A Better Way to Buy A New Home

By Jim Rosewater

Imagine going to purchase a new car only to learn that the BMW model you want needs to be built to order.  You ask the price, the salesman smiles and then tells you that he’ll give you “the best price possible.”  He then quotes you a base price of $50,000.  That sounds pretty good and fits your price range, so you then ask him what it includes?  He hands you a features sheet which includes the following:

  • Tire Allowance = $900
  • Stereo Allowance = $1,500
  • Paint Allowance = $800
  • Leather Seat Allowance = $1,400
  • Light Allowance = $700
  • Navigation Allowance = $1,300

You immediately ask, “what are all of these allowances?”

The salesman tells you, “well, since you’re custom ordering your car you need money in your budget for these items.  You’ll select each item while your car is being built.  We’ll recommend some showrooms you can visit to look at the different choices during the process. You’ll have a great time seeing and selecting the latest finishes.”

You’re first question is, “how come we can’t decide these finishes now?”

He responds by telling you, “all of our customers do this while their car is being made.  It allows us to get it started quickly and deliver earlier.  Plus, you get to take your time visiting some nice showrooms.  They’ll give you great pricing on the finishes too.”

You answer, “but, I don’t know what type of leather seats I can get for $1,400, or stereo equipment for $1,500.”

He looks at you, smiles again and says, “don’t worry, we’ve built many custom ordered cars and you’ll have plenty of great finishes to choose from that will fit the budget…”

 You would never buy a new car using allowances as described above, so why would anyone agree to buy a new home – a home that costs many hundreds of thousands of dollars more than a car – using a such a flawed process?

For decades custom home builders have employed the excessive use of allowances to rapidly price, sell and start homes.  Regrettably, many of these allowances are loosely defined and are commonly inadequate to meet the buyer’s expectation.  Most of these builders are small, have little buying power with suppliers, don’t explain if allowances are builder’s cost, retail prices, or involve any added margins or kickbacks.

Its not a surprise that most custom homes come in over budget.  The “wonderful” and “low” prices buyers thought they were getting at time of contract often turn out to be low balls to gain a contract.  The truth is, exceeding allowances is normal, causing change orders and budgets busts that regularly occur well after the start of the home.

Unfortunately, custom home clients continue to suffer through this approach because it remains the industry standard. Not surprisingly, large corporate home building companies don’t use allowances at all.  They avoid them because they have the personnel, tools and resources to provide honest pricing “up front”.  Most small home builders don’t have the ability or desire to provide comprehensive selections and pricing prior to start – so they don’t do it .

At Arthur Rutenberg Homes we offer you a better way to buy and build your dream home.  We avoid the budget busts and headaches associated with mystery allowances because we have a carefully managed process that marries the resources of larger companies with the local expertise of local custom builders.

Our process simply works better, and it has been proven thousands of times.

We enable you to:

  1. Experience our model homes each priced to include all of the features shown.  What you see is what you get.
  2. Visit a Design Studio for a Preview.  Our Design Studios are staffed with professional Interior Designers who will show you the finishes that come with your home as well as others that are available.
  3. Receive a detailed Rapid Quote that specifies exactly what is included in your home down to the models of the bath fans.  Any allowances are demonstrated by actual products featured in our model homes of equal value.  No surprises.
  4. Attend a Color Session with our Interior Designers and your builder after purchase to select all of your finishes in a single location prior to the start of construction.  We make the process very easy.
  5. You’ll know the cost for any requested changes within days, not weeks.

At Arthur Rutenberg Homes we have a saying;  Mystery is good for the Theater, not custom home building.  With our buying process you’ll have peace of mind knowing exactly what you are getting with your new home.  And, your budget is never a mystery.   We don’t like surprises, and neither should you.

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