How can I negotiate with a home builder in Houston Tx for a new construction on a lot that I like in todays?

Asked by Brenda, Houston, TX Thu Feb 7, 2008

market? the builder is Trendmaker, their prices for the same floor plan varies from community to community, how much leverage do I have? I am not working with a realtor so I am expecting to get that discount plus $20,000 in incentives that they offer in existing homes, any other thoughts? Again this home is not yet build.

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Houston Homebuyer’s answer
Houston Home…, Home Buyer, Houston, TX
Mon Feb 28, 2011
Hi Brenda!

My husband and I are in the closing process now in a fairly new subdivision on Lake Houston. In our two year search for our dream home I have done more research and feel more qualified than most realtors around the area. I have gone through interviewing about 15 different realtors before finally deciding to use a friend of the family from out of town to handle all of the paperwork side.

While I understand this thread was started three years ago now, there's a few tips I'd like to share for all future homebuyers.

In regards to realtors:

1. You do not have to use a realtor. The price comparisions, tax rates, and all other research can be found by the average homebuyer who has the patience to do some research on the internet. HCAD http://(www.hcad.org) is a great place to start following by sites such as trulia and city-data.com. There is not a hidden secret computer program realtors use that the average person doesn't know about. All it comes down to is research, research, research!

2. If you go with a realtor, remember that your choosen realtor does not have to be local although stick with someone within the state you're purchasing. While a local realtor may know the subdivision, you should as well. Talk with the neighbors (assuming you live in the Houston area) and get a feel for the neighborhood. Invest your time and energy in getting a good solid feel for the community your about to build your home in!

3. We have found that most realtors are mainly interested in the commision, not about finding your perfect home. Time spent is time wasted for most of them. That's not to say that there are not good ones out there but do your research, interviews, and check, check those references! Afterall, you're hiring them. Their pay comes from the seller but they're working for you!

Now as far as the negotiating, you must decide what your finances can handle and what you are willing to spend as well as what "up-grades" you are going to want and at what cost. Go to the negotiating table with this number and list firm in mind. Don't lead off with this number/list. Start with a lower number and include several other up-grades that while nice, aren't must-haves. They'll come back with something higher than your original offer but lower than their "book" price inclusive of a few (one or two) upgrades. From this point it will be back and forth between you and the builder (also referred to in this write-up as "seller"). This will all be a game of give and take for all parties until an acceptable agreement can be made.

A few examples of give and take are as follows:

Senario 1: You would like tile floor, however carpet is the standard installed flooring. Solution: Specify that you'd like level concrete unfinished floors in the rooms you intend to put tile into and ask for a credit from the builder. It is often far less expensive to contract out the tile work (or do it yourself if you're handy) after Trendmaker has turned over ownership of the house to you.

Senario 2: The home comes with Level I Granite counters, yet you would like Level III or Silestone. Solution: Again, specify the cabinets are to be installed and prepared in such a manor as to allow the installation of a level countertop and ask for the credit of unused material and labor from the builder. With this item, keep in mind that in counter appliances and sinks will not be able to be installed without the counter-top unless the items are of "under-mount" type.

Last but not least, the contracts. Make sure you have educated yourself on the workings of the contract and all related legal documents. If need be, hire counsel to advise you. Remember to get everything in writing!!

While long-winded, I hope this helps just a bit. Good luck to everyone and God Bless!!!
0 votes
Thank you for great tips
Flag Thu Jul 11, 2013
Great, thank you for your tips
Flag Thu Jul 11, 2013
neelofer zub…, Agent, houston tx 77036, TX
Sat Sep 1, 2012
you dont buy house every day it is a big investment/you dont want to do bad investment just to get the realtor commision
the realtor will walk you through the whole deal and she will make your home buying process easy for you without paying any penny to buyer agent
he or she is experience and they have a licensed for that
the way realtor can help you buying a house no body can
realtor knows how to negotiate and where to negotiate if you are working with the listing agent or builder agent , keep in mind they are not working for your benifets
they show you saving money on oneside and taking back from other hand

