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Last night, Fox6 reporter John Mattes (of considerable renown after he was attacked a couple of years ago, camera rolling, while investigating an alleged real estate scam) did a piece on that buy one, get one free deal on houses in North County.
He introduced the story, got a company-sponsored tour of one of the mansions, then chatted with Brian Yui of HouseRebate.com to find out if the buzzed-about promotion really was a good deal. You can watch the clip here, and I’ve transcribed part of it below:
JM: But hold on. Is it all too good to be true?
So just like any combo fast-food deal where you get the free fries but you question the deal, you need to question this deal, too.
BY: I think it’s a great marketing ploy by the developer. …
There’s a comparable house right down the street, the same model, which pretty much is selling for $300,000 less.
JM: That’s right. $1.29 million, built by the same builder. So Brian says, unless you want a second row house on a busy street, be smart. Just demand a mega-discount on that mega-mansion.
BY: Everything’s negotiable in this marketplace.
Here’s the listing he’s talking about: 2543 Royal View Road with views of the San Pasqual Valley. The company hasn’t updated that page since it apparently lowered the asking price from $1.43-$1.475 million.
Now the house, a “Heston V” floor plan, four-bedroom, four-bathroom, six-car garage, house is listed at $1.295 million.
The houses in the two-for-one deal are in the same Michael Crews housing development, Royal View, and two of them are the exact same floor plan, “Heston V,” as the one listed for $1.3 million on the resale market. But the new ones are $1.6 million.
I called Adam Rossman, the developer representative selling the resale house, to ask about the $300,000 difference.
Rossman saw the clip last night and thought the story missed the point, that one house is new and one house has been lived in.
“One’s a resale and one doesn’t come with a free house,” he said as a defense of the price difference.
But, I asked him, by selling the new house for $300,000 more than the resale one, doesn’t it appear the developer is just adding the cost of the row home to the mansion?
Rossman claimed by buying one of the new houses, a buyer would come out $100,000 ahead, since the company has valued the “free” row houses at $400,000. That would make the mansion price effectively $1.2 million, $100,000 less than his resale listing.
On his listing: “It’s 1 million 3 and that’s it, end of story,” he said. “I know on the Fox story last night they made that reference, but it’s not a good reference. There’s no free house included with this one. They’re separate issues. Two separate things.”
But consumers in this market aren’t very sympathetic to sellers justifying their higher prices. A lower price attracts, especially when the floor plan on the resale house is the same as the new one.
I just called Gary London, a local real estate analyst, to ask what is a reasonable amount for a builder to charge for a “new house premium.” He said there’s no formula, but the builder has to see things from the buyer’s point of view — not hide behind a technical distinction between old and new to justify a price difference.
“The answer is, you’ve got to think in terms of the consumer,” London said.
What do you think? As always, feel free to send me an e-mail.
Thanks to reader CL for the heads-up on the piece.