Is it possible to find out how much a home cost to build?

Asked by Hali, Austell, GA Mon Mar 2, 2009

I previously asked this question without details...I want to know what the usual markup is I've found 2 homes for sale that have been on the market for 2 years. Having an idea of what the builder paid will help me, as I wouldn't want to make an insulting offer. :-)

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Don Tepper, Agent, Burke, VA
Mon Mar 2, 2009
Repeat after me: Do not worry about insulting the seller.

And the problem with the scenario you describe is that it really doesn't matter much what the building costs were 2 years ago. That's ancient history.

Honestly, I don't know what the markup is. But let's just make up a scenario. Let's say it cost a builder $300,000 to buy the land and build the house. And it's on the market for $450,000. I understand your question: What might you offer that the builder would accept? So you might say, maybe, $350,000 or $375,000. And maybe that's a fair answer.

On the other hand, two years ago: The builder has had two years of carrying costs. Throw in two years of interest and taxes on $300,000. That alone might be $70,000. So, using your scenario, $350,000 wouldn't be a good offer anymore; it'd be under the builder's costs.

On the other hand, let's say property values have declined sharply. When the property first came on the market, it might have truly been worth $440,000. So it was just slightly overpriced, which is why it didn't sell. Now housing prices have come down 40%. It's only worth $250,000 approximately. There's no way that house will sell for $350,000. And you'd be making a horrible mistake offering $350,000.

Having an idea of what the builder paid will not help you. And it'd be the builder, not you, who'd be insulted or not insulted. Unless your name is Emily Post, that shouldn't be a consideration.

The only thing you need to know--repeat after me, the ONLY thing you need to know--is how much the houses are currently worth in today's market. Then you make an offer no higher than--and in today's market almost always lower than--today's value. If it's accepted, fine. If it's not, that's fine, too.

Hope that helps.
1 vote
Hank Miller, Agent, Alpharetta, GA
Tue Mar 3, 2009
Hali -

Who cares what it cost to build? It's what the market says it's worth that matters. Builders ran wild during the boom, no let them bleed, you can insult them and if they are let them hold and eventually give it back to the bank, then buy it.

The question is why have they been listed for so long? We''' poke around if you like -

Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
678-428-8276
0 votes
Team Lee Hom…, Agent, Marietta, GA
Mon Mar 2, 2009
Hali,

It doesn't hurt to ask. We work regularly in Douglasville with this same scenario and have found that builders are just happy to see ANY offer. That doesn't mean they will take it so you will need a excellent negotiator...one that can stand firm, sound educated on the market, disconnect from the purchase, & one that knows how and when to walk away. The builders usually beg you to come back and even counter offer to you upon you walking away. Natalie and I are Certified Skilled Negotiators that will save you thousands. Do you have an agent?

Please email or call anytime.

Thanks,

Jonathan
Web Reference:  http://www.TeamLeeHomes.com
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