thanks
neelo
1 vote
Andrea Mazzo…, Agent, Houston, TX
Sun Sep 13, 2009
Hi Brenda,
I am familiar with this builder. I have visited Cross Creek Ranch. Please keep in mind that whether you are working with a Realtor or not, a builder of this magnitude such as; Trendmaker or Lennar Homes and many others always include a Realtor commission into the development of the property.
The incentives would still be available to you even if you were represented by an Agent. The builder is not giving you a " special deal" because you don't have an agent.. He is going to sell you a property at the price he wants.
If you were represented by an Agent, your agent could not only negotiate the price for you but he could also find out how many ( if any) similar properties have been sold for.
You won't get any negotiating help from your Rep in the Sales Office because he works and he represents the builder. They would write and use their own contracts, which are at least 40-50 pages long. They have probably asked you to put down a deposit between $1,000 to $3,000 to hold the lot, which you'd get it back if you were to change your mind. If the house is yet to be built, this is the time to negotiate and come to terms, Brenda.
Make sure you ask questions, and more importantly ask your Rep to go over that long contract with you.
As far as negotiating the price, I would probably ask the on-site Manager just in case. It doesn't hurt to ask.
Good Luck to you.
Web Reference:  http://www.AndreaMazzoni.com
1 vote
Jane Lindsey, Agent, Bunker Hill Village, TX
Wed Sep 5, 2012
Agree with Andrea below. You won't be getting any discounts by not using an agent to represent you. Without an agent, they are indeed going to sell at the price they want and since you appear naive, he will take full advantage. Home builder salesmen are by far the worst high pressure salesmen around. Even as an agent, I sense this when i take my customers to look at new homes. And I'm standing right there!! They have no shame. You need a good buyer agent. Do you think an unlicensed salesman will tell you how much the surrounding homes sold for? Why do you think there are so many foreclosures in North Katy on new homes? All they need to do is sell new homes for the highest price. I can almost guarantee it's going to be over market price.
0 votes
Angela Sarge…, Agent, Austin, TX
Sun Sep 13, 2009
Sally-what advice would you give to Brenda?

I would also like to add that a Realtor not experienced in NEW HOME SALES is not your best candidate if you choose to use a Realtor. It is an area of expertise that requires training and understanding of the process. If you obtain a Realtor for the sake of a person to stand by your side, you could be very disappointed.

I have had many homeowners share with me their disappointment with the fact that their Realtor took them to the new home site, then the next time they saw them was at closing. This is NOT representation. If you choose to use a Realtor, interview them, ask questions, and check client referrences.

Best wishes!
0 votes
Angela Sarge…, Agent, Austin, TX
Sun Sep 13, 2009
Brenda,
You negotiate just like you would for any major purchase. Know what is a fair price, and offer what you are willing to pay! The posts here were trying to explain that the Realtor fees are factored in to the entire construction costs. In our area, they even come out of an entirely different budget.

However, YOU have choices and have the ability to negotiate what price you are willing to pay. Do I believe you are better off with a professional that knows how to negotiate these transactions? Absolutely. However, it is not impossible to do it on your own. Especially if you have are well informed in land value and home contruction costs.

The only reason builders are able to pull the prices they are getting is because people are willing to pay what they ask. It is no different with resale homes. We can put a home on the market for any price our seller would like to get for their home. But it may not get any showings, as they can only demand what a buyer is willing to pay.

I hope this helps!
Angela
0 votes
Margaret T.…, Agent, Conroe, TX
Sun Sep 13, 2009
For Sally, I am sorry but we can't answer her question with our know the subdivision, floor plan and lot. We know she wants to save the money that we would be paid and get all the extras that are given to everyone else., that is all. Well the unlicensed sales person that is not held up to any ethics or laws will also be paid as listed below, this is built in, there is a marketing cost built in. The $20,000 incentives is built in. Some Realtors take extra Classes for New Home Sales. This is not just to act like a used car salesman. It is to know the building process, the inspection process and the local regulations. Not all builders are following them. Not all builders have all their bills paid. Laws are different from state to state so things may be very different here than in Va. . I will tell you that the Realtors here are the most highly trained in the U.S., I put an thumbs up on Andrea as he came very near to an answer - the nearest anyone could without having the particulars.
Margaret
0 votes
Sally, Home Buyer, Richmond, VA
Sun Sep 13, 2009
I think it's kind of funny that none of the realtors...who apparently think you can't live without their guidance and advice...were able to answer your question.
0 votes
Margaret T.…, Agent, Conroe, TX
Fri May 16, 2008
In my experience, anytime someone wants to do something themselves to save money, they are in a bad place ( I won't name that place.)
What is your profession, Mechanic, Accountant, Doctor, Attorney, Pizza maker, Service Station Owner?
What would you think of someone that wanted to preform your job just to not pay for something that was not coming out of his picket anyway. Salesperson and the preferred buyers agent fees are built in with grass, fences, toilets and so on.

First of all the prices vary because the price of the DIRT - that is location, locaion and location - varies.

You have better bargining power on homes not built or started if you know what you are doing, but trying to outsmart the professional will not help.

Marg
0 votes
Terri Hayley, Other Pro, Dallas, TX
Sun May 11, 2008
Brenda,

The sales counselor's job is to get the BEST price they can for the home. Often times, there is a bonus in it for them if they can sell the home and they have left over "discretionary" money that they could've given to the client. The SC represent the seller. You need someone who'll represent YOUR best interests. It doesn't cost you a thing. They can't give you a better deal because you do/don't have a Realtor. Also, Realtors bring them volume business - you are a one shot deal. Who's going to get the better deal?

There is probably more on the table to be had.

