New Home development Question

Do you really want to squeeze the builder BEFORE he puts any time and labor into your dream home?

 

$23,000 thats
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Everything is negotiable.

Builders are sucking wind right now. Go for it.

 

+1000

 

+1. We are building a new house and paid the asking price. We did get a lot of "goodies" for free, but I didn't wanna start squeezing them. Plus, usually when these houses are finished the price almost instantly goes up, so why sweat it?

Just my opinion. I'm not a very aggressive person either, so take that in mind.

If anything just pay the price and see if you can get "free" upgrades. Builders love to "give" stuff away as it makes the homeowner feel like they're getting more.

 

Between their intial commitment last summer and the closing, my friend was able to knock like $60k off the price of his new house (from ~$300k down to ~$240k!).

They're offering crazy incentives in Vegas, along with discounts, "extra" buildout credit... they're doing like "no mortgage payments for a year" and other desperate things. It would be worth it if the market wasn't going to go lower (which I think it will, for another year or three).

 

I'd be willing to bet the builder would dance a little jig right in front of you if you offered him $300k. Ever seen the Simpsons episode where Burns sold the power plant to the Germans?

Why offer on it now? Wait until it's built and he has a couple hundred houses he can't sell, then start negotiating. I'm no financial expert, but I think the term for the current real estate situation is "buyer's market?"

 

Jesus! $300k for something they are asking $323K for??

With 40+ percent cancellations the norm - I'd start at $200k and have a hard time moving anywhere North of $250. Bargain for them to pay your mortgage for the first year or so too... pretty standard deal (even with Ryland) in the Chicago area.

Ryland, Pulte, D.R.H. Cambridge, you name it - they're all just this side of Chapter 11, sitting on huge numbers of unsold lots & unbuilt land, and dying for cash!

 

You will likely get away with getting at minimum their cost basis and likely take more if you roll up your sleeves. We are sitting on roughly 60 homes [ready to go] in a nice community in Silicon Valley and are letting homes go for $50,000 below our cost, just to get them out of our inventory. It costs us $5,000 per month/home to inventory in interest costs alone. In actual terms we consider ourselves very lucky....we've had 15 years of fantastic returns building 300+ homes/year and only got caught with several bad projects. Otherwise we are phasing our new projects based on demand. Areas where academic test scores and school districts are in high demand, it is business as usual. Overall it is certainly not as brisk as it once was, but sales have been very steady [roughly 2/week] in areas where schools and tests scores are very good. Alternatively, several communities that have been built-out in less than desirable school districts are choking [sales rate = 2/month].

 

Personally I think anyone is nuts to build a new home in the current market (exception: true custom home--- see below). You will get a much better deal on an existing home.

Another point,... not many people looking to build currently. Do you want to live in a neighborhood with ongoing construction for the next 5-10 years?

Finally... if/when you chose to sell... if there is still the ability for a new buyer to build in that subdivision, you will have to discount to sell your house.

Bottom line: unless you are building a custom home (true custom home = architect designs plans solely for you... not what these tract home builders want you to believe is custom)... buy existing in the current market.