Foreclosure in San Ramon>Question Details

Priya, Home Buyer in San Ramon, CA

Can I negotiate with new home builders? How much can I negotiate off the base price?

Asked by Priya, San Ramon, CA Fri Jan 11, 2008

And what are the factors to take into account while negotiating?
I am planning to buy a home in San Ramon, Windemere. Its a Lennar home - 2600 sq ft, 6000 sq ft lot for 880000. Is that a resonable price?

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31
In this market, I think the builders should give a price-guarantee. If they sell a similar house within a year for less than what a buyer pays today, they should refund the difference...This is already happening in many areas in CA. If the housing market in San Ramon is really HOT, then this might not happen. But if the market is not hot, then this price guarantee will probably make San Ramon a hot market :)
2 votes Thank Flag Link Thu May 8, 2008
I hate to say this but your best move is to find a plat you like and go dircet to the builder. They will give you the best pricing. They all are offering fees to Realtor's of course. Some will deal direct and give you the realtors Fee's off if you you demand it.

The best strategy is to shop various neighborhoods and get the best prices from each builder. Than shorten that list and go on a 48 hour purchase program and let each builder you are looking for the best home and price and lot and that you are buying that weekend. Let them know that it is between their home and one other home. Do this during the week so the head of sales can be available to make a decision. They will want to compete to get your sale.

More than anything get a home that you like and enjoy it. That is a nice area!

Best wishes;

Dirk Knudsen
"The Real Estate Doctor"
2 votes Thank Flag Link Sat Jan 12, 2008
I'm just amazed at the number of out of area realtors who have absolutely no knowledge of the Bay Area new home market, yet feel compelled to post in a San Ramon thread. Are you all just posterbating for VIP or Mayor status?

Priya, you've probably long since gone, but I'll post for the benefit of others. Most of the new home builders in the Tri Valley area require your agent to accompany you on the first visit or the Builders agent defaults to dual agency. Yes, that nice person in the builder's office is a realtor and the moment you fill out the "information card" you have waived independent representation and triggered dual agency; the builder is now your realtor.

This can be okay, if you know what you are getting into. I've visited all the new builds in the East Bay and the pricing policies vary. At Fallon Village they are pricing very aggressively and building very few homes on spec, so the there may not be much wiggle room. The other builds seem to still be practicing the ridiculous policy of listing the home for about 15% over what they are willing to sell it for and then giving you a bunch of discounts and credits towards upgrades, which ultimately get to the "real" price anyway.

I've called them on the BS with comps in hand and for the "real" price, which they usually will give. One example was a home listed for $960K, but had a 8% "Valentines" day discount, plus $40K in so called "upgrade credits". Skip the vastly overpriced upgrade credits and the "real" price is ~ $830K. And if you don't have a buyer's agent, make sure they give you back the 3% commission as a credit of the adjusted base price (or credit it for closing costs).
1 vote Thank Flag Link Fri Mar 5, 2010
I saw a lot of young couples with kids looking new house in Windermere but both working in south bay. I am not sure how much study they have been done on commute issue they have to face. During traffic hour, it will more than 1 hour back to home. If you they have kids, they has no choice but drive at peak hour to pick them up. If single pay can not support the house, at least one person of the family has to work locally to take after kids.

Also, do not forget the 1.75% property tax at Winderemere. Basing on my calculation, comparing with Gale Ranch (1.27% and $40 HOA), it translates to about 8% more to home price.
1 vote Thank Flag Link Sun Feb 17, 2008
I have been looking at some houses in windemere for my sister. For the price (880K) you should be able to get a 3000+sqft house now. In my opinion, you should be able to get a substantial reduction in price. How much you can get depends on your bargaining skills.
I suggest that you look at the list prices for homes in the neighborhood and offer below their asking price. I think Jennifer gave some examples.
I would not go above 800K for the house but then I am not personally in the market. You should make an offer that suits your conditions.
BTW, I heard from one of my friends who lives in windemere, that one of the builders initially refused a really low offer and a day later the builder's rep called back accepting that price. This may or may not be true and the conditions may be specific to the house (last one in the lot...) but it shows that you should make an offer that you like and wait for the builder to respond.
Good luck with your search.
1 vote Thank Flag Link Sat Jan 12, 2008
This is something you should contact a local Realtor about. He or she can tell you how much you should offer.

