Builders offering trades on resale homes

The article, Builders move homes by taking trade-ins, from the Arizona Republic, reports that builders frustrated by customers canceling deals are coming up with aggressive ways to keep them. Some are offering trade-in programs, while others are giving sales guarantees on existing homes. It's a switch from their traditional role in the house deal: building and then selling them. Now, builders are taking a more active role in clearing the way for buyers to purchase their homes. The new programs are driven by a drop in new-home orders and soaring cancellation rates that have left many builders with an excess of unsold homes. Cancellations shot from 1 percent in January 2005, the midst of the housing boom, to nearly 29 percent in March, according to Hanley Wood Market Intelligence, a real estate and new-home construction consulting firm in California. Although some companies are seeing an improvement over last year, cancellations were still running high the first quarter of 2007. At Scottsdale-based Meritage Homes, cancellations stood at 28 percent. At KB Home, it was 31 percent. Pulte Homes lost 25 percent of the sales to cancellations in its Southwest division, which includes Arizona. Valley housing analyst RL Brown said a 15 percent rate is an acceptable industry standard.
http://www.azcentral.com/business/articles/0523tradein0517.html