Hi Akarissa,

One way to offset a higher purchase price is to change loan programs.

For example:
West Chester is eligible for a no money down USDA mortgage.

Let's compare the payment for a USDA loan to an FHA loan using a purchase price of $200,000.00

1) FHA - loan amount of $193,000 (after the required 3.5% down payment) at 3.75% gives you a principle and interest payment of $902.75 plus the monthly mortgage insurance payment of $186.81.

Payment of $1,089.56

You'll need to add taxes and insurance but those figures will be the same for either loan.

1) USDA - loan amount of $200,000 (zero down payment) at 3.75% gives you a principle and interest payment of $944.76 plus the monthly mortgage insurance payment of $51.00

Payment of $995.76

That's a difference of $93.80 per month.

Here is where we get to the good stuff. You could add another $20,000 to the USDA loan and your payment would be basically the same as the payment for an FHA loan of $193,000 which means you have increased your purchasing power by $27,000.00. Do you think that would help you?

Please feel free to contact me for more help or additional information.

NO, NO, NO and NO. Here’s why! If a builder discounts a home to you they have essentially destroyed the comps in the area and cannot build that plan or others in that same area since the appraisers will now appraise the value of future construction at the reduced sale price for the home you purchased. This will stop construction in the area! Gone are the days of having a 10k or 20k off “sale” of builder inventory, builders and agents must price the product correctly right out of the gate and stand firm or make the decision that this will be one of the last homes built in this neighborhood for a couple of years. I recently had the same experience with a buyer and told their agents to check all past sales in the subdivision and that they would find no price reductions in the subdivision, after they checked they submitted a full price offer. Things a builder can negotiate without hurting area comps are upgraded appliances, prepaid HOA dues paid out of the builders pocket not on the HUD, upgrades such as trim, front door ect. You can thank the Federal Government for the new way of doing business but this is the “change” we voted for, I don’t like it since the government in a roundabout sort of way are dictating my business model and not allowing any flexibility on my part in the market place!

Yes it is possible to get deals but usually not on price but on options the builder is willing to include for no charge. Just had a client who got a lot of various options included but it all depends on how popular the development is and how much interest the builder has.

It is possible, but you'll need to think a little out of the box and look at the whole package...sometimes price shouldn't be the only focus of negotiations. Good hunting!

I live in West Chester and yes you can get a deal on new construction. Call me and I can tell you how and where.

JoAnn M. Hall
Weichert Realtors
License PA & DE
484-459-3829
j_hall_conroy@yahoo.com

I agree with Alan below. It is possible to get a good deal. You won't steal one however, like in the case of an older home that has been on the market for a long time. We just took clients out to a new build out your way, where there was a lot of give and take just to get enough buyers to start building the project. We also know buyers who have decided to build somewhat smaller new homes to make them more affordable.

Where do you want to live Akarissa?

John B. great answer! Way to look at the entire package not just one aspect of a transaction!

Personally like you always have the opportunity to negotiate with builders however just know that they may not bend any. You will want to assess how badly you want a new build and how much you are willing to pay!

Thanks,
Brooke Hengst
REALTOR, CDPE, The Elite Group
Your Castle Real Estate
(720) 988-5952
bhengst1@gmail.com http://www.brookehengst.com

Ask but don't get your hopes up.

Akarissa, ALL my colleagues below have given you EXCELLENT advice. Your best bet is to interview agents, choose one you trust and begin discussing strategy.

I wish you the best of luck!

Eric Axelson, Associate Broker
Kurfiss Sotheby's International Realty
856.617.1212 mobile

Hello Akarissa,

It is possible to get a bargain. Builders are hurting too and still need to unload inventory. Find a good Realtor to help you in the negotiation.

Best Regards,
Alan Openshaw
Cornerstone Lending
Southampton Pa
267 992 7276
VOTED BEST OF BUCKS 2010

Hi Akarissa,

Everything is negotiable! Especially upgrades and additions. Make sure you have someone on your side, remember that site agents work for the builder/seller. Please take your Buyer Agent in with you the first visit to the new construction site so you can have representation. If you don't have someone yet, I'm happy to help!