From my past experience I can tell you than no builder has ever refused to negotiate with me for any one of my clients, NO MATTER THE MARKET CONDITIONS!

Hope this helps, good luck.
Web Reference: http://dmvproperties.com/
1 vote Thank Flag Link Sat Jan 12, 2008
Builders are bargaining more and more in today's market, but as Joe said, builders are often hesitant to reduce the purchase price below a certain point, in part because they don't want it published that you paid less than your next door neighbor.

They're often more inclined to offer discounted or free incentives (like upgraded wood flooring, or free granite, a free dug-out basement or finished basement, maybe even a larger garage)... that way the listed purchase price, that the public will see, is the same, but most are not privy to what extras you purchased, and that can save the developers reputation with his other buyers.
1 vote Thank Flag Link Fri Jan 11, 2008
Alan May, Real Estate Pro in 60201
MVP'08
Contact
I just want to make one clarification for Hawkeye and others who read this post. A new home builders sales person may or may not be a REALTOR. Being a licensed agent and a REALTOR are not the same. Many new home agents are not REALTORS and they represent only the Seller. Most new home contracts will include a clause that specifically states that the Builders agent represents ONLY the builder and there is NO DUAL AGENCY. The buyer is unrepresented.
0 votes Thank Flag Link Wed Mar 17, 2010
At the end of the day it is just another negotiation. You have a buyer, a seller and a product with terms and conditions. In any market, good or bad if you don't negotiate a lot, hire one. (realtor) Some people love to work their own deal, great. Be aware however, that without an agent "anything you say, may be used against you in negotiation"
When you have an agent you have a sounding board. Your agent works for you, to get you the best price. Your agent is not bound to share your comments or postion with the seller's agent.

Most builders have agents, so what does that tell you? On average the agents usually earn the builder more money. Builders do not look at seller's agents or buyer agents as an extra expense. When a builder gets a loan to buy the land and build the homes the commision has been built into the business model as an operating cost. Heck, if the builder failed to put this in his business plan to the bank it would be a red flag.
Even if they are running with all cash, they know that an agent will be that site 7 days a week, 12 hours a day answering phones, showing models, sending emails, writing contracts..etc.. What a no-brainer. He is out looking for his next land grab to do another deal.
Your job as a buyer is to know what the builder's finacial situation is at that moment. That is what determines how willing or able anybody is, a bulder, a private owner or you mom and dad are to sell at a price. That could change day to day. On Monday he could have a huge bank note comming due. So he will do anything to sell a home. On tuesday, a builders office building across town gets a cash contract, so now he his not in such a hurry.
> Don't over think it. No what your bottom line is, find out what the other side's bottom line is, then hash it out. Always be ready to walk away, really really walk away. Never invest more time or money before the deal is done that prevents you from being able to walk away... even if you have to limp away.

> Don't go it alone, it just reduces your bargining power. Anything you say to the sellers agent becomes fair game. The seller's agent's job is to get any information helpful to getting the highest price. For example, if you say "boy I would probably pay full price for this house" or "if they would agree to just put hard wood in the foyer they would have a deal"
Guess what? The sellers agent tells the builder, and they have good info to use to get you to close.

> Don't try to be the smartest person in the room. Builders may wear jeans, drive trucks and chew tabacco but they are shrewd business people. At the end of the day "you don't get what you ask for, you get what you negotiate.
http://www.nashvillehomesurfing.com
http://www.facebook.com/nashvillerealestatebybrianambrose
0 votes Thank Flag Link Wed Mar 17, 2010
Thank you Hawkeye. That is very useful information for less experienced new home buyers.
0 votes Thank Flag Link Fri Mar 5, 2010
Get a Good Buyers rep and go for it. The Builders may give you incentive for working direct as well. Make sure whoever you hire works that area and knows their stuff. Bottom line is this is a great time to buy but is also subject to many factors. Buyers Agency may be right for you!

