Article on pricing of New Homes with hidden Incentives

Daily Real Estate News December 20, 2007How Hidden Incentives Distort Home ValuationSome real estate attorneys and appraisers warn that the use of incentives by home builders and home sellers to entice buyers is making it difficult to adequately determine property values. Residential appraisers and lenders need to exercise caution when using the price recorded by the county clerk, as the value of incentives is rolled into that figure, experts say. However, given that incentive information is not included on the public record and that builders and real estate practitioners are not required to disclose the information to appraisers, it is virtually impossible to determine the actual price paid for a property. There are concerns that incentives used by builders conceal discounts that might anger owners in the same development who paid more for their units. Including incentives in the recorded price also may lead buyers of nearby properties to pay too much or enable lenders to make bigger loans than they would have otherwise. Source: Wall Street Journal, James Hagerty and Michael Corkery (12/19/07)Daily Real Estate News December 20, 2007How Hidden Incentives Distort Home ValuationSome real estate attorneys and appraisers warn that the use of incentives by home builders and home sellers to entice buyers is making it difficult to adequately determine property values. Residential appraisers and lenders need to exercise caution when using the price recorded by the county clerk, as the value of incentives is rolled into that figure, experts say. However, given that incentive information is not included on the public record and that builders and real estate practitioners are not required to disclose the information to appraisers, it is virtually impossible to determine the actual price paid for a property. There are concerns that incentives used by builders conceal discounts that might anger owners in the same development who paid more for their units. Including incentives in the recorded price also may lead buyers of nearby properties to pay too much or enable lenders to make bigger loans than they would have otherwise. Source: Wall Street Journal, James Hagerty and Michael Corkery (12/19/07)