Florida Mortgage Applicants: Consider Builder Incentives When You Buy
If you’re in the market for a newly built home, check out some of the incentives being offered by area builders.
Many builders are experiencing sales slowdowns and contract cancellations because of the Florida real estate market slump - and they’re hungry for your business.
Last week, Bradenton-based Taylor Woodrow Inc., which has three developments in South Florida - and one on the way in Pompano Beach - announced a new program to attract home buyers. Under its “Forfeited Deposit Transfer Program,” qualified Florida mortgage applicants can use contract deposits forfeited by other buyers and apply those funds toward the purchase of a new Taylor Woodrow home.
“We wanted to find a positive application for these forfeited deposits,” said Sheila Johnson, director of sales and marketing for Taylor Woodrow’s Southeast Homebuilding and Tower Division in Palm Beach Gardens. “Making these monies available to potential buyers is a meaningful incentive that significantly increases their buying power.”
When a buyer walks away from a real estate contract, the entire deposit is forfeited, Johnson said. That’s 10 percent of the purchase price plus 100 percent of the cost of any options the buyer ordered.
While Johnson wouldn’t disclose the percentage of the firm’s contracts that have been canceled by home buyers, she said the rate is higher than usual. “But we’re certainly not in panic mode,” she said.
Other developers are also seeing cancellation rates higher than normal. Horsham, Pa.-based Toll Brothers Inc., which is building several developments in the South Florida housing market, recently disclosed in a filing with the Securities and Exchange Commission that it sustained cancellation rates of 37 percent in its fiscal fourth quarter of 2006 and 30 percent in the first quarter of 2007. The company’s historic cancellation rate is 7 percent, it reported.
To avoid a buildup of excess inventory after cancellations, builders are offering sales incentives, some of which can be substantial.
Sunrise-based G.L. Homes is applying forfeited deposits to the purchase of other homes, according to Marcie DePlaza, division president. Although a new buyer still has to come up with a deposit, the purchase price of the new home is reduced by an amount equal to the forfeited deposit. The program is only available for “quick delivery homes,” the company’s name for homes that a Florida home mortgage loan borrower can move into within 30 days.
“The incentives for these homes make them very desirable for prospective buyers,” DePlaza said.
Some local industry observers are impressed with the forfeited deposit programs. “They’re a creative way to generate buzz on existing inventory that builders need to move,” said David Levin, a Delray Beach-based housing analyst.
Levin also said builders are anxious to avoid contract cancellations and to hold onto existing home buyers. He has advice for anyone under contract to buy a home who is thinking twice. “If you’re in danger of losing your deposit, go back and talk to your home builder,” he said. “They may be more receptive to working out a deal with you than you would imagine.”
SOURCE: The Sun-Sentinel