Bets wishes;

Dirk Knudsen
0 votes Thank Flag Link Mon Feb 22, 2010
That's classy, reviving a 2 year old thread to slam those greedy agents because we know that builders always have the buyer's best interest at heart.
0 votes Thank Flag Link Mon Feb 22, 2010
Yes, you can negotiate with a home builder and its best to do it yourself. Dont use a greedy agent. The agents say that you dont have to pay, but the truth is that you pay more for the house. On a $880k house the commission would be 3-6%.. or $26.6K to $52.8K.. Wouldnt you rather keep that money yourself?

Tell the builder that you are willing to negotiate yourself and not bring in an agent and he should knock of 3%, just like that?
0 votes Thank Flag Link Mon Feb 22, 2010
You can now get a REO of 3000+ sqft for less than $800k. Why bother to buy a new build.
0 votes Thank Flag Link Sat Jul 5, 2008
New home prices depend on many different factors which include home close date, builder motivation, location etc. The best discount you can get is on a quick close home which builder must close in next couple of months. I would suggest you to go thru an experienced real estate agent to help you negotiate a good price for you.

I work as Real Estate agent in San Ramon area and well versed with the prices and inventory of homes.

You are welcome to call me at 925-997-3503 if interested to discuss your requirement. It will be my pleasure if I can help you with your home search.
0 votes Thank Flag Link Sat May 10, 2008
Yes, it is possible to negotiate with builders. A lot depends on current market conditions, if sales are slow builders are more likely to negotiate. I suggest you work with real estate professional in your area who is familiar with this particular builder and let them negotiate for you and guide you through the building process. Builders have commission for the real estate professional already built into their prices and will pay the agent. You get professional representation and it will cost nothing or very little. The sales agent sitting in a display home is usually an employee working for the builder and representing the interests of the builder. They negotiate contracts all of the time and have a distinct negotiating advantage over a potential homeowner. A real estate professional will work to represent your interests and can negotiate effectively on your behalf and provide you with lots of good advice when it comes to picking out floor plans and options. A professional can help you make choices that will help you realize a healthy gain in equity when it's time to sell.
0 votes Thank Flag Link Fri May 9, 2008
Go ahead and negotiate with the builder. It costs you nothing. Look at the latest news, builders are hurting.
0 votes Thank Flag Link Thu May 8, 2008
Dear Priya, Sri, and Sukanya,

Hope you're doing well. If you're interested in the Paloma community at Windemere, there is a Residence Two with pre-selected granite and flooring being offered at a great value ~ August move-in.

Please give me a call at (925) 984-7671 for more information.

Thank you.

Warm Regards,
Zia
0 votes Thank Flag Link Thu May 8, 2008
I am sure Lennar will go down little bit on this home. I assume this is Paloma plan 1. right? Currently, these homes are assigned Hidden Hill Elementary school. Some grades in Hidden Hills elementary are over flowing and kids are diverted to Quail Run, which is a great school..
0 votes Thank Flag Link Tue Apr 8, 2008
Hi Priya,
We took a look at similar homes by Lennar today and are interested to know if you made any offer/deal and if you were able to negotiate. Also, we heard that the elementary close by hidden hills elementary is overflowing is on a lottery system. Do you have any infor on this and what the alternative schools might be.
0 votes Thank Flag Link Sun Feb 17, 2008
Srini, I did not make an offer, decided to hold off for some time. The prices seem to be really volatile now. Bigger homes (even Lennar's) are listed for much lower prices.
0 votes Thank Flag Link Sun Feb 10, 2008
Priya,
Did you get deal on this Lennar home ? Could you tell us details on the offer you gave? Its almost 1mth now, based on Lennar listing of $880K and your buying, we will know how much it changed in one month.
All the best.
0 votes Thank Flag Link Thu Feb 7, 2008
In today's market in relation to new home sales, price negotiation is still tied to the relevant location: here in Sacramento, builders are even accepting offers on new homes.
Web Reference: http://www.usahousebuy.com
0 votes Thank Flag Link Sat Jan 12, 2008
I'm finding that houses over $600K are not even negotiatiing and sales are up 17%. Under that price, everyone is having a hard time selling. It's a local thing though.
0 votes Thank Flag Link Sat Jan 12, 2008
This is a question that can best answered by a local Realtor. As a Broker in 2 states, I have seen the same builder provide substantially different incentives, options, and dscounts in one community vs. another.

