Thank you all for the valuable information. They all all very helpful. :-)
Instead of sell our current home now, we decide to rent it out hoping the market will be better for seller in a year or two. Luckily our financial status is ok so down payment and loan shouldn't be a problem. At this time my husband is still on the fence whether we should buy now or later, we are also drawn between location and age of houses. Well, that's another discussion, :-p . Thank you all again.

Thu Jul 10 2008, 18:11

James ....I knew that you weren't implying it was the only avenue. I think you offered great information, I just noticed that several people had mentioned it and simply wanted to clarify that point :-) you always offer valid and great feedback!

Tue Jul 8 2008, 20:27

Stacey, ...I didn't mean to imply that pulling solds is the only method ..it is one method to see if that particular builder has been flexible on the sale price. Most builders aren't, but I've worked with some that have been. If it shows that they are, then the buyer has two avenues to negotiate on...sale price and back end stuff.

Tue Jul 8 2008, 11:09

Susan

If you want to negotiate you have a big job to do first - sell your existing home. I have never met a builder, or any seller for that matter, who's willing to negotiate to their bottom line with a buyer who still has a home to sell. You can't depend on bridge loans or other equity lines to get you past this hurdle either. These have all dried up. Your lender will also be very concerned with any strategies to keep your current home as a rental. Perhaps you have a financial position that doesn't require the sale of your home but you'll need concrete evidence of that to present with your offer. Hire a good local Realtor to help you out, and remember, buyers of your home will want to negotiate too. Your price needs to be good. Good Luck!!

Tue Jul 8 2008, 07:32

I feel like I must point out based on the comments below to evaluate the closed homes one thing....if a buyer comes in on let's say a $800,000 new construction home and negotiates $50,000 in additional upgrades for the cost of $800,000. Most builder addendums will reflect that negotiation this way......

$800,000 - Purchase Price
$50,000 - Upgrades
($50,000) - Buyer Bonus
_____________
$800,000 Total Purchase Price

This does a few things....allows there design center (who provides the upgrades) accounting books to balance, appropriately reflects the negotiation and essentially allows the builder to reflect a full asking SOLD price that is inputted into the MLS.

So as you can see pulling solds off the MLS will not always reflect appropriate information for negotiating purposes. Often times you will even see higher than asking price on New Construction homes and that is because most often buyers add upgrades or had rolled in closing costs to the final purchase price.

Your best bet in negotiating is to have a saavy agent working for you, build a good repore with the site agent and see which homes the builder wants to move and what incentives (if any) they are offering now, ask how many sales they've had over the last month......and then ask over the last year, find our when the community opened, how many homes are in the community, how many are remaining. Visit other sites that the builder might have, then let the site agent know you were there, she might be more willing to offer up information if she thinks she can get you to buy in HER community vs. her co-workers --- you'd be surprised.

But bootom line is don't rely on the solds recorded in the MLS for comparisons for a negotiation tool, although it should be researched -- look at ALL of the factors.

Best of luck!

Tue Jul 8 2008, 07:22

New construction is best negotiated on the items Stacey mentions. One way to see how well the builder is negotiating on the front end (sale price) is to have your agent look up all the closed sales in the development to see what they have sold at compared to what they were listed for. You'll get a good idea how much the builder can be moved on price.

As for how well the market is in the areas you mention ($750K to $850K, Bellevue/Kirkland/Redmond). For statistical purposes, I included both condos and single-family homes in these figures:
The first half of 2008 had 222 closings. The median price was $767K. The median time on market was just under 2 months at 57 days. Interestingly 32% of these homes were sold in the first month they were on the market. 21% sold in the 2nd month, 11% in the 3rd month, 8% in the 4th month and 28% more than 4 months. ...this means a the majority of homes in this area and price point sell fairly quickly. In general, these homes all sold for almost 3% under the last listed price.

Now...that was for all homes/condos in the 3 cities. If you filter out just the new construction ones, only 56 have sold since the beginning of the year (there are 104 still available). The Average sale price is about 2% under sale price in general. 2-bedroom homes seem to have the most flex in price as they sold for nearly 5% under list (although there was only two 2-bed homes that have sold that are new.

