Beazer Shows that Combined Services are Dangerous

Posted February 3, 2008

Beazer announced that they will no longer build homes in North Carolina (and four other states). In addition, Beazer Mortgage is being shut down. This is all a result of problems found last year in their business practices, mainly exposed by the Charlotte Observer.

In my opinion, this shows why “combined services” can be very dangerous. Although the companies that combine home sales and mortgages tout it as a convenience for their clients, these combined services can also be harmful for a great number of home buyers. As evidenced by Beazer Homes, the temptation to cut corners and push the limits in order to sell a few more homes can be very powerful. This can lead to major problems, including foreclosure issues!

Let me explain one of the main reasons this is NOT in the best interest of the general home buying public. A home buyer visits a community to view a home. The sales agent on site takes the buyer out and shows them the homes and begins selling. Pressure to “act now” to get the special incentives is very strong, and home buyers are encouraged to sign immediately. In many cases, even if the buyer has a buyer’s agent to help, if the buyer’s agent is not there when the buyer signs the documents, the buyer’s agent is cut out of the deal and has no way to ensure the buyer is protected and treated fairly. At the same time, this means that the company keeps additional profit. And keep in mind that the sales agent works for the company, not the buyer!

Now, in order to get the special incentives, they put even greater pressure on a buyer to obtain their mortgage with the company’s mortgage company. This is an additional profit center for the company, so they will do everything they can to increase their profit. This could mean higher rates and fees. Not only that, but now the company has the power to “make things happen.” This gets dangerous. If the home is not the right fit for the buyer, the mortgage company is not going to say anything unless they just can’t get it done. Everyone involved is looking out for the company’s interest, not the buyer’s!

So when all is said and done, the buyer could be put in a contract that does not benefit them and a mortgage that is not favorable. In the worst cases, such as those shown by Beazer’s problems, can result in home buyers somehow buying a home they never could afford and losing their home to foreclosure. All so that the company could make a bit more money.

The moral here is that buyer’s should always work with a Realtor as a buyer’s agent, and have a 3rd party, unaffiliated mortgage professional help them out. Just because the company that sells the home also offers mortgages does not mean that they will save you a dime. In most cases, it will cost you more in the long run.

If you are considering buying a home in Charlotte, speak to the experts of the Ed Nailor Mortgage Team. We can get you pre-approved and if you do not have a Realtor to protect your interests in the home buying experience, we can introduce to a few that we know look out for their clients.