Mary Robins
Keller Williams Realty
610-220-7145
mary@maryrobins4homes.com http://www.maryrobins4homes.com

Hello Akarissa,

While there may be more room to negotiate than before, just how much negotiation is the question. There are hard and fast costs in new construction. A cubic yard of concrete, a cinder block, wood, siding, roofing etc. There is the labor paid to subcontractors that has little room to flex. The only negotiation is what is above and beyond the actual costs. One place where you may win with new construction are the last few lots in a large development where the builder can discount the lot just to sell the last few as he has already made his money on the rest. He can delete profit just to be done. If you buy a lot and then try to build, no one will work cheap nor discount the raw materials.

The real deals are with pre-owned homes full of equity, short sales and forclosures. Here the seller is not bound by replacement cost and can sell for less than a similar new home would cost to build. This is why you may think the price of new homes seems high.

Best of luck,

Howard

Hello Akarissa

There is definitely room for negotiation in today's market. I believe in doing homework before making any offer. Work with an agent who will help you with a thorough analysis

- understand current market values of resales in that neighborhood
- Is the home a 'quick delivery'?
- how many lots remain in that community?
- is the builder a big national builder like Toll Bros., Pulte, or a local one with few individual homes...

Your negotiaiton will be much more successful if you are well informed. If you wish we can sit down and go over all of these points at my office in Exton. You may reach me at my cell - 484 947 3127 I will be more than happy to assist you in your negotiation.


Bela Vora, Realtor
Coldwell Banker Preferred - Exton
Downingtown Real Estate
484 947 3127
bela@belavora.com
http://www.downingtownrealestate/blogspot

It is a solid Buyers Market. Last week a site agent called me asking me to bring buyer back to a new construction site. Builder was offering to buy down the interest rate for any buyer. Down to the last few homes and builder wants to SELL. Make offers. You do not know what a seller will take unless you make an offer. Builder will negotiate.Be willing to walk away if you are not getting what you want for the price you want to pay.
Linda Burgwin ABR/EPro/Relocaiton Specialist
Long and Foster Devon,PA
Office: 610-225-7400
cell: 484-716-163

Anything is possible in this market Akarissa. We work with many builders who are more flexible than most. Please contact us to see how we may further assist you.

Good Evening,

Rob Hughes: Long & Foster Real Estate Inc.
(Associate Broker) (AB065650)
(Hughes Associates) (Realtor since 1987)

Office: 610-225-7400 x7438

Cell# 484-410-9765 (Preferred)
http://WWW.DELVALREALESTATE.COM
http://WWW.ERICMAYMORTGAGE.COM

Good evening Akarissa,

I am a firm believer in the Buyer's Market and in negotiating. Your ability to win at any negotiation is dictated by your willingness to get up and leave the negotiating table.

First, prepare, prepare, prepare. Get prequalified by a local, licensed Mortgage Banker. Make sure you meet face to face and you come prepared with all the documents necessary for a complete and thorough prequalification. You can verify a license at nmlsconsumeraccess.org

Second, prepare your wish list. Write it down. Store it on your smartphone. When you have the list in front of you, you can compromise off items from the list and make offers more promptly and accurately. The "dream house" exists only in our minds!

Third, make offers. Make them quickly, reasonably and always in writing. Be sure the terms of your offer call for a very rapid time to sign formal contracts/sales agreements and quick closings. Have your Mortgage Banker call the Builder's agent immediately to discuss how well qualified you are. In other words, do what ALL the other Buyer's out there don't do. That's how you convince a Seller/Builder you're serious and that's how you win at negotiating.

I bought my first house with these techniques; sold it quite similarly. I've advised many clients over my 22 years to use these techniques and they WORK.

Good luck to you!
Trevor Curran NMLS #40140

Akarissa,

Absolutely! Your Realtor should know what to ask for and if you don't have a Realtor I'd be happy to help you!

Best of luck!

Krista Fuchs

Krista Fuchs Team
Prudential Fox & Roach Realtors
Cell-484-459-8025
Office-484-875-2600