What is the model home pricing strategy?
This is one of the most difficult areas for a new investor of model home leasebacks to understand, or at least to accept. The model homes in most states are not heavily discounted. To get an understanding of why this is, you need to understand why the builder wants to sell his prized model homes in the first place and how his motivation can play into your future. The builder sells his models for basically 3 reasons. Number one is to improve his cash flow. Number two is to relieve his credit line of the cost of the home allowing him/her to build more homes. Number three is to provide a built-in exit strategy. Since the model home is one of the very first homes built in a new community, if a builder heavily discounts the home to you then all of the builder’s future sales in the development could suffer. Appraisers use most recent sales prices and closest comparable sales in a community to determine the prices of future home sales. As the first buyer in a new community you are in fact set
