Home Buying in Chandler>Question Details

Richard, Home Buyer in Chandler, AZ

can you negotiate a selling price or options prices with a new home builder? thank you, richard

Asked by Richard, Chandler, AZ Mon Jun 30, 2008

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You definitely can!!! Especially on this market. Although the amount will vary greatly from builder to builder and from area to area. Before starting the negotiations make sure that you understand the current local market, the history of the builder and the history of that specific development. Your best weapon will be knowledge. Good Luck!!!

PS – I live and do most of my business in Chandler and hold a CNE (Certified Negotiation Expert) designation – which I have found very handy on these cases. Please let me know if I can be of service.
Web Reference: http://smartazrealty.com/
1 vote Thank Flag Link Tue Jul 1, 2008
Richard,

You may negotiate the price , however it can be stressful as they will try to say it is the bottom line. Then the agent will get a phone call and ask if your buyer is still interested in thier property, and that they will reduce it or offer more incentives, such as closing costs.

Feel free to call if you have any more questions!

Lucinda
0 votes Thank Flag Link Wed Jul 2, 2008
HI Richard,

Consider this interesting article.

Top 7 New Home Buying Incentives
By: Joshua Ferris

After the real estate market hit a steady decline in mid 2006, home builders turned to incentives as a way to attract home buyers to their communities and to help differentiate themselves from the competition. When you start looking for a new home be sure to compare builder incentives as much as the communities themselves.

To help you choose, I have created a list of the top 7 new home buying incentives you should look out for:

Military or Civil Service Incentive - As a thank you to the individuals who serve in the military or are veterans of the military in addition to firefighters, police officers, EMTs and hospital staff, national home builder K. Hovnanian is offering $5,000 off the asking price of their homes, for a limited time, to people in these fields. Other large builders also offer similar incentives to teachers and civil service positions.

Lower Asking Price on "Spec Homes" - Depending on your moving situation, this is the golden egg of builder incentives. Most new home builders will construct a set number of homes in their community as "spec" homes or homes built on speculation that people will purchase the homes and move in quickly.

Once these homes are finished the builder won't want to sit on a large inventory of homes so they will offer spec homes with predetermined upgrades included at a lower asking price than if you were to build the home from scratch and add those upgrades.

Incentives Tied to Builder's Mortgage Company - Builders and on-site sales representatives enjoy working with their established banking relationships because they feel it will make the mortgage process easier and less stressful for everyone than if you were to use an outside lender. In this scenario I've seen builders offer to pay closing costs, participate with a down payment assistance organization and up to one year of Homeowner's Association fees for buyers who purchase using their mortgage company.

Lot Premium Reductions - Like a rare platinum ring, highly desirable lots tend to come with a premium attached. Builders often place premiums ranging from a few thousand to nearly $100,000 on the most desirable lots in the community. Lot premiums are not set in stone and under the right circumstances can be negotiated much like everything else.

Reduced Option Prices - With the average new home buyer spending about 10% of their purchase price on upgrades you should look to get the most bang for your buck with the limited budget you have set for options. When evaluating the standard features list for a community, check into the cost for all of the options you would want in the home and see if the builder is providing special pricing on select options.

Standard Features... and then some! - To make homes more appealing than the standard features list will allow, builders are now including previously optional home upgrades like granite countertops, expanded suites, swimming pools and sun rooms as an incentive to buy in their community.

"Free Gifts" with Home Purchase - Sometimes it takes more than granite countertops and hardwood floors to make a home stand out. Some builders are going the extra mile and including in-home luxuries like plasma screen tvs and offering car leases to draw in prospective buyers. For soon to be commuters, a two year lease on a new car might be the perfect way to help ease into life in the suburbs.

When you are ready to start looking for a new home your best bet is to get in touch with a real estate agent who specializes in new home communities. This agent should help you cross shop communities and serve as a third party to help advise on the best deals and the potential pitfalls of incentives. Because incentives vary greatly, you will need to weigh the pros and cons of each community before making a final decision on the home that's right for you. {end of article}

I hope this information I provided will help you to make good real estate decisions.

---
Paul Welden
REALTOR
HomeSmart Real Estate
0 votes Thank Flag Link Tue Jul 1, 2008
Yes, you can. The other day, I took a Client of mine to a new home builder site here in the San Francisco Bay Area. The listed price for the model, the only property left for sale, was $789,000, down from $839,000. Guess how much they were willing to sell it to us? $710,000, complete with all the upgrades and some furniture, too. Yes, you can negotiate the price with a new home builder. All depends how motivated they are.
Web Reference: http://prp4you.com
0 votes Thank Flag Link Tue Jul 1, 2008
Hi Richard,

The short answer is YES. If you want reasons & methods to use, I welcome you to contact me.

Thanks!

