Attention Builders: It Doesn't Take Much to Blow an Otherwise Easy Sale

By
Real Estate Agent with Austin Texas Homes, LLC 453249

I am currently working with a great buyer client, helping them sell their home and purchase a new one in the same general area of town. They honed in on a brand-new home very quickly, and the builder accepted their offer with very minor changes, reducing the price a few thousand below what already appeared to be a good deal.

After visiting the design center for the builder today, there were a number of discrepancies between what the salesperson had told us and the reality with regard to the cost of upgrades. In a nutshell, some of the items were a few hundred dollars higher, while other "standard features" were simply subpar for the price point of the home. As a quick example, the wood flooring that we had seen in photos looked pretty good, but the actual wood offered was very dated looking. The buyer remarked that he wouldn't have put it in his current house when they bought it 17 years ago. To bring it close to what they would deem acceptable, it will cost them thousands, despite "downgrading" flooring in some parts of the home.

Other standard items came as a surprise, but I won't bore you here with every detail. Suffice it to say that it was a deflating day for them.

There was also a minor misunderstanding (now rectified) with regard to what the builder's lender was offering by way of incentives. Unfortunately, although it's cleared up, the overall experience left a bad taste with my clients, and they may or may not proceed with this particular home.

So, even though the house is in the right area, with the perfect floorplan (including some extras that they weren't expecting), and at a workable price, the experience today has left them wondering whether to proceed or just keep looking.

My advice was not to make a firm decision today, because they could be kicking themselves later. I told them to talk about it, pray about it, and sleep on things. We'll talk tomorrow, and the answer will probably be much more clear, whichever way they decide to go.

He mentioned that they were worried that they didn't have a "warm fuzzy" feeling and we are just starting the process. He also said that he sensed that the builder isn't very customer service-oriented. Clearly, that is a BIG red flag.

Time will tell with regard to this particular home. I told him that if they had a bad feeling, it's probably worth listening to that gut reaction. I reminded him that I really do just want them to get the right home, even if it means we start looking again. That's the truth. I would never want a client to feel uncomfortable moving forward on a house. That being said, I also told him that they don't want to be kicking themselves later for walking away from what could be the perfect home.

At any rate, the lesson for the builder is clear and threefold:

  1. Be consistent in your message. If you don't know the exact cost of an upgrade or the quality offered, don't speculate. This can (and usually does) lead to problems later. I would much rather hear, "I don't know how much that costs offhand, but it's not standard" than to experience sticker shock.
  2. When you're selling homes priced at 50% over the median value for Austin, have better materials onhand in your model home to give people a sense of what is standard.
  3. This is the single biggest financial decision that most people will ever make. Treat it as such, especially when you have nice, qualified buyers.

Thanks for reading!

 

Photo credit: Flickr.com via theakshay

Posted by

If you're looking for a home in the Austin area, you can also visit my primary website at www.austintexashomes.com.  Thanks!

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Gene Riemenschneider 04/15/2012 08:34 PM
  2. Winston Heverly 10/17/2012 09:04 PM
Topic:
ActiveRain Community
Location:
Texas Williamson County
Groups:
"Whacked"!!!
Diary of a Realtor
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Rainmaker
58,818
Steve Facella
ReMax Prestige - Lake Worth, FL

I love this post. I have not yet sold a brand new construction home but will remember this when I do.  Thanks for more great information.

Apr 12, 2012 07:23 AM #55
Rainer
30,648
Rachel Tipton
Litchfield Real Estate - Litchfield, SC

Dude,

This is a timely post for me. There is a brand new development right across from our office, and the on site agent just did a presentation on the floor plans available. I will keep your remarks in mind when I find qualified and interested buyers for these new constructions. Thank you!

Apr 12, 2012 07:42 AM #56
Rainer
30,267
Peter Michelbach
International, INT
i Sell Real Estate

Jason - thank you, great post and timely - can I send this impressive  post to my builder?

Apr 12, 2012 08:56 AM #57
Rainmaker
143,948
Liane Thomas - Corona & Riverside Real Estate
The Jet Team, Allison James Estates & Homes - Corona, CA
Bringing you Home!

Very good thing they have you there representing them with the builder, too.

Apr 12, 2012 09:27 AM #58
Rainmaker
212,755
Judy Orr
HomeSmart Realty Group - Orland Park, IL
SW & Near West Chicago suburbs

I worked at a new construction subdivision for about 2 1/2 years just to experience it and learn about building from the ground up.  Learned a lot of things.  The builder I worked for had good standard features for the price range and we had jokes about some other area builders where toilets were an upgrade (just a joke to make a point).

There have also been some very prolific builders who did not finish up on their punch lists and had some unhappy (and vocal clients).  One unhappy buyer put a sign in front of the house in a subdivision still being built about it being a lemon.  The builder finally fixed everything and demanded the sign be taken down.  The buyer said the builder will have to wait as long as the buyer did to get the work done.  Classic!