The builders make decisions basd upon how that particular project is performing, as well as how the builder is doin in gneral. Lenar may be very flexible with one project and not on another.

Without someone with up-to-the-minute local knowledge, you might leave something on the table.

There is frequently greater flexibility in negotiating the extras vs. the base price. Your question that asks if 880000 is reasonable depends upon the market condiditons, and what is included in that base price. I wish I could be more helpful, and I do provide much detail in my answers where and when I can. Your question can really only be answered with the input of a local RE Pro who knows that development.

Good Luck
0 votes Thank Flag Link Sat Jan 12, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
I wish it was that easy, but comps alone are not the only aspect of the negotiation. Also there are guidelines the builders stick to and if you are familiar with what those are it is easier to pick your battles with them. And for the other comments about builders not willing to drop the price due to what others sold for, well if that was the case we wouldnt have most of our foreclosures in new home communities. Builders will sell at whatever they can get when they need to, if you have been watching the valley's builders behavior it is a indicator. San Ramon is not comparable to Tracy or any of those communities, but the builders are usually the same.
0 votes Thank Flag Link Sat Jan 12, 2008
Priya....

I am a Realtor in San Ramon and please be advised that Lennar is negotiating with their buyers and also paying for a Realtor to represent you.

If you do not have a Realtor representing you please get one. If you have already started the process with Lennar please allow for the brokerage fee in your negotiations. The builders many times they will negotiate the upgrades in lieu of a price reduction. Good luck.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Fri Jan 11, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Thank you all for your responses. To answer Jim's question, construction on the home has begun already. But the home is not completed yet, expected completion is around May 2008. It is not a premium lot - not a corner lot.

-Priya
0 votes Thank Flag Link Fri Jan 11, 2008
That is a good initial response.

Your milage may vary, but I have been told by buyers in my area (Philly) that it is near impossible to get builders down below a certain price point (the base asking price for a given model). They may, however, get creative with financing, offer to pay closing costs, offer free upgrades, etc. - all items that will not show up when anyone searches for the sale price of your home.

Remember, they have to sell more homes in that community and discounting yours, means that they just discounted everyone sold after yours (assuming the buyers do their homework). It also means that they have to answer to a lot of PO'd owners who bought just before you and were told that the base price is the lowest the homes would go for.

Enormous pressure on the builders may motivate them to drop the price, but I wouldn't count on it. Here, I am doing about 1 or 2 new construction inspections per week, so the market isn't as dry as many are being lead to believe. Granted, fewer are at the framing stage, so these deals were signed a while ago, but I still get framing inspections too, so there are new home buyers out there still.
0 votes Thank Flag Link Fri Jan 11, 2008
Your best bet is to Use a Realtor that can negotiate on your behalf. You can ask questions on this board all day to get a general idea, but it could steer you in the wrong direction. Get a Local in the Area who has experience negotiating with the builders. See if they have some testimonials. If you try it on your own you will be gambling that you are gettting the best deal

Good Luck
0 votes Thank Flag Link Fri Jan 11, 2008
Priya - tell us more - is the home already completed? Is it a "dirt start" (foundation still to be dug)? Does it have a premium lot that a lot of Buyers would want?
0 votes Thank Flag Link Fri Jan 11, 2008
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