---
Paul Welden
REALTOR
HomeSmart Real Estate
0 votes Thank Flag Link Tue Jul 1, 2008
Those who are successful in their negotiations are those who know the market . The short answer is "yes" . You can always put in an "offer" on anything. ... but go into it 'knowlegeable'. Not all builders (or for that matter all sellers) are willing to drop their prices, but many are... and truly, much of negotiating for a home purchase comes in the finesse behind the offer. With the right tools, and the right information at hand, you're in a position of power. A good portion of of any home purchase is 'negotiation'. Choose a savvy REALTOR in your area, and go for it!
Web Reference: http://www.vickirestivo.com
0 votes Thank Flag Link Mon Jun 30, 2008
You need a real estate agent involved builders contracts are difficult you are also covered under the agents e & o insurance. http://www.lynn911.com
0 votes Thank Flag Link Mon Jun 30, 2008
traditionally builders have been hesitant to lower sales prices and willing instead to compensate by throwing in the options and allowances. that's so that subsequent sales are supported and to keep the owners happy. that said, there's never been a better time to grind them small than right now. closing cost allowances are nice but the fact remains that a sales price is a sales price...if it's a possibility go for the lowest sales price knowing that someone later will be doing even better

i would advise that there is a great risk to be one of sales in a larger tract...we had the experiance here in Calif. of builders making huge changes to subsequent homes that spanked the first guys in. cheaper in every way including price, unfinished homes in 1/4 built tracts, associations that could not be turned over to the owners' associations, amenities not delivered...what, no community pool? where's that playground you guys promised?

based on your question i callled a friend who sells tracts even now...she says that they are rolling over on sales price like never before and that most of her inventory already has the goodies installed. she warned me that any tract that's less than 75% built out is a risky proposition due to the financial condition of all the builders she is familiar with. she also says that every builder she knows is cheaping out on fit and finish.
0 votes Thank Flag Link Mon Jun 30, 2008
It use to be that many new home builders would not negotiate, but with the market as tight as it is, most are willing and are gald to negotiate a sale. It might not say so on the literature they hand out, but don't be shy, make your best deal. The worst they can say is no. Bring along a licensed Realtor.
0 votes Thank Flag Link Mon Jun 30, 2008
Richard - negotiations should always occur in the price of a new build. Having experience working with a national new home builder, I can tell you that there is usually quite a bit of "wiggle room" for homes. As Steve said, spec homes usually are your best option for getting more off the price. Options are usually set in stone so any price decrease usually occurs in the base price of the home.

As Stacie mentioned - the market is tough for new home builders. They have a big need right now to drop their inventory levels. Some have been better at others at doing this while other builders have an extreme amount of debt on top of an extreme amount of inventory. They need sales to keep the cash flow and that can - sometimes - result in some pretty hefty discounts off the advertised price.

Don't forget to also have your REALTOR try to negotiate things like points towards your mortgage and financing incentives (usually with their lender) and then compare whatever the final decision is with other lenders outside of the builder's mortgage company to verify you are getting the best financing deal as well.

Lastly, try to have a clause written in to your contract that does exactly what Steve mentioned - ensuring that if base prices fall before you move in to your home that you'll get the same price before you close on the home.
Web Reference: http://easyrealestateaz.com
0 votes Thank Flag Link Mon Jun 30, 2008
Hey Richard,

T.W.Lewis & Shea are pretty tough on Options, However they will give a few thousand on Lot premiums.

Most home builders will let your earnest money go Hard ( non refundable ) and, or order the building permit, before your design center appointment.

My experience is to ask for a design consultant to walk through the models with the buyer before you sign a contract.
It makes it easier to see the upgrades in that 25K gourmet kitchen. 7K for a refrigerator?
20K for tile?
There`s no reason not to know exactly, or very close to how much that home will cost before you sign.

Obviously, This is when you have the strongest negotiation opportunity.

Most important in today's market is , as Steve has pointed out, If the price of this new build is 5% less in 6 months when my home is built, will the builder refund the difference?

Remember the new home sales consultant, does not work for you, they work for the builder.

Good Luck
0 votes Thank Flag Link Mon Jun 30, 2008
Mr.P, Other/Just Looking in Arizona
MVP'08
You betcha Richard! It is funny, since you didn't use to be able to do that, the price was the price, but now with this market, and yes to highlight what the other gentlemen have mentioned to you, definitely the spec homes. The builder has money in them, and they are waiting for the buyer to come to terms with them, to get it off their books.
Good luck, and I would be happy to help.
:)
0 votes Thank Flag Link Mon Jun 30, 2008
Absolutely! There are many factors that determine how much you can negotiate, but if there has been much movement of new homes in their community, the builder will be will to negotiate to make the sale. There would be more room to negotiate if the home is either a spec home or nearly completed where a buyer failed to perform.

Best advice would be to find a competent REALTOR that understand how the new home builders operate and make sure you visit the community for the first time with that REALTOR.

Good luck.
Web Reference: http://www.jameswehner.com
0 votes Thank Flag Link Mon Jun 30, 2008
Your best chance of negotiating a price with a new construction builder, would be in buying a spec home from them. If it's a build-to-suit situation, they are not likely to budge at all on the options, and they might budge a tiny bit on the base price. With the number of people that are failing to close escrow on a build-to-suit, builders are being fairly aggressive in getting rid of their built up inventory. If there's something close to what you want in inventory, that's where I would be looking.

I have been successful negotiating prices down for build-to-suit clients in the past, when a builder has lowered their price after we went under contract. Essentially, I've ensured my clients pay no more than a new client today would pay.
0 votes Thank Flag Link Mon Jun 30, 2008
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