Apr 12, 2012 09:34 AM #59
Rainmaker
61,527
Rosalie Frankel
Dominion Real Estate Partners - Cave Creek, AZ

GREAT post...will keep your comments on hand when we visit a new builder home.  Thanks.

Apr 12, 2012 09:37 AM #61
Rainmaker
1,022,624
Adrian Willanger
206 909-7536 TheHomeFunnel.com - Seattle, WA
Profit from my two decades of experience

Jason, some excellent advise to builders, I also feel once your clients sleep on it or just take a step back it will very clear on how to proceed.  

Apr 12, 2012 12:08 PM #62
Rainmaker
349,038
Sonja Patterson
RE/MAX Realty Center - Cypress, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

Jason, I haven't read all the comments...but I would have them talk to some of the neighbors in the evening or on the weekend.  Find out how responsive the builder is to warranty issues, and how concerned are they about "making things right" after they have their money.  Hope your buyers are able to continue with this home as it sounds like they really were excited initially!

Apr 12, 2012 12:13 PM #63
Rainer
24,694
Tolin Peterson
Preview Properties, Inc. - Seattle, WA

It seems that in my area, all builders have these "discrepencies"...

Apr 12, 2012 12:56 PM #64
Rainmaker
287,248
Travis "the SOLD man" Parker; Associate Broker
Team Linda Simmons, Enterprise, AL 36330 - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

So far, I haven't seen a lot of the "bait'n'switch" on upgrades that have been pointed out. Most builders I know use a cost plus x%, so it's up to the buyer to keep a check on themselves.

Apr 12, 2012 03:16 PM #65
Rainmaker
69,680
Edith Schreiber
Luxury Homes, Move Up Buyers, 1st Time Homebuyers, New Construction - Dallas, TX
Dallas Area Real Estate

Great post, Jason!

May be a coincidence, but this sounds like the buyer/seller you wrote about in your last feature a short time back.

At any rate, you are dead on with your advise to them, as well as your advice to the builders.

PS Before going into general real estate, I worked for several years in sales for builders. I learned sooooooo much during that time about the process and how different builders handle their business, and it definitely still helps me today in assisting my current buyers.

Here in the DFW area, we have some builders that make their buyers number one - before AND after the sale.

Others show that they are more concerned with making the sale......and often their interest in doing the right thing after closing is a distant memory. Sounds like you were dealing with a builder whose associates are not well informed - I can see why your buyers left with a not too warm & fuzzy feeling.

Probably had alot to do with their decision to not move forward.

Thanks for the thought-provoking post....good stuff!

 

Apr 12, 2012 03:35 PM #66
Rainmaker
858,516
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

This builder sounds like a shyster to me. I don't blame your buyers for being cautious.

As the wife of a former custom home builder, I'm looking at this and thinking "Man, we could have had a lot of money in the bank if my husband had just been crooked." (But I'm still glad he wasn't.)

Apr 12, 2012 04:38 PM #67
Rainmaker
650,437
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Jason,  I agree.  It is amazing how much builders and bulder reps mis lead or misrepresent the product and then wonder why the buyer walks away.

Apr 12, 2012 04:50 PM #68
Ambassador
1,115,662
Bob Crane
Woodland Management Service - Stevens Point, WI
Forestland Experts! 715-204-9663

Once again Jason, great advice.  this advice works for more than just builders, consistent messages are important in all transactions.

 

Apr 12, 2012 05:21 PM #69
Rainmaker
196,598
Jirius Isaac
Isaac Real Estate &TriStar Mortgage - Kenmore, WA
Real Estate & loans in Kenmore, WA

Great advice, as usual  Jason!  Hope all is well with you over in Austin.

Apr 12, 2012 05:37 PM #70
Rainmaker
369,227
Sylvie Stuart
Keller Williams Check Realty 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagstaff, AZ

Yes, everything in writing and good communication from the builder will help--good luck!

Apr 12, 2012 05:43 PM #71
Rainmaker
1,286,270
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I hope they are getting a home inspection on this new home too.

Apr 12, 2012 07:23 PM #72
Rainmaker
654,359
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

 I've read a lot of posts here on AR, agents complaining about how terrible buyers are when they have the 'nerve' to change their mind.  I just want to give a cheer to you, for treating people the way they should be treated when making such a big decision.

Apr 13, 2012 07:57 AM #73
Rainer
54,102
Linda Fidgeon
Berkshire Hathaway Homeservices Page Realty - Wrentham, MA
Make your next move your best move!

As Lenn said, some builders do this deliberately and then try to upsell. Thanks Goodness your buyers have a buyers agent working fo rthem.

Apr 13, 2012 02:03 PM #74
Rainmaker
131,030
Shelley Rowton
Move To Realty - Austin, TX
ABR, RSPS - (512) 507-5779 MoveToRealty of Austin

Since you wrote this, I have heard about this several more times here in Austin.  Methinks we are all talking about the same builder and/or design center!  I hope the trend changes soon!

Dec 26, 2012 09:17 AM #75
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