New construction incentives: how they work, and why you still need your own agent

A builder incentive adds value on top of the price. It isn't a reduction in it. It might be a credit toward your closing costs, a lower interest rate for the first year or two, money to spend at the design center, or a stretch of HOA dues the builder pays. The price on the contract usually stays the same.

I'm Jen Keene, a REALTOR® with eXp Realty Luxury in Scottsdale. I'm not the agent you call once. I'm the agent you call at every stage of your life. Brand-new homes are being built across Scottsdale right now, and here's who's building and where. Once you've found one you like, the incentive is the part that's hardest to compare.

Often because the recorded price becomes the comparable sale for the next house in that community, and sometimes for the same floor plan a few lots over. An appraiser, a lender and every buyer after you will look at it. A closing cost credit or a rate buydown is handled apart from the recorded price, so the builder can make your deal work without resetting that number.

• A rate buydown. The builder pays to lower your rate, for the first year or two on some programs and for the life of the loan on others. Ask which one you're being offered. They aren't the same offer, even when both are called a buydown.
• A closing cost credit. Dollars applied toward your closing costs. It helps most if cash at closing is your tighter number.
• A design center credit. Money toward upgrades like flooring, cabinets and fixtures. It's worth the most if you were already planning to spend on upgrades.
• HOA dues covered for a period. Ask what the dues become when the builder stops paying, and who pays for the common areas after that.

Builders often tie the full incentive to their own lender. That's allowed, and their package can be the better deal. Get a second quote from an outside lender anyway, and compare two full numbers, rate and fees and the incentive's value, not two headline rates.

Yes. The person at the desk in the model home works for the builder. You'd be negotiating on the builder's paperwork with nobody there on your side.

Asking a builder's website for information doesn't commit you to them. Walking into the sales office can. In many new communities, if you don't register your agent on your first visit, you can lose the chance to have an agent represent you there. Call me before your first visit, and I'll come with you or get you registered first.

First, get pre-approved, not just pre-qualified. The sales office will ask early who you're financing with, and a real pre-approval lets you answer. Here's the difference between the two.

Second, expect to sign a buyer agreement with me before I take you through a model. It doesn't commit you to buy anything, and it puts your agent on record before you walk in. Then I ask the sales office for the full incentive list in writing, because the written version is the one you can hold them to.

• Comparing the incentive to the sticker price instead of your real cost. Run each offer against your monthly payment and your cash at closing. The biggest-sounding number isn't always the best one for your budget.
• Skipping the inspection on a new home. A new build still goes through many hands on a schedule. An independent inspector catches things the builder's own walkthrough isn't set up to catch, and it's easier to fix them before you close.
• Not reading the new community's HOA documents. A new association often has rules still being written. Here's what to look for in an Arizona HOA's documents.
• Not checking the condition on the incentive. Some builders pay it only if you close with their lender, and some limit the design credit to certain categories. Ask before you start picking finishes.

Call before you sign anything else. Some communities let an agent be added after that first visit, and some don't, so find out where you stand instead of assuming. Once you're under contract, here's what happens next, step by step.

Call me at (480) 203-6605 or get in touch before your next visit to a sales office, and I'll tell you what to ask for.