New construction builder incentives: they were gone for a while, but like a certain sci-fi hero played by an actor who hails from Austria, they’re BACK!
The real estate market is has been shifting ever since the series of mortgage interest rate hikes that doubled interest rates. Currently, average interest rates exceed 7% for 30-year mortgages, making it even more challenging to afford a home compared to early 2023. And these increases may not be over as economists acknowledge the still strong job market and not-yet-curbed inflation rates.
As buyer power dwindles, every industry is feeling the impact – from mortgage lenders to realtors struggling to sell in a market that doesn’t allow much price cuts due to low inventory. Even new construction home builders are feeling the pressure to stimulate new home sales by easing the burdens on their buyers.
Thankfully, in every market, there are solutions. Namely, more builders are offering incentives to American homebuyers.
Incentives: The Solution to Ease Home Buyer Woes
For the first time in a while, everyone from builders to landlords is beginning to offer incentives for their clients. Specifically, improving affordability is trending. In fact, the National Association of Home Builders (NAHB) recently urged G7 leaders to include housing affordability in their development plans.
While landlords feel more inclined to offer incentives like a first month’s free rent, new home builders are using incentives to make homes as affordable as possible (or the best value possible). One example of a type of incentive that’s popular includes rate buydowns with preferred lenders. Others may include free upgrades to better materials, or other ways to improve mortgage payments for their buyers.
- Note: Are you a builder offering some incentives right now? Let us know what they are, and we can share them with buyers in your area!
Best New Home Construction Builder Incentives
Paying For Closing Costs
Closing costs typically make up 3-6% of the home purchase price, which can become a barrier to closing when finances tighten. Builders who offer to absorb the closing costs may find higher success in buyer retention. It’s especially helpful for first-time buyers who don’t have equity in their pockets.
Free Upgrades in New Homes
With building material costs cooling, builders can strike a win-win by offering free upgrades, such as better countertop materials, more deluxe appliances, or some improved fixtures. When you offer these at a price for a standard setup, the buyer will be pleased at the additional value without the added cost.
Create Special Financing Opportunities
What if you told your clients they could use a time machine and grab onto mid-2022 interest rates? It’s possible when you work with a mortgage company or lender to create special financing perks like an interest rate buydown. You may also be able to offer a low down payment financing option to ease the financial pinch.
Special Deals and Discounts
Since every builder is unique, each company can offer different deals to its clients. These can come in the form of the following:
- Discount on an upgrade
- Free upgrades, such as better materials or improved energy-efficiency
- Price discounts for older people, college grads, vets, and first-time homebuyers
You may also think of something else that your clients will love. Brainstorm with your team to determine what concessions you can make to incentivize a sale.
Offer a Good Builder Warranty
Saving money at closing is excellent, but long-term financial protection is also on top of mind. Potential buyers are looking for the best deal possible. Builders can offer a warranty on their new construction homes to give buyers peace of mind. For example, a 10-year structural warranty can help a buyer feel more confident about signing the sales papers at the closing table.
Selling New Construction Homes in 2023 and into 2024
Selling homes at this time presents more challenges than January 2022’s red-hot seller’s market. Higher mortgage rates are the chief concern for buyers and sellers. However, Marketplace Homes has experienced a similar housing market in the early 2000s, and we’re equipped to offer solutions to help our clients succeed.
We may have to work a little harder and be more flexible, but there are still many factors in our favor. Home prices are still high, and existing single-family home inventory is still low. We need builders to supplement the demand for new homes, and your clients know this too. If they want the home of their dreams, your new construction business is their best option!
Double Down on New Construction Builder Incentives with Marketplace Homes
What’s better than offering fantastic builder incentives? Doubling down with realtor incentives from a brokerage. Marketplace Homes has a variety of guaranteed sale programs that make the transition to a new home as easy as possible.
By eliminating the need to move twice through Sell & Stay and removing home sale contingencies through Guaranteed Purchase or Guaranteed Lease, our creative solutions can resolve many worries on a homeowner’s mind. We also offer savings on commission when they select a new construction home with our builder partners. For more information, contact us today to speak with a real estate agent.
Alicia Persson is the real estate content writer for Marketplace Homes. She has several years of experience working in real estate teams that specialized in investments and property management. Before she joined MH, she was a freelance writer for 7 years, providing real estate and home living content for boutique digital marketing agencies.
She is a proud University of Virginia master’s graduate and enjoyed her undergraduate years at the University of Mary Washington. When she is not writing, she plays keytar and does female lead vocals in a local 90’s band or spends time with her amazing family.