By Raynor James 

If you are looking to buy in the residential real estate market these days, you are a lucky person indeed. Everything is in your favor, particularly if you are buying a new home from a builder who has excess inventory.

Real estate developers are a highly optimistic lot. Much like a certain movie cliché, they often believe that if you build it, buyers will come. This is particularly true for real estate developers that build residential developments. Regardless of trends in the market, they will build and build till they run out of money.

Despite the cooling off of the real estate market in 2006, developers continued along this path. Well, now the bill is coming due as they like to say. The inventory of new homes is massive. The pool of potential buyers for these homes is much smaller than it was. Do you see a problem for the builders in this scenario? You should!

If you are looking to enter the real estate market as a buyer, you just might want to focus on brand new homes built by developers. Right now, they are an absolute steal. The buyers have construction financing obligations they must meet, so they need to move properties. All those upgrades they wanted to charge you for before can now be had without paying one red penny. Simply put, the leverage has switched from the builder to the buyer. That means you!

While you can get more for your money when dealing with builders these days, there is one area you need to be careful with when making a purchase. Builders are so desperate they will often sell you a price for a certain amount and then drastically lower prices on the same models two weeks later. If this occurs, you are going to be pretty miffed about your situation. There is a way, however, to avoid this problem.

The key is to demand that a cancellation or matching clause be put into your purchase agreement. A cancellation clause lets you back out of the contract before a certain point in the transaction if you want or, in this case, if the builder drops prices. A match clause requires the builder to lower your price to match any price reductions offered on other homes before you close escrow. Either way, you gain more protection from being in a situation where you pay more than others are.

Is this a fail safe approach? No, but it is the best you can hope for. If you close escrow and the builder then drops prices a month later, you are just going to have to live with it.