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

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Re-Bloggged 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
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Topic:
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Location:
Texas Williamson County
Groups:
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Comments 74 New Comment

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Show All Comments
Rainmaker
58,718
Steve Facella
ReMax Prestige

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.

April 12, 2012 07:23 AM
Rainer
30,648
Rachel Tipton
Litchfield Real Estate

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!

April 12, 2012 07:42 AM
Rainer
30,267
Peter Michelbach
i Sell Real Estate

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

April 12, 2012 08:56 AM
Rainmaker
132,587
Liane Thomas - Corona & Riverside Real Estate
Bringing you Home!
The Jet Team, Keller Williams Realty, Corona Real Estate

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

April 12, 2012 09:27 AM
Rainmaker
212,354
Judy Orr
SW & Near West Chicago suburbs
Classic Realty Group

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!

April 12, 2012 09:34 AM
Rainmaker
59,038
Rosalie Frankel
Dominion Real Estate Partners

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

April 12, 2012 09:37 AM
Rainmaker
936,319
Adrian Willanger
Profit from my two decades of experience
206 909-7536 TheHomeFunnel.com

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.  

April 12, 2012 12:08 PM
Rainmaker
339,877
Sonja Patterson
Texas Monthly 5-Star Realtor Recipient for the Hou
RE/MAX Realty Center

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!

April 12, 2012 12:13 PM
Rainer
23,594
Tolin Peterson
Preview Properties, Inc.

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

April 12, 2012 12:56 PM
Rainmaker
267,830
Travis "the SOLD man" Parker; Associate Broker
email: Travis@theSOLDman.me / cell: 334-494-7846
Team Linda Simmons, Enterprise, AL 36330

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.

April 12, 2012 03:16 PM
Rainmaker
66,654
Edith Schreiber
Dallas Area Real Estate
Luxury Homes, Move Up Buyers, 1st Time Homebuyers, New Construction

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!

 

April 12, 2012 03:35 PM
Rainmaker
794,801
Marte Cliff
your real estate writer
Marte Cliff Copywriting

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.)

April 12, 2012 04:38 PM
Rainmaker
628,767
Stephanie/Bob The Ruiz/Miller Team
The Ocala Dream Team
Keller Williams Cornerstone Realty

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.

April 12, 2012 04:50 PM
Ambassador
890,365
Bob Crane
Forestland Experts! 715-204-9663
Woodland Management Service

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

 

April 12, 2012 05:21 PM
Rainmaker
189,503
Jirius Isaac
Real Estate & loans in Kenmore, WA
Isaac Real Estate &TriStar Mortgage

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

April 12, 2012 05:37 PM
Rainmaker
347,753
Sylvie Stuart
Home Buying, Home Selling and Investment - Flagstaff, AZ
Keller Williams Check Realty 928-600-2765

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

April 12, 2012 05:43 PM
Rainmaker
1,234,729
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

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

April 12, 2012 07:23 PM
Rainmaker
653,973
Joetta Fort
Independent Broker, Homes Denver to Boulder
The DiGiorgio Group

 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.

April 13, 2012 07:57 AM
Rainer
53,530
Linda Fidgeon
Prudential Page Realty

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

April 13, 2012 02:03 PM
Rainmaker
128,330
Shelley Rowton
ABR, RSPS - (512) 507-5779 MoveToRealty of Austin
Move To Realty

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!

December 26, 2012 09:17 AM
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Ambassador
962,308

Jason Crouch

Broker - Austin Texas Real Estate (512-796-7653)
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