Locked In Pricing
What is Locked in Pricing?
Here at EDGEhomes, we made a decision several years ago to eliminate any verbiage in our contracts that would allow us to renegotiate pricing with buyers or cancel buyers for no reason. We did this to make sure that our buyers knew that when they signed a contract with EDGEhomes, their price was locked in.
Why Are We Locking in Pricing?
As a local builder, one of the reasons that we decided to lock in our pricing was housing affordability. There is a crisis when it comes to housing affordability on the Wasatch Front, and we don’t feel like we can champion that cause if we are going to try and get that young family into their new home and then renegotiate pricing right before they close on it. So, we are committed to helping with the affordability crisis and helping people get into a new home.
Is Locking in Pricing Hard to Do?
“We’re concerned about all of our buyers as whole, and that’s why we lock in pricing.”
We get asked a lot right now “is this difficult to do- to lock prices in like EDGE is doing?” The answer is: yes, it’s not fun. We are experiencing the same increases in labor and materials that every other builder is experiencing. We are making less on each home than we anticipated we would make. But at the end of the day, we are a local builder, we’re here long-term, and we’re not concerned about each individual house. We’re concerned about the company, and we’re concerned about all of our buyers as a whole, and that’s why we lock in pricing.
How Much Does It Cost to Lock in Pricing?
When we talk about locking in pricing at EDGEhomes, the first thing a lot of people ask is “How much does that cost you to do it?” This has been written about a lot, recently. There’s been articles about an additional $25,000 per home in increased lumber costs, and other things of that nature. It varies for us how much it costs, but at the end of the day, we have a purchasing department in our company, and with it, a dozen employees who spend every day trying to find innovative solutions to new materials, new products, and build new vendor relationships. We have great vendor partners that have been with us through the ups and the downs, and we’re leaning heavily on them to help reduce the impact of this. At the end of the day, these are real costs that EDGE is eating for every one of our buyers that goes under contract and closes on their home.
How Has Your Retail Pricing Been Affected?
Oftentimes, there is a perception that buying a new home and designing it is going to cost you more money than resale. We keep a close eye on the market trends and our pricing has moved just in line with the resale market as well. So, at the end of the day, the market dictates pricing, and EDGE has sold over 700 homes in the first five months of the year. This shows that the market continues to want new homes, they want to design their homes, and they believe that there is still an incredible value in those homes. Not to mention, throughout construction, as the market continues to increase, and your price is locked in, you’re going to be able to capture all of that equity when you close on your new home