By Cynthia Gregory
Most buyers believe that negotiating the lowest possible purchase price is the way to go in this market, but in fact, focusing on cost alone can end up draining hundreds of dollars every month from an uneducated buyer’s pocket. The first step, as Ryland Group Sales Manager Todd Condon sees it, is teaching buyers about other options. This, in part, is why Ryland created its new Payment vs. Price program.
“Payment vs. Price allows us to educate buyers and show them solutions they may not have considered,” he says.
Without a substantial down payment, private mortgage insurance (PMI) can take a considerable bite out of a buyer’s wallet. That buyer will pay about 0.50 percent of the loan amount the first year, and nearly that in subsequent years until they have sufficient equity to cancel for payments. For most buyers, that’s years in the future.
Rather than negotiating a few thousand dollars off the purchase price, which is the route an uninformed buyer is likely to go, leveraging those dollars by asking the builder to pay the full PMI upfront means lower monthly payments. This is what the Payment vs. Price program does – not only does this sales incentive allow agents’ clients to buy a new home more affordably at the time of purchase, but over time, the savings will also amount to considerably more than they would have been under the initial PMI offering.
“By taking the focus off the home’s price, we’re able to help buyers understand that there are a lot of alternatives available to them,” Condon points out. This takes some effort on Ryland’s part; many buyers may not initially understand the concept of leveraging, and therefore, don’t trust the possibilities. Inviting the agent to help explain the options to the buyer is the key, since buyer and agent have already built
Condon says the buyer response has been tremendous, and agents love the program, as well. The market is competitive – distressed properties, re-sales and other new construction properties are all options for buyers. Ryland’s Payment vs. Price quickly gets buyers into a fully-warranted new home personalized with the options they choose at a price they can afford, simplifying the process for both agent and buyer.