Home Buying in 21117>Question Details

Sara, Home Buyer in Columbia, MD

How much negotiating room is there when buying from a builder?

Asked by Sara, Columbia, MD Thu Jul 30, 2009

We put in an offer on a home that was a model for the builder. It has been sitting vacant for 6 months, had one offer that fell through. We are paying cash. It's listed for 374,900, our realtor advised to offer 330. Says it's overpriced by 30k. We put in offer at 3, and didn't hear back today...how much do you think they're willing to play ball? Is it a bad sign that they didn't respond?

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your offer was 20% lower than list. let me give you a few facts

i did a simple search so that i could speak fact instead of fiction. here are the legit numbers. you are in columbia. you are looking for three seventy five list price. i searched by price, area and timethree fifty to four hundred single family homes and over the last six months here is a fact 48 properties meeting the stated criteria sold for a total of 96.5 percent of list price at time of sale. the average subsidy given to a buyer from seller is 6,121.

your agents suggestion was about 88% of list and 8percent lower than average sold price to list price ratio. your agnet made a good suggestion.
0 votes Thank Flag Link Tue Aug 17, 2010
Builders do not always react quickly on offers. If your Realtor understands the market then you should trust them, but it really depends on the size of the builder & if they are local or a national. All builders are willing to negotiate, but to a certain extent. Good Luck!
0 votes Thank Flag Link Mon Aug 17, 2009
Sara,

Sellers normally express their dismay with a low offer by electing not to respond. By doing so this puts you in a position of making a counter to your own offer without them commiting to a number other than the one they are selling it for.

Why did you not take your agent's advice and make an offer at $330,000. Generally, agents have a pretty good feel for the local real estate market and what builders are will entertain for pricing.

Our recommendation, if you are still interested in this property, is to speak with your agent again about their best recommendation.
0 votes Thank Flag Link Fri Jul 31, 2009
Don't let them scare you, they are playing hard ball too. Just be prepared to walk away from the deal if they aren't willing to negotiate. What is the cost of the basic model? You should have brochures on it, model homes always have that stuff around. It should also have a list of upgrades available. If the home you want to buy has granite counters for instance, that is an upgrade for all but the most luxurious homes ($800K & up) and runs about $75 per sq ft. Is it all hardwood floors? Installed that can be around $5/sq ft. Estimate the amount you think the upgrades cost and add that to the basic price of the home. Fireplaces are another upgrade of about $5K if wood burning (cost to build the chimney mostly). Then you'll know whether your offer was reasonable. I am sure you Realtor probably did this same math. Good luck! Cher
0 votes Thank Flag Link Thu Jul 30, 2009
Builder inventory homes generally have more "room" on the price than homes built to order. They have either been built on condition that the buyer can sell his house, than cant, or it was bult as a "speck house" or finally , a model. Either way they want to move it. Always choose a realtor you trust and listen to their advice on market value. They should be the expert on values in the area you are looking at. If your Realtor believes a house listed at 374,900 is worth 344,900, the builder knows the value as well. Putting in too low of an offer is usually a waste of time, even in this market. All involved should know what houses are selling for in the area, and usually can figure out an average price per square foot. The real "value added" in model homes is usually the upgrades that are included. Hopes this helps.
0 votes Thank Flag Link Thu Jul 30, 2009
I'm sure your Realtor has done her research. The builder has equity in the home I'm sure, although I don't know what the upgrades add up to. If you are paying cash, the builder should be much more negotiable. It's not a bad thing that you haven't heard anything back for a day or two, but your Realtor should follow up very soon if there wasn't a response time written in the offer.
I hope this helps!
Web Reference: http://www.kathy-dawson.com
0 votes Thank Flag Link Thu Jul 30, 2009
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