Pros and Cons of Buying a Model Home

You've just taken the tour of the builder's deluxe model home, and the sales agent is beckoning you into his car to go look at some prime lots. That's when you pop the question: "How about selling me this house?" Although it might seem farfetched, buying a model or display home might be a really good deal for smart buyers, if the conditions are right. But don't judge a book by its cover when it comes to model homes, warns Lew Sichelman of The Journal Newspapers.

On the upside, the builder usually goes all-out to make the model home a showpiece, decked out with high-end furnishings and equipped with lots of extras. The home itself is typically constructed from a larger floor plan, making for a big, luxurious unit designed to bowl you over. All those features usually drive the cost too high for most buyers. Then there's heating or cooling bills and other costs the builder paid to keep the unit open for tours.

But the builder's position may be somewhat different than with the typical luxury home. Extra costs associated with the model home are written off as marketing expenses. And if the development is almost sold out and the market conditions are slow, the builder may be ready to bargain. Under those conditions, things like custom built-ins or higher quality carpeting and fabrics might be priced at cost.

Nevertheless, you need to consider the unique drawbacks of a model home along with the advantages. The cardinal rule "Buyer Beware" applies more than ever. First of all, beware of construction flaws if the builder is testing out a particular plan for the first time. In some cases, they might be learning by their mistakes. Sometimes it's a rush job if the model needs to be built pronto to start the sales process. With the priority on speed rather than quality, you might end up with cabinet doors that don't close, or inferior cabinet hardware, for example. These defects are frequently overlooked during a home tour.

It's wise to take a closer look. Remember, you're actually buying a "slightly used" house. Depending on how long the housing development takes to sell out, a model home can remain open for years--seven days a week--with the heating and cooling systems running and people traipsing through on the carpet. Make a list of things that need correction or repair. Find out if the model is selling "as is," or if the builder is willing to address those items. Everything is negotiable. They might agree to repainting the walls, and cleaning or even replacing the carpet.

Finally, make sure all warranties on workmanship and structural defects are effective from the PURCHASE date, not construction date. And check out when the warranties on the appliances expire.