Best wishes,
Terri Hayley
0 votes
Margaret T.…, Agent, Conroe, TX
Sun May 11, 2008
The home builder may tell you that you will get a better deal (as one here did) not working with a Realtor but I have worked with builders and been in Real Estate for near 40 years.
They want you to think that,but they will pocket that fee. You are not getting that discount. You would get a discount anyway when it got to the point of saying - We want it or We Walk. The selling fee is built in, those people do not work there for nothing, they are paid less than a Realtor but the builder is setting off more of his cost pencil wise when it is an inhouse sale. The person at the Builders office does not have to have a Real Estate Lic. or be controlled by any commission - he answers only to the builder so he does not have to live up to the standards as a Realtor.
You do need a Realtor that is experienced in new home sales. That does not mean done some because they already had a buyers agency agreement, that means experienced in dealing with the builders. There is a certain amount built in the price for several different uses and an extimate of time on the market. These concessions can be moved from one use to another - someone just needs to know what they are.
And again the concessions will vary from builder to builder depending on the volumn and experience of the builder.
Now I will agree that prices will vary from one subdivision to another. The cost of the land, the streets, the utilities, the amenities and so forth will vary. The Builder either paid for these in his developement or purchase of the property. But some of this variance can be credited to the neighboring subdivsions. Just trying to get what the market will bear.

Now that I have totally confused you , good luck

Margaret
0 votes
Joel, , Houston, TX
Wed Feb 20, 2008
Fact is... I am a homebuilder and a broker. On large production homes, commission is built into the development of the neighborhood and not specific for each home. As guidelines, builders are not to tell the customers that they can reduce the commission on the home if they are not working with a Realtor. Moreover, you can negotiate the price of the home. The sales counselor does not have that authority, but the sales manager or vp of sales will. In a very competitive market, I have had many clients get more off the top than expected. If you don't ask, you won't receive.
0 votes
Bruce Lynn, Agent, Coppell, TX
Thu Feb 7, 2008
Always always always work with a realtor. You'll have a much easier time with negotiations this way then working directly with the salesperson. Checkout my website as to why you should use a realtor when negotiating with a builder under the section on new homes. Also prices will vary from community to community even for the same house as land prices will vary. Your price on existing construction will likely be better than on "to build" homes. One reason is commodity prices have and are increasing significantly. The other is holding costs. Sometimes the builders don't even own the lots until they sell you the house or build on it, so often you can make the better deal on an existing home. When you are ready for assistance let me know and we'll connect you with just the right realtor in your neighborhood.
Web Reference:  http://www.teamlynn.com
0 votes
T.E. & Naima…, Agent, Dallas, TX
Thu Feb 7, 2008
Brenda, the fact that you are asking for help says that you really need the assistance. Realtors fees are built into the price of the house or come from a separate marketing fund from the builder. Thinking that you will get that discount is a myth. How do you know that the house is not already overpriced and if the builder comes down whatever amount 10K or more that it's still worth that amount? It could be 50K overpriced to begin with. How good of a job does this builder do? what is its reputation? are they still going to be in business when your house is finished and when warranty issues come up later? I admit that we don't have a crystal ball but a good Realtor will tell you the likelihood based on their expertise.

Get yourself a buyer's agent that can give you comps, advice on the lot location. The builder has someone working for him, why shouldn't you? especially that it doesn't cost you anything.
0 votes
Martina Loth…, Agent, Exton, PA
Thu Feb 7, 2008
Brenda,
It really seems that you need some help there. Usually Builders' don't negotiate a whole lot better prices with clients without a realtor, and depending on the price of a home the commission for a buyers agent is somewhere around 2 to 3 %. Does that really make the difference? Your Realtor could also give you more information on different mortgages available for you and all the buying and closing procedures. All your questions could be answered if you would choose to work with somebody who is representing YOUR best interest. A Realtor can provide the most detailed information for you and you don't even have to pay for their services!!! Since you are already in negotiation with the builder you would have to check with them if they would still allow you to choose a realtor sometimes it gets tricky there. Have you already signed any contracts with the builder? Please check the TAR webpage http://www.texasrealtors.com/ and the NAR webpage http://www.realtor.org/ for further information on how Real Estate is supposed to work.
If you have any questions please don’t hesitate to contact me or any other Realtor to help you.
Good luck
Martina

Visit my Web Pages @
http://www.ml-real-estate.com/
http://www.har.com/martinalothert
http://martinalothert.yourkwagent.com/
http://martinalothert.point2agent.com/
email: mlothert@kw.com
Phone: 936 525 0144
0 votes
It is really funny to read all the realtors responses to the questions stating they are the only way to go for a real estate deal. If you do not know the process, by all means go with the realtor to guide you through the process and do bargaining for you. The fact that none of these realtors mentioned is that you can do your own research and do your bargaining to come to a fair price for the home. In the end, the builder is in business and looks at the bottom line which includes how much is going to be paid to the realtor. If you can bargain well, you can always work that in the amount you offer.
Flag Sun Dec 15, 2013
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