New Construction Builder Incentives
Free upgrades, mortgage rate buydowns, and price cuts: new construction builder incentives are even more important in 2024 than ever before. Since the heyday of low rates have been behind us for a while, sustained high interest rates make these perks necessary to motivate new construction homebuyers. Therefore, like a certain sci-fi hero played by an actor who hails from Austria, they’re BACK, and should be around for some time!
One of the leading publications on New Construction, Builder Magazine, also confirms this trend for 2024 in its latest article, “Incentives Remain the Name of the Game for Builders in 2024.” And, with 2024 shaping to be an even better year for builders than 2023, you can count on new home incentives staying on top of mind when it comes to this year’s hottest real estate trend.
Source: 30 Year Fixed Mortgage Rates – National Average (mortgagenewsdaily.com)
The real estate market has been shifting ever since the series of mortgage interest rate hikes that doubled interest rates compared to early 2022. Currently, average interest rates hover around 7% for 30-year mortgages, making borrowing challenges similar to the latter half of 2023.
After 11 consecutive rate increases, there seems to be no more increases in store for now, and there are even 3 proposed decreases for 2024. However, the timing of these rate cuts is to be determined as The Fed acknowledges the ongoing strong job market and current inflation rates.
As buyer power remains similarly decreased compared to Q4 of 2023, every industry is feeling the impact – from mortgage lenders to realtors struggling to sell in a market in which borrowing is still harder than in years past. 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
In this current real estate market, everyone from builders to landlords are beginning to offer incentives for their clients. Specifically, improving affordability is trending. Across the board, anyone who is affected by the real estate market or who cares about housing affordability is responding to our market conditions. Landlords are offering free month’s rent credits and other move-in incentives.
The National Association of Home Builders (NAHB) recently urged G7 leaders to include housing affordability in their development plans. Meanwhile, the White House also proposed a Housing Supply Action Plan to encourage builders to create smaller, more affordable houses while also providing homebuying credits to economically disadvantaged homebuyers.
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
Knowing what builders are offering incentives can help you find the best perks when building a new construction home. At Marketplace Homes, we work with most of the nation’s top 20 builders. We know the home builders with the best incentives and can connect you with a company that can build the home of your dreams- with all the best possible deals.
1. 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.
2. Free Upgrades in New Construction 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.
3. 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.
4. 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:
- Rebates
- 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.
5. 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 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.
