In the latest housing market twist, the FBI announced they are investigating builder incentives. The incentives included cars, tuition and credit card payments, and even cash.
Another example of people using a home as an ATM. The biggest problem here is by virtue of a buyer receiving an incentive to purchase a home, it artificially inflates the sale price. In some cases other parties to the transaction were not privy to the incentive amounts, like the mortgage lender and appraiser. This has fraud written all over it.
Builders can be very aggressive in moving their inventory. For a new construction buyer, ask tons of questions and look for the true bottom line cost. Most of the horror stories we hear are from people who purchase a home from a builder without representation. Builders aren’t fond of real estate practitioners and attorneys. They prefer to handle the transaction by their own rules.
Recently, we heard a client who purchased an upper bracket home in Lake County, Illinois, paid $500,000 in extras and upgrades. The same builder is now offering the same package for $50,000. What just happened to the price of this home?
More now than ever the public deserves and must get the real story when it comes to real estate. In a typical market, a new construction buyer might wait 2-4 years for the market to catch up to the premium new construction price the buyer paid. With the current market, this could easily be 5-7 years now.
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