Tucson, Ariz., Homebuilder Experiments with 'Trade-In' Sales Concept
By Joseph Barrios
The Arizona Daily Star, Tucson
RISMEDIA, Jan. 17 – (KRT) - A Tucson home builder's new marketing strategy might look familiar -- it's one car dealers have been using for decades, and it goes something like this: "You buy ours and we'll buy yours."
ITC Homes Inc., a relatively new company in the Tucson market, is using the sales tactic at its 700-home Santa Rita Acres Estates near Vail. The custom homes, which start at $289,000, sit on one-acre lots. The development caters to buyers who are looking for a "move-up house," said Ron Amiran, the project director.
No other new-home builder in Tucson is making such an offer, Amiran said, and he's never heard of another builder doing so -- though home builders in other areas are.
"We are very healthy financially and we can afford to do that," Amiran said. "Sometimes I might make a few thousand dollars, sometimes I might lose a few thousand dollars. I have staff that can sell it. I'm taking the risk."
About a month ago Amiran made the offer to two prospective buyers, he said. Both loved the trade-in concept and bought homes. So the company will begin advertising the program next week in earnest.
If someone wants to purchase an ITC home, the deal is sealed on a contingency: that ITC and the buyer can agree within a reasonable amount of time on a selling price for the "old" home. If the company and the buyer can't work out a price by themselves, an independent appraiser will help settle on the price.
If there's still no agreement, there's no deal, Amiran said.
The offer is open to anyone living in the Tucson metropolitan area, including Green Valley and Oracle, or anyplace within "striking distance," Amiran said. ITC workers must be able to evaluate and repair the home if necessary, he said. ITC will then turn around and try to sell the home.
Deal maker for one couple Amiran said the idea hatched a few weeks ago when a couple visited ITC's model homes. The couple, living at a home in Rita Ranch with five children and a few dogs, were looking to move soon. They viewed the models and liked what they saw, but decided they didn't want to wait several months for the home to be built. They didn't buy.
"They have to put their furniture in storage. It's a serious problem," Amiran said.
One other problem: They also weren't sure if they could afford to buy the new home without selling their old one, Amiran said.
The offer made all the difference for Theresa and Donald Snively, one of the first to buy an ITC home under the new offer. For the last four years, they've lived on the far East Side in a home with a swimming pool.
Today, they don't swim much and the Snivelys decided they wanted property to ride horses. Theresa Snively, a certified public accountant, said the home trade program made all the difference.
"That was a deal maker right there. We were pretty intent on moving. That right there clinched it for us," she said. "We didn't have to mess with realty companies or any of that. I just want to move."
Although uncommon in Tucson, the builder's tactic is not entirely new.
The Web site for Veridian Homes in Madison, Wis., offers a sale program in which the builder will purchase a home buyer's home if it can't be sold on the open market within a predetermined time. The Web site for Davis Homes in Indianapolis offers a similar deal.
Marved Investment & Construction Inc., which was sold in 1971 to U.S. Home, made a very similar offer in the Tucson area decades ago, said David Greenberg, president of the Tucson division of D.R. Horton. Over the years, there have been other "guaranteed trade programs" but none in recent memory, he said.
Long Realty Co. used to purchase homes under a similar program but abandoned it about five years ago, said Stephen Quinlan, board chairman. At that time, builders were reluctant to begin construction of a new home until the old one was sold, he said.
"We took the risk that if the house didn't sell, that we would buy the house. It worked for us because the builder was paying us a brokerage fee on the sale of the new house," Quinlan said.
Quinlan agreed that in today's market it's probably not a high-risk endeavor for ITC because new and used homes are being snapped up so quickly.
A resale home spends an average of 41 days on the market, said John Strobeck, a housing market analyst. In past years, the average time on the market may have been two or three months.
Thomas Doucette, founder of Doucette Communities in Tucson, said the offer could very well bring in buyers.
"Those kinds of incentives might be a powerful tool to help them affect the sale of a new home," Doucette said. "Someone, obviously, is confident that any home they take in in trade, they're going to be able to resell it." But it's not something Doucette homes would use as a marketing tool.
"People who are looking at the kinds of projects we do are sort of specialty buyers. They're looking to be in a small square-footage property," Doucette said.
Ron Peetz, president of AmericaBuilt homes, said it would take too much money to initiate a similar program for his company. And, he said, business is good enough as it is.
"I think it's an innovative and interesting idea, because it is one of the hardest things about selling a move-up type product. Most people are not in a position to own two homes at one time," he said.
What if a new buyer owns a larger, more valuable home and wants something smaller? Amiran admits nobody has made such an offer, so he's not sure.
"Never happened," he said. "We never thought of that one."
[Never thought of that? Duh? Mish]
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