Yes, its true. New home builders are having a tough time moving supply and so one answer aside from chopping price is to increase the pool of available buyers. How do you do that, you ask? Well one way is to take motivated buyers who have poor credit and help them with credit repair programs. The Wall Street Journal has an interesting article about a program that more than one new home builder is trying out.
Both Hovanian and DR Horton are large home builders with an uncomfortable amount of supply. They have devised similar programs that puts "credit challenged home buyers" through intensive coaching that includes assistance with debt reduction and responsible spending, according to the company's Web site."
"The program is now available in 19 states for products including single-family homes, town homes and active-adult communities. Applicants are screened carefully, says Hovnanian, and about half of those referred sign up. The company pays Debt Resource USA, Fort Lauderdale, Fla., $150 upfront and $200 when a student graduates and closes on a house. In a third of communities, aspiring buyers sign contracts before joining the credit program. Those who don't complete the program can't buy a house."
There is another good article on How to erase bad credit that points out that many credit repair company's are scams. We dont think large companies such as DR Horten would be involved in such schemes, but it is wise to check with the FTC Bureau of Consumer Protection, if you are looking into companies on your own.
This is certainly a win win situation. I dont think it will move the kind of supply that these builders are seeing, but its a positive market approach to self help that we can all applaud.
Thanks for reading
Howard Bell
Your Property Path
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