kebb06, Home Buyer in Oklahoma

Will a builder go 10 - 15% below list price if home is on market for longer than 3 months? What is the lowest?

Asked by kebb06, Oklahoma Thu Nov 20, 2008

I have looked at probably every new construction subdivisions in the Johnson County, KS areas (Olathe, Shawnee, Gardner, Spring Hill) within my price range. My agent keeps telling me that builders will not come down off their price very much, if at all. So I need to expect to pay full asking price. Even though the market has halted a little bit. I would get a better deal on resale. I have no contingencies to ask, and could close in less than 30 days. Is it possible for me to come in under 10% of the list price? My buyer's agent seems to think that is ridiculous to try.

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When purchasing a new home in a Subdivision the Builder has more than just this one time deal. If they reduce the price dramatictly on a home, future home values could be affected. An appraiser is going to wonder why this home with this amount of square footage sold for 10% - 15% less than this home. So it’s not only your offer that they must consider it is also future sales.

Also other Home Owners in that area want to see their homes appreciate in value. If the Builder starts selling similar square footage for less than what they purchased their homes for their homes also lose value.

While this might work well for you on the front end after you’re a part of the Community decisions like this will carry over to your property values.
0 votes Thank Flag Link Wed Dec 17, 2008

I am sorry to be so late to this question. But- Here in Gardner there are 3 subdivision that are discounting new homes SUBSTANTIALLY. For example, a home that was listing this summer for $191,000 sold this month for $165,000. That is an unheard of discount on a new home. But some of these builders are starting to be foreclosed on and they are willing to do anything to free up cash. Also, here in Gardner there are 5 new subdivisions that are so willing to sell their homes they offer lease purchase, or flat out rental. So if you are looking for a deal on Johnson County NEW HOMES, Gardner is the best I have found in the county.
Let me know if I can help you out any further.
0 votes Thank Flag Link Fri Dec 12, 2008
It is always worth a try. The worst that could happen is they would say "no." in which case you submit a new offer. They will negotiate, because they want to sell.

A couple of things to consider. 1) Is the home complete or still under construction? As far as builders go, the best deals will be on the homes that can close the fastest. If it is a completed home that has been sitting, the builder could be more motivated to reduce the price to free up capital. 2) Unlike in the resale market, you may not be able to just talk percentages when looking for your discount. Like retailers, builders have profit and loss margins that they have to protect. Those margins will vary depending on the cost of building, upgrades and market conditions. I've seen many builders in my area (SC) offer discounts as high as $10-25K (equivilent of 10% or less) off the list price, which cuts their margins to the point where they have enough left to keep the lights on if they have a large market share. If it's a smaller builder, the discounts may not be as much, because they need to make more per home due to less volume.

The bottom line is that the builder makes a living by building a selling homes and can't afford to give it away, but can't make any money if it doesn't sell at all. If you make a reasonable offer based on other NEW home sales in your area, you should be able to negotiate a deal that you and the builder will be comfortable with.
0 votes Thank Flag Link Sat Nov 22, 2008
It's not appropriate for your agent to assume this. Here in Johnson County, it honestly depends on the builder, which floorplan, and which subdivision. A new home on the market for only 3 months is not unusual, and we are not experiencing the devistating market that so many other cities across the country are. Your agent needs to check recent home sales in the community you are interested in, and compare the sales prices to the list prices. Dig a little deeper, and try to look specifically at homes built by the same builder to see if he has a history of being flexable on price. Again, some subdivision tend to sell better than others, so it all depends on various factors. Your agent needs to do his/her homework. Good luck!
0 votes Thank Flag Link Sat Nov 22, 2008
Im no expert on Kansas real estate, but the answer should be the same everywhere: There is only one way to find out. What do you have to loose by having an offer rejected? If nothing else, when you do get an offer accepted, you will have peace of mind knowing that you did not over pay.
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0 votes Thank Flag Link Thu Nov 20, 2008
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