RISMEDIA, Jan. 5, 2007-(MCT)-Two of the Omaha area's largest real estate interests have joined forces to offer buyers with existing homes a guaranteed sales program.
Under the program from HearthStone Homes and Prudential Ambassador Real Estate, homeowners who want to buy a new HearthStone home could enter into an agreement to list their existing home through Prudential with the understanding that if it doesn't sell by the time the new home is completed, Prudential will buy the listed house.
The sales price would be set at the beginning of the listing process after consultation with an independent appraiser, said Vince Leisey, Prudential's president.
Generally, he said, prices for the homes that don't sell while the new house is being built-he expects between 90% and 95% to sell during the seven- to eight-month construction period-will be about 12% below the appraised value to account for Realtor fees and closing costs.
The program is "a win-win-win because the consumer can buy without worrying about not selling," Leisey said.
Consumers "know the worst-case scenario, including what equity they can expect to get out of their house, and aren't left scrambling to figure out how to close on their new HearthStone home," said Neil Smith, HearthStone's chief market and community development officer.
In turn, HearthStone can sell houses without the possibility of a deal falling through because of an unsold existing home, and Prudential will pick up hundreds of listings it wouldn't have had otherwise, Smith and Leisey said.
The overall housing market will benefit, Leisey said, because such a program helps to keep houses turning over in the marketplace.
"The problem we've been seeing, with marketing times lengthening, there's a trickle effect," Leisey said. "We've seen two, three, four transactions affected all of a sudden because one house can't sell. So we see this as positive for the housing community and the economy."
Some individual Realtors, including Mark Abboud of Real Estate Associates, offer guaranteed sales programs.
HearthStone and Omaha's other large-volume builder, Celebrity Homes, have long linked buyers with individual agents who offer guaranteed sales.
"We make certain our customers are confident that if, for some reason, their home doesn't sell in the market, they have a Plan B," said Shawn McGuire, Celebrity's director of sales and marketing.
But Leisey and Smith said the Prudential-HearthStone program will differ in some ways from past practices.
Smith said the Prudential agent will be housed at HearthStone's Choice Studio near Oak View Mall, where prospective buyers also meet with a mortgage officer and ultimately make selections for finishing the home.
"It'll be integrated into the regular process," Smith said.
Few restrictions will apply, Leisey said, except the house cannot be worth more than $250,000 or in need of a major repair, such as a new roof.
In addition, he said, the guaranteed-sales price won't be set by a Realtor's review of comparable sales but by a third-party appraiser selected from two who have agreed to work with the program.
"Everyone's goal is to sell for the appraised value or more," Leisey said. "Our goal is to never do a buyout, but that's the safety net."
Smith said HearthStone no longer will sell homes with a contingency clause that requires sale of the existing home in order for the deal to close. Buyers with existing homes must be able to qualify to carry two mortgages, pay cash or enter the guaranteed sales program, Smith said.
He said about 50% of HearthStone buyers have existing homes they need to sell before they can close on new homes.
HearthStone closed on 920 homes in 2006. The company reported closing on 860 homes in 2005.
Smith said the builder expects to stick with the guaranteed sales program even when the market picks back up and re-sell times are less of an issue.
"It just simplifies things," he said. "Slowdowns often make you think about your business differently. You think of better ways to do business."
Copyright © 2007, Omaha World-Herald, Neb.
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