with Standard Pacific Homes in Jacksonville, Fla. “The banking industry, because of all of the problems it has, is making it very difficult to give those types of things away. They are saying you can’t do that — just knock it off the price,” he says. “The bank says ‘How much am I really lending you? Am I financing your car? Is it built in to the price?’ So they say, ‘You know what? We are not taking these risks like we used to. It has to be all above board and on the HUD.’” As a result, Daddario says, most of the builders are really going the extra mile to fully disclose everything to everybody and so it has just become easier to knock something off the price. The deals are still out there, but whether or not seller incentives constitute fraud is a very gray area that comes down to how 26 HOUSING GIANTS.11.24.08 www.HOUSINGGIANTS.cOm http://www.housinggiants.com

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