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Buying a House


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2016 Dec 25, 11:26pm   3,967 views  10 comments

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Can you negotiate a big discount with a home builder if they have just started developing a piece of land and they have plans for 25 homes? What have been your experience? I'm planning on taking a mortgage out. How much of discount? 25% off the price?

Thanks

#investing #housing #house.

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1   🎂 Tenpoundbass   2016 Dec 26, 6:40am  

I would hold until the building boom. Or at least wait another 6 months, until you can gauge if Trump is actually going to do anything about the housing shortage.
There's a real housing shortage right now in this country. I can't see a developer having a bidding war in the opposite direction, not the way things are now.

That only happens when your town has about 10 or more new SF residential sub developments going on.

2   BayArea   2016 Dec 26, 6:51am  

rbirchtree says

Can you negotiate a big discount with a home builder if they have just started developing a piece of land and they have plans for 25 homes? What have been your experience? I'm planning on taking a mortgage out. How much of discount? 25% off the price?

Thanks

#investing #housing #house.

Unless they can't sell what the are building, they most likely will not entertain anything you have to say.

The location can play a role too.

3   Strategist   2016 Dec 26, 6:52am  

rbirchtree says

Can you negotiate a big discount with a home builder if they have just started developing a piece of land and they have plans for 25 homes? What have been your experience? I'm planning on taking a mortgage out. How much of discount? 25% off the price?

Not with major homebuilders. You can negotiate for them to throw in the extras for no cost.
That has been my experience.

4   anonymous   2016 Dec 26, 8:35am  

rbirchtree says

Can you negotiate a big discount with a home builder if they have just started developing a piece of land and they have plans for 25 homes? What have been your experience? I'm planning on taking a mortgage out. How much of discount? 25% off the price?

they will only entertain ANY discount if they have homes that are already built but not selling for months on end. plus, they build out in phases - so if the first phase isn't selling well and the rest of the land is on hold, then they MAY start reducing the asking price. keep in mind that a price reduction on a new home indicates poor planning and they will be in no mood for low ballers on top of that. they would rather wait it out and simply increase marketing.

now, this is a fine time of year to try and snag a deal on a home that meets the above situation - already built, sitting for months, phase 1 of the project, price reduction, etc.

i would think the MOST that you can do, is around 5% off the newly reduced list price. in any case, the sellers probably won't entertain offers that fall drastically outside of the "average sale/list price ratio" figure for the local market.

builder credits for upgrades are pretty much always offered, but beware that you have to use the builder's subcontractors and those people usually SUCK.

5   anonymous   2016 Dec 26, 12:00pm  

Thanks for all the advice y'all!

6   Patrick   2016 Dec 26, 2:07pm  

rbirchtree says

Can you negotiate a big discount with a home builder if they have just started developing a piece of land and they have plans for 25 homes?

Why do you think they'd give you a discount? Because they need to sell 25 houses and would prefer to get a few in the bag right away? I'm probably missing something.

7   🎂 Tenpoundbass   2016 Dec 26, 3:02pm  

rando says

Why do you think they'd give you a discount?

I remember when I was doing carpet in South Florida in the 80's and early 90's as west of University was being built up. Developers would discount preconstruction Houses, so they could work up the capitol needed to secure loans and permits, and the Model home.
The first few people to move in to new developments get a discount for the months or even years of construction they have to live through. Countless times I would be walking through dirt, sand and gravel to the front of the Lot to draw power from the Permit stand. There would a house completed next door with the people already moved in, the only lot on the whole development with sod besides being only one of the few completed structures.

Nothing like that was happening in the 2000's during the bubble(same mindset as now). They were getting full price for preconstruction condos. Which btw some markets now will still give you preconstruction prices on condos.

Also during the 2000's when SF or even townhouse developments were going up, it was if every structure went up simutaniously all within a year. The project didn't linger on for 2 to 5 years as before.

8   Patrick   2016 Dec 26, 5:33pm  

Tenpoundbass says

The first few people to move in to new developments get a discount for the months or even years of construction they have to live through.

OK, that seems like a reason to expect a discount.

9   Someone_else   2016 Dec 26, 5:54pm  

Lots of buyers from all over. Hughes, et al, direct marketing to China.

http://www.honoluluhi5.com/new-condos-in-honolulu/

10   anotheraccount   2016 Dec 26, 8:00pm  

Strategist says

Not with major homebuilders. You can negotiate for them to throw in the extras for no cost.

From my experience, you have to get very lucky to get a deal with a major builder. In 2010 through early 2012 you could.

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