Investment propertyIs There Any Room To Haggle With The Builder?
Is everything truly negotiable in real estate? You can "make your best
deal" on a car, and you can counter offer on a re-sale (used) home, but what gives
these days on new homes? Is there any room to haggle with the builder? How
often are offers on newly constructed homes entertained or even tolerated in
a market like this?
To be honest, not often. But I guess what goes around comes around. I can
clearly recall the days of huge buyer incentives (a free swimming pool with a
home purchase?!), no lot premiums, and sales people saying things like "If
you could make a commitment to buy this home today, what would it take to
make a deal?" And that market lasted, and lasted, and lasted. Today the
tables are turned and, of course, no one knows if this "seller"s market" will
last as long as the "buyer"s market" did. All new home builders know is the
usual "supply and demand" thing. Factors such as land costs, material costs
and labor costs are skyrocketing, so negotiation is all but out of the
question in many new home communities. For builders, turning a profit isn"t a
bad idea, either, after such a long draught.
So what are the exceptions to the rule, and what can you do to make a
"sweeter deal" in a market like this? I suppose you have to put yourself in
the builder"s shoes to think up what might be attractive to him. For
instance, the builder, in many instances, would not consider lowering a price
or offering an incentive to a potential buyer on a house whose construction
has not even yet begun. But he may blink twice when it"s a house that is due
to be finished within the next 30 to 45 days. Why? Because he"ll incur a
whopping house payment on it at completion, on top of the cost he is already
incurring for carrying the land for that unit. If a house is this close to
completion, he may just be getting nervous, because builders base their
margins on projections for closed sales. If the builder prefers not to mess
with the appraised values of home in his community, he may only deal on
incentives, such as paying for your closing costs, throwing in some upgrades,
or not charging a lot premium. Lowering the base price of the home may
affect values later on, so he may just steer clear of that thought.
Is the home site in a location that not everyone would be crazy about, but
it suits you just fine? How long has it been available for sale? Does that
finished house have someone else"s upgrades selections in it, but they"re not
all that bad? Whatever the average buyer may balk at is what a builder may
soften his position for.
Sometimes becoming this shrewd a home buyer takes time and patience. It
takes a watchful eye, and a good rapport with the new home sales agent as
well. If you"re looking for just the "right" situation, keep in touch with
the agent, or drop by on a regular basis to find out what"s going on in the
new home community you"re focused on. Ask them to call you if someone "falls
out of escrow" (sounds like going into the abyss . . .). Tell the agent what
home site you would like to become a "back-up" buyer on, but be willing to
make a fast deal if your dream come true. Luck, fate, and timing can also
use a savvy buyer, but requires you to strike when the iron is hot. Be sure
that your financing pre-approval is in hand, and your down payment money is
arranged before poising yourself for this scenario.
Builder closeouts are another place to sniff around. The last few homes may
become bargains, since the builder is not as concerned with exact values any
longer, but you may need to take whatever you get in terms of location.
Still, if values all around you are higher and home values in general are one
the rise, it may turn out to be a winning deal.
We"re all good at pointing out the "should-haves and could-haves" of our
lives. Cutting any kind of a "deal" on a new home in this market, however,
just could be one of those accomplishments you can boast about a few years
from now.
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