Shoul I ask for more incentives/discount on new build?

Asked by Jim R, Austin, TX Sun Sep 30, 2007

I put $2500 down on a new build in Austin in early August 2007. The house will be ready in Feb/Mar 2008. I'm wondering if it would be good business sense to push the builder for more incentives before I complete the transaction next year, in view of the current market situation. If I should, when would be an appropriate time to do this and what should I be asking for? The final price with upgrades is $340.000. Jim R

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18
Mylendingpla…, , Austin, TX
Mon Dec 3, 2007
Order your own review appraisal. This will likely be the best $350 you ever spend. Then if the appraisal shows the comps aren’t supporting your contract price--ask for a discount based upon the facts of the independent appraisal.

Think about it: The Builder, builder's appraiser, builder's mortgage company aren't really working for you, they are working for themselves. Do you really think the builder's appraiser will appraise a home for less than what they builder is supposed to be selling it for?
1 vote
Jim R, Both Buyer And Seller, Austin, TX
Fri Feb 22, 2008
Ok I had no success on price but I did negotiate all landscaping, and a full suite of appliances, plus some other extras. Chris you are right, they were very rigid on price after initial contract signing. I'm not sure how I did but we do like the house and I am very motivated to get out of the apartment I am in which increased our rent 40% when I went month to month in February. I know I could have canceled or been more hard line but we are worn down by the kids in this small space and need to move. Thank you all for your responses. Jim R.
0 votes
Ronnie Breda…, , 78735
Fri Feb 22, 2008
The best time to negotiate incentives/discounts is prior to signing contract. Builders are just like private sellers, they will negotiate! I recently found a David Weekley spec home in Canyon Creek for a buyer client. It was listed for $394k. We took their contract, marked through $394k and offered them $345k. The new home rep told us her manager probably wouldn't even respond to the offer.

She called me about 1 hour later saying they accepted our offer with NO changes.

In your situation, you have been under contract for over 6 months on a new build. I don't think the builder will be very flexible at this point. People tend to frown on "after-the-fact" negotiations.

It never hurts to ask if you don't mind being told no. Good luck on your move!
0 votes
Tricia Boudr…, , Austin, TX
Sun Feb 17, 2008
Since you are getting close to closing, now is the time. I would definitely give it a shot. If you are using the Builder's preferred lender you might try to negotiate some points or closing costs. You could also ask for sprinkler system, gutters, extra landscaping. These are things that are easier to add so close to closing. Also, if you have another home you are interested in somewhere else, it wouldn't hurt to bring that to their attention. Good Luck.
0 votes
Dena Davis, Agent, Austin, TX
Sat Feb 16, 2008
I went to a meeting of a group called Residentail Strategies. It was thier quarterly state of the market meeting for builders and those that service the builder community. The speaker said that cancellations of contracts by buyers for new builds are at 40%. The cited the reason being buyers continuing to shop after the contract. So people are finding more incentives with other builders and canceling contract.
0 votes
Roy DuBose, , Austin, TX
Sat Feb 16, 2008
for information only --- why did you NOT use a professional realtor to negotiate for you in the beginning?
0 votes
Mark Thompson, , Austin, TX
Wed Jan 16, 2008
I am working with some customers whom are having a new home built by a national builder.
They were initially given an incentive and after reviewing the comps in their neighborhood, I was able to negotiate an additional $30k incentive.
It pays to use a professional, and as mentioned previously using a independent appraiser is another wise choice.
0 votes
Dena Davis, Agent, Austin, TX
Wed Nov 28, 2007
It wouldnt hurt to ask. But I doubt that the builder would give you more in incentives nowe that the contract has already been negotiated. If you had requested it prior to contract signing-- surely you would have recieved it.

Were you represented by a real estate professional?
0 votes
Kevin, Agent, Austin, TX
Sat Nov 10, 2007
Ask for all you can, the most they can say is no.

The only bad or wrong question is the one that doesn't get asked.

Realistically I'd be looking more at Spec homes right now, unless there is something specific or major in a home that you can change over time. Most builder have had some sizable price reductions and major incentive offerings. What is your price range and area of interest?
0 votes
Janae Oliver, , Austin, TX
Wed Oct 31, 2007
YES -- Definitely ask for what you want, you have a 50/50 chance of getting the extra incentives you want if you ask for them. It's close to the end of the year and builders want to get the inventory off the market. In dealing with new construction, I've negotiated with builders throughout the entire process in getting additional incentives - even after we had the home under contract!!! It's not a done deal until after you've closed on the property, since you are still under contract now is a great time to ask for what you want.
0 votes
Perry Hender…, Agent, Austin, TX
Fri Oct 5, 2007
Ask for everything you can. There are lots of avialable options out there so they aren't going to risk losing you. However, if they say no and you back out, then you may losethe $2500.
0 votes
Jim R, Both Buyer And Seller, Austin, TX
Tue Oct 2, 2007
Thank you all so much for your replies - much appreciated -Jim
0 votes
Chris Tesch, Agent, College Station, TX
Mon Oct 1, 2007
Jim, You can definately try to negotiate, and I probably would if you can get something for 30K less that is comparable. If you walk away from the deal you can loose your deposit, but they also could potentially sue for specific performance. Most of the time they won't as it's bad PR, but it is a possibility. I would suggest going and speaking to them and telling them what you've found as far as incentives that they are currently giving.

Good luck!
Web Reference:  http://www.ChrisTesch.com
0 votes
Jim R, Both Buyer And Seller, Austin, TX
Mon Oct 1, 2007
I'm inclined to agree that the landscape has changed, and even though I have an preliminary agreement, I believe everything is open to negotiation. As far as I know the worst that will happen is that I will lose my deposit if I walk away from this deal. If I can get a similar property for 30k less in January 2008, it would be very tempting to take it. Lets say their new builds have many more incentives in Jan. 2008, times are harder, shouldnt I ask for the same things?
0 votes
Julie Nelson, Agent, Austin, TX
Mon Oct 1, 2007
I concur with the answers thus far ... once you're under contract with a builder, your negotiating window is pretty much closed. However, in the current Austin environment where things have slowed down considerably in August and September, builders may be getting nervous about selling their existing inventory and may be willing to negotiate further as they do not want deals falling through.
Web Reference:  http://www.searchAtown.com
0 votes
Jim R, Both Buyer And Seller, Austin, TX
Mon Oct 1, 2007
I dont have an agent as I delt directly with the builder, so I guess your answers are pretty much the deal is done? Jim R
0 votes
The Hagley G…, Agent, Pleasanton, CA
Sun Sep 30, 2007
Are you working through a Realtor? If so, they will know how to expertly negotiate with the bulder. In my experience, builders are less likely to give all of the incentives and discounts available to buyers working without a Realtor.
Web Reference:  http://www.cindihagley.com
0 votes
Chris Tesch, Agent, College Station, TX
Sun Sep 30, 2007
Jim, part of the answer to your question lies in the builder and what kind of discounts and incentives the builder usually will give. I know which builders in my area will accept lower prices, and which ones, despite the market, will insist on full price. I know which kind of incentives they will give and which they won't. If you have an agent working with you on this one it would be extremely helpful. Typically, though, once the contract is signed you don't have further room for negotiation.
0 votes
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