Guaranteed: Your Property Will Not Go Down in Value

Posted by Dave Fratello on Thursday, September 6th, 2007 at 5:16am.

Here's a new sales tactic – a builder is guaranteeing buyers that they cannot lose money on their home purchases. If you want to sell your home down the road, the builder will pay you the full price you paid, regardless of market conditions at the time.

Let's not get too giddy: The offer is good only on some newly constructed townhomes in south-easternmost Torrance.

For now.

You gotta love the sales pitch, courtesy of the RE advertising supplement to Sunday's Daily Breeze:
It's true! BC Urban Development will guarantee that you cannot lose on your new home purchase by offering the first ever 100% guaranteed buy-back program in the history of LA.

It's simple. If for any reason you decide you do not want your home, give the developer notice 3 1/2 years after your closing date and he will buy it back from you for the exact same price you paid. No closing costs to you whatsoever and no hidden gimmicks. Simply return the home in good condition (normal wear and tear is Ok), and get your original down payment and closing costs back and walk away.
Oh, yes, the BS alarms are ringing, and we imagine there is a lot in the fine print that a buyer will want to check out. But isn't the whole notion fascinating?

Consider the advantages to the seller:
  • Log a purchase and clear inventory in CY 2007;
  • Lock in 2007 prices;
  • Most buyers won't exercise the option;
  • Some of those who do try to sell back can be refused on technical grounds;
  • Eventually (5 yrs, 15 yrs, whatever), the unit can be sold at 2007 prices again;
  • The builder may never have to take a loss; certainly the whole development is more likely to be profitable in the short term if this tactic gins up sales.
For reference, these are the "Normandie Park Townhomes," all at 1445 W. 224th St. in Torrance. Several of them are on the MLS at a click below $500k for 3br/3ba, 1,600+ sq. ft.

This builder seems to be startlingly realistic about the current zeitgeist among buyers. He's got a bunch of new homes to sell and he knows what is stopping buyers from moving.

He's also taking the long view, which, among MB builders, isn't very common or, generally, even possible.

So, any chance we'll see "buy-back guarantees" some day on new construction in the Trees?
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