May 8th, 2008 by Michael Oliver

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People constantly ask me, ‘Which builder gives the most for the money?” My answer is, “Depends.” In this post, I’m only going to discuss the largest production builders selling homes in Tucson. For a discussion of semi-custom builders, please refer to the previous post, Which Builder Builds the Best Quality.

Lets start at the beginning. For a long time, KB Home would give you the most house for the money, hands down, every time. Now, in my opinion, it seems like they are lost and are way overpriced. They are not offering incentives or “deals” that excite my clients or me. Don’t get me wrong. KB Home is still selling homes, but I think their buyers are either not shopping hard enough or do not have enough knowledge to make an informed buying decision. Within the past 4-5 weeks, I have been finding the best deals with DR Horton and Meritage. DR Horton is now sporting the “$500 dollar moves you in” deal. Meritage offers the “$500 dollar moves you in” deal and then some. In my opinion, Meritage is where the deals are right now. In most communities, they are offering good starting incentive packages, and they are always willing to do a little more to make a deal happen. (Note: you need to be aware that when a homebuilder’s sales rep says, “That’s the max incentive,” it’s not the case. It’s their job to shut the spigot off.)

I think community location is the greatest factor in homebuilders’ decisions to cut prices and offer deals in order to make sales. Right now, great deals are to be found in Sahuarita and Red Rock (where it’s a risky buy but super cheap). Sahuarita offers a lot for the money, and the builders there are really feeling the crunch. They are trying to out deal each other to make sales. Pulte is also offering fair deals in their Sierra Morado community on the east side, but you’re looking at 225k+ for a 1500 square foot, single-story home.

A buyer who is super concerned with “the deal” should have a laser focus for builder spec homes that have been sitting. Also, unless you are great negotiator (statistically, only 1 out of 1000 people are), I highly recommend using a real estate agent who is very familiar with the new construction arena. Why? Well, to put it simply, NOT ALL INCENTIVES ARE ALIKE. Five thousand dollars towards closing costs versus $5000 worth of option money versus $5000 off the base price are all DIFFERENT INCENTIVES! How can that be? Let’s break it down. To get $5000 towards closing costs, you will need to go through the builder’s mortgage company. That mortgage company will most likely charge you $1500-$2500 more than you could get elsewhere, so that 5k actually NETS OUT TO $2500-$3500. The $5000 in options is worth $5000 only if you select the correct options. If you apply that money to options that are highly, highly overpriced (think bath fixtures and flooring), your money essentially evaporates. YES, EVAPORATION JUST TOOK PLACE, AND YOUR 5K IS NO INCENTIVE AT ALL. By choosing the correct options, you can utilize 90-95% of that 5k. Last but not least, $5000 off the base price is the best option of all, assuming you have enough for closing. Any time you can get a builder to reduce a base price, that’s a win. But good luck! It’s rare that a regular customer knows how to reason with builders to induce them to offer such a thing. Do you see why a Realtor who knows new construction might just be something you would want to have? In this market, the value of incentives is in the tens of thousands, so there’s a lot at stake. Best yet, the homebuilder pays the commission to your agent! The only catch is that you have to bring the agent with you on the first visit; otherwise, your right to have your own representation is voided! Now, if you have already visited a builder and after reading this, you are thinking, “Hmm, maybe I do want some representation,” let me know. There are a few ways around this, and the builder may yet pay for your representation. However, I’d need to discuss this with you first and see if there is any hope in your situation.