If you want to live in a newly built home, be forward about pressing your advantages. Just a year or two ago, home builders were holding fast and firm on asking prices. Now it’s a buyer’s market. Here are ways to get a good deal:
Look for spec homes. These generally are already built, never lived in, and are simply awaiting buyers. Many builders erected them before the economy turned sour with expectations that they would pull in a higher price. Now that price is unrealistic, and builders are negotiating.
Don’t expect that the builder’s financing is the best deal in town. Remember: Over the years you live in your home, you’ll pay more in interest than on principal! Shop around for the best option. If your builder knows you’re being proactive, chances are he’ll give you a better deal. It might come as a lower interest rate, a percentage of the selling price returned to you at closing, shaved points, or some other benefit. He might offer you an in-ground pool if you stay with his financer. But the extra interest could cost you much more than that over the years.
Look for deals even if you are buying in a neighborhood where you wouldn’t normally expect them. When a builder is willing to negotiate, he often does so quietly, so that the people who already bought from him in the area won’t be upset with him.
If you’re looking in a development, choose one that’s close to completion. The last houses to go are generally sold at a lower rate. Don’t feel like you’re getting in on the tail end of a deal if you’re the last to move in. You’ll already know what the neighborhood demographics are. You won’t have questions about whether additional homes are going to block your view.
Another tip for purchasing a home in a development involves walking around and chatting with people who already live there. Ask if the builder lived up to his promises. You will also get a feel for the builder’s reliability and his willingness to negotiate extra features or price cuts.
If the builder offers you an upgrade to compensate for any issue, decline it in lieu of a price cut. An upgrade might place your home’s value beyond the norm in that neighborhood, which hurts you at resale time. Just ask for a price cut.
When you’re looking for your dream home, or even just the land to build it on, hire an exclusive buyer’s agent (EBA). That means your agent works independently of the local brokers. You will still sign a contract with him, but there’s no chance he will also be representing the seller. And specify in your contract, whether you go with a EBA or a local real estate agent, that you want access to all listings, not just one agency’s. You can also retain the right to look on your own.
Check your builder’s reputation with the local homebuilders association or architectural board. Also ask the local Better Business Bureau if the builder has complaints against him. Besides reviewing complaints from other buyers, look for contractors with unpaid bills, which could indicate that your builder is going through a period of instability.
Know what you want in a home ahead of time. Be specific when you sit down with the builder. Vagueness will cost you money later. Don’t let the builder push you into costlier options beyond your budgeted amount — you’ll pay for them in the end. And feel free to carry brochures from other builders with you when you visit each one — the hint of competition lubricates the wheels of deals.
Hold the builder financially accountable. Make sure the builder gets the subcontractors to sign lien waivers. If they don’t, and the builder doesn’t pay them, they can put a lien on your home. Also, make certain he cannot draw progress payments from the bank unless both you and the bank officer have approved them.
For new home communities and developments organized by state visit the home builders page on NewHomeGuide.com/
For your real estate needs in Boulder CO, try Automated Homefinder.
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Tags: buying a home, home builders, home buying tips, tips
November 5th, 2009 at 2:38 pm
Great tips on negotiating with a builder! Buyers should keep in mind, that right now the prices are still pretty low, so there may not be as much room to negotiate large discounts as they were able to in the past.
November 11th, 2009 at 4:44 am
Buying a first home or unit as an investment could be a better financial proposition than buying a house to live in, particularly if you and/or your partner pay income tax at a relatively high marginal rate.As an investor, you will be able to take full advantage of the negative gearing necessities of the tax law. Negative gearing involves claiming a tax deduction against taxable income for the interest and other expenses which exceed the income from a rental real estate investment.
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November 11th, 2009 at 5:05 am
A great thing to remember is that no matter what you are doing you should always be looking around. Searching the neighborhood for some comparables is good because it gives you leverage when you want to ask the builders for something. No matter what though you should be looking at the houses in the area to see what they go for. Talking to your realtor about how much the location affects the cost of the house is another good factor to remember.
November 17th, 2009 at 1:38 am
Monica , because of the economic situation and the low demand buyers can take advantage of anxious properties owners
November 30th, 2009 at 3:06 pm
It’s like anything else; do your homework - and your math. Show up prepared.
December 21st, 2009 at 12:28 am
Now is a great time to work a deal with builders. I had a buyer about a month ago who was able to get 60k off a home that started in the 300k price range. Depends on the builder and the house it’s self. This home had to close before the end of the year in order to work out.