Anyway, ..the point is ..there is room to negotiate depending on the builder. Many builders are sticklers for their price (something about them being able to show their bank what price point they can fetch). Definitely negotiate all the back end stuff hard. Closing costs, upgrades, etc. .(look at Stacey's list).

remember builders everywhere are feeling the pinch to some degree. Some worse than others. Have your agent do their homework to help you figure out what the builder's most likely position is and go from there. First rule of any negotiation, ....learn everything you can about the other guy.

good luck and have fun!

Tue Jul 8 2008, 01:51

I certainly agree with all of the answers below....and can tell you after many years working as a New Construction Community Sales Manager for some of the largest builders in the state, that you will have much more weight when negotiating the following items:

* Upgrades (since the builder can extend them to you at a retail cost but only pay their cost to install)
* Closing Costs and Financing Credit (buying down points on your loan, etc) but almost always tied with
their preferred lender (and in my opinion not necessarily a bad thing)
* "Standing Inventory Homes" - Essentially a home that is complete or ready to move into
* Cancelled Transaction Homes - Homes that have been pending and fallen through and now the builder
is scrambling to sell. Often times the builder's "Home of the Week"
* Quick close date and non-contingent

I firmly agree you should have a buyer's agent at your side to investigate and best represent you in the negotiation process.

Feel free to call me with any questions you might have and best of luck to you in your home buying venture!

Mon Jul 7 2008, 21:06

Susan
The market is doing well for homes in the Bellevue, Kirkland, Redmond areas for new const.
Are the homes on average sized lots or very small lots? Recent homes closed are listed
on the multiple but don't show any extras given to buyers. If you do not have a buyer's
agent I strongly suggest that you retain one to help you with the information needed
for negotiation. If you decide not to use an agent you can door knock other homes in
the area that have sold and ask the new owners what extras they asked for and home
sale prices are a matter of public record but they are not necessarily updated immediately.
You can call a title company and they can run the sold activity. Negotiating a sale to a
lower price is always great but well priced new construction will have very little negotiation
and getting a lower sales price or lots of extras on a home that is not your top choice
is not better for you. I would be happy to answer you questions in more detail if you
desire. I live in downtown Kirkland and there is not new construction at that price that
does not border the freeway. You may be looking at Finn Hill or Totem Lake area.
I'm not trying to be evasive but without knowing your specifics there is not an easy answer.

Mon Jul 7 2008, 19:55

Susan,
Negotiations are one part science to two parts art. That means you really need to study recent sales of comparable property (new construction in your case) in the vicinity of your intended new home. Getting a solid idea of what is selling and for how much will give you a sense of the 'correct' price for the home you want. If the builder is already offering incentives then that's something to be considered. You might also consider closing costs as an acceptable concession. Some builders may prefer paying such expenses rather than reducing their price for 'appearance' sake. Such credits also mean fewer dollars out of your pocket whereas a price reduction may only reduce your monthly payments a few hundred dollars. But know there are limits for credits you can receive based on your down payment amount. Also, keep in mind that negotiations is a lot like lobbying. Often times you ask for more than what you get. But what you get is very acceptable. It's never good to be cut-throat about terms especially in new construction since the builder will remain in the picture for a year or more because of warranty terms. Finally, there are a lot more things to consider than just $$$. And that is part of the negotiation process. Like it or not, an experienced real estate professional can truly help you achieve your goals beyond just dollars and cents. Just make sure you find one that's ready and willing to do your bidding.

Mon Jul 7 2008, 17:28

Susan,

It will help to have a knowledgible real estate professional in your corner. Try to find one that is active in your area of interest and has recently done business in the development.

It will help to know recent sale prices, specifics on deals they has offered previously, what incentives are currently being used.

Good luck,
The "Eckler Team"

Mon Jul 7 2008, 17:08

Are you working with an agent? Your real estate agent should be able to direct you. It is a buyers market in most areas so you have some negotiating power with new construction. Some of them are giving buyer bonuses already. I would be happy to provide you with Stats for Bell/Kirkland in those price ranges. You will need to provide a preapproval letter from a lender also. The builder may have a preferred lender. I would be happy to discuss this with your further. Give me a call. Karen 206-714-1384

Mon Jul 7 2008, 16:49