How much of a discount should I expect from a builder on a lake home?

Asked by Mjknight, Gwinnett Thu Sep 6, 2007

I have found a lake house that a builder has for sale and am interested in making an offer. The house has been on the market for about 9-10 months and with the overall slowdown its apparently overpriced. In dealing with builders in the past they aren't very negotiable on price.

How much should I offer the builder? 80% of the asking price? 85%?

Is there such a thing as offering too little and alienating the seller?

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J Lo, Home Buyer, California Glory, Brentwood, CA
Thu Sep 6, 2007
Hi Mjk:
Your question is fairly common in this market... nationwide. However, if I were you and I found a home & was interested in making a genuine offer to purchase - I would contact an agent in the area - preferably someone your friends, family, or co-workers can recommend - and see what the comparables have sold for in the past few months & what others are on the market for today.

Assigning a specific percentage would be irresponsible. What it cost to produce the home is also irrelevant. What the market can bear is the appropriate answer. It affects the overall market - and even though these are tough times - it's isn't exactly cause for pandemonium.

What happens today, affects tomorrow. You want stability in the market place - for your own good. You will be investing a large amount of money into this home (no matter the selling price) - if we all reacted as if this were a free for all - where will the value of your purchase today be tomorrow?
2 votes
Deborah Madey, Agent, Brick, NJ
Fri Sep 7, 2007
In recent years,. all sellers were less negotiable, because they didn't need to be. Builders will generally estimate their costs and determine the selling price long before construction is complete. That worked in a stable or appreciating market. If you are in a market that has experienced some pricing adjustments, the builder's orginal estimates and selling price might be too high.

If the lake home is an individual custom property by a small builder, you may have more room for negoatiation as compared to a developement. A larger builder is more likely to negotiate upgrades, or offer incentives, vs. cutting the base price. If the builder cuts the base price, it would be difficult to ever raise the base price, unless it is an across the board permanent price adjustment. A smaller builder with an individual property may be more receptive to an offer that represents less than the asking price.

From your description, you might be dealing w/ a single property. Hire a good buyers agent who can give you pricing advice and stragey based upon comps, trends, activity levels, and absorption rates. The asking price may be close to realistic, or more than 30% off, or anywere in between.

If you are dealing w/ a development, I still advise that you hire a good buyers agent who can represent your interests and negotiate on your behalf. If base pricing is not negotiable, you can seek free or discounted upgrades, assistance w/ closing costs, financing incentives via direct payments, or buy downs on the interest rates or points.

Good Luck!
1 vote
P Bright, , Smyrna, GA
Thu Sep 13, 2007
ask for 15 % off and see where you go from there. Have your cash in hand and be ready to close in10 days to get best deal. We can help with any loans.
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Paul Renton &…, , Atlanta, GA
Fri Sep 7, 2007
Your Realtor can pull all the market stats for your property and will come up with a good startergy. For my clients I make a case backing it up with the market data, I make sure my clients can close in 30 days or less when I make the offer and that they are financially approived with funds not just pre-qualified. This makes them the most desirable offert and the builder is more likely to take the offer.

In negotiation you have one shot at getting your best price and the side who is best prepared with supporting documentation usually wins.
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Pam Winterba…, Agent, Danville, VA
Thu Sep 6, 2007
Everything is negotiable. Have your Realtor do a history and comparables on the property. Make you offer based upon the length of time on the market and the results he/she find for you.
0 votes
Joshua Jarvis, Agent, Duluth, GA
Thu Sep 6, 2007
There is no set discount on a home like that. Hopefully you have a good agent in the area (I know a good one if you need one and -- no, not me, lol). Your agent can better advise you of the specific situation that the home is in. Can you alienate a seller? Oh, Yeah! Can you present a low ball offer? Yes. There's ways of presenting offers and that comes with experience of negotiating deals. Sometimes a low ball offer can sound like a huge, win/win with the right presentation.
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James Dudley, Agent, Suwanee, GA
Thu Sep 6, 2007
As a buyer you have alot of leverage in todays market. I always reccomend having a buyer's agent when purchasing new construction. Builders do have a reputation for not being negotiable, but if you have a realtor representing you that knows the market and can plead your case by backing up your offer with evidence of what the market will bear then usually the builder will listen.

Keep in mind that large builder/developers are less likely to negotiate because they are selling an entire neighborhood and want to maintain the values in that community not only for the homeowners, but for profits as well. Recently many builders who are feeling the effects of the declining market have slashed prices and are giving away huge upgrade packages to sell homes. Many homeowners are upset that have already purchased homes in those communities at a premium. It can be important to research the builder and make sure that this does not happen to you later on down the road and to verify the builders workmanship.

Having a buyer's agent who is a tough negotiator can help you get a better deal on your home and keep you from looking like the bad guy. Buying a home direct from a builder or new home development can be one of the most dangerous transactions a buyer can have if they are not represented and there is ever a problem with the product. In today's market even builders are being foreclosed on so who is to say that builder will be there to honor their warranties and work after the sale.

There are many great deals on the market, but be sure you have all your bases covered.
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Steve Miller, Agent, Rome, GA
Thu Sep 6, 2007
The good thing is that when you're working with a builder on "New Construction" he will know EXACTLY how much he has invested in the project and should have it priced, with a fair profit, in order to be competitive with other home in the area. With a resale, everyone, including the homeowner and Realtor only have a good "guess" as to the value based on comparable sales and supply/demand in the area to determine a "market Price".. So, in short, the builder, if he's wanting to sell the home quickly, will have priced the home with a fair profit since he know's exactly what he has in it.

Insofar as a "discount" or reduction in price, you might be more successful in getting upgrades included without increasing the price. When these upgraded items get to a point where the builder cannot come out with a fair profit, he'll certainly let you know that he's "all-in." It's then your decision to make whether it makes sense for you and you feel like you got the "deal" you were looking for. Hope this helps. - Steve
0 votes
Herman Chang, Agent, Palm Beach Gardens, FL
Thu Sep 6, 2007
A Comparative Market Analysis of the community and neighborhood would have to be done to determine a good asking price. This analysis would let you know what is currently available for sale, what expired and what sold within a specified time frame. I would be glad to recommend an expert Realtor in your area.
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