New homebuyers who search builder websites are likely to be in for a big surprise when they visit model homes.
According to research from HomesUSA.com, the prices would-be buyers find at the job site are often higher than they are on the website, or on the builder’s post in the multiple listing service. In one case, says HomesUSA President Ben Caballero, the difference was a striking $100,000.
The Addison, Texas-based company found no rhyme or reason to the discrepancies. In most instances, job site prices were higher than those listed online and on the MLS. In some cases, though, it was the other way around.
Either way, in the four major Texas markets the brokerage firm studied -- Dallas, Houston, Austin and San Antonio -- there were price deviations in a third of the cases.
The differences smack of bait-and-switch schemes designed to lure buyers into visiting a builder’s community in person instead of just online. And in some instances -- “a small minority” -- that may be the case, says Caballero.
More likely, though, “it’s an honest mistake,” he says, because one part of a builder’s operation doesn’t know what the other part is doing. And many builders don’t have procedures in place to ensure that price changes put into effect at the job site are also updated on the web or the MLS.
Sometimes builders forget to tell their real estate agent, who manages their MLS listings, about price changes. And sometimes they fail to notify the in-house person who manages the website. But either way, the oversight can be terribly misleading.
HomesUSA found price discrepancies averaging $17,000 in a third of the houses advertised for sale by one merchant builder alone.
The research is limited to Texas, which is the largest new-home market in the country. But Caballero suggests there is no reason to believe the same thing isn’t going on everywhere.
“To me, builders are playing with fire,” he says. “They are leaving themselves open for complaints and mistrust. This is not a small deal.”
As Caballero sees it, the problem is not about builders’ inability to manage prices. It’s their inability to manage information. “Zillow and others have been criticized for bad data. This is just another case where consumers are getting bad data,” he says.
And boy, is the data bad. One major Houston builder had price discrepancies on 70 percent on his houses, HomesUSA found. Another large builder who was active in 23 markets across the state thought he had things under control, but “was absolutely flabbergasted” when Caballero showed him that he didn’t.
“It’s not for lack of effort,” the broker says. “It’s usually for lack of ability.”
It’s not just prices that builders’ websites and MLS listings aren’t keeping up with, either. It’s also the sales status of their houses: whether a house is completed or still under construction, or whether a house is sold or still available.
“Whether a house is move-in ready makes a big difference to someone who wants to move in right away,” explains Caballero.
HomesUSA manages its builder feeds electronically. “It can’t be done manually,” which is what many builders try to do. “There are too many moving parts,” Caballero says. “Builders have been slow to adopt technology; that’s not their core competency,” he says. And as result, when sales managers are notified of a price change, management forgets -- or fails -- to notify the person who manages the website. Consequently, the information drops through the cracks.
So what can buyers do when they are led to believe one thing by a builder’s website or MLS post, only to find out prices are higher when they visit the model home park?
If you are convinced the discrepancy is deliberate, you can complain to your local Better Business Bureau or the consumer affairs agency in your area, or perhaps your state’s attorney general’s office.
But if you believe it’s an honest error, you might try to leverage your buying power by negotiating, either for a price somewhere between the two numbers or for a free option or upgrade. To maintain goodwill, some builders will try to work with their customers -- especially when the builders were wrong to begin with.