Negotiate a new home build

[mfer]

All, looking into building a home, but not sure on strategy of doing so. The subdivision right now doesn't have any houses built. Any tips for proceeding would be appreciated. I know of someone else trying to build in same subdivision and he isn't getting very much off. Also, these are new homes, but not completely custom homes. Don't know if that changes much. About 60 homes total with 5 pre-sold.

Thanks for the advice.

[jjnd08]

A new subdivision is always a gamble. You never know who else will buy, how everything will turn out, etc.

But, there is a possibility that everything turns out nice, the market continues to improve, maybe some high rollers move in to the neighborhood and buy up 2 lots at a time and build some really big houses. Then you can see some really nice appreciation. That has happened to my parents a couple of times, and a friend here in Texas.

[mfer]

Originally Posted by jjnd08

A new subdivision is always a gamble. You never know who else will buy, how everything will turn out, etc.

But, there is a possibility that everything turns out nice, the market continues to improve, maybe some high rollers move in to the neighborhood and buy up 2 lots at a time and build some really big houses. Then you can see some really nice appreciation. That has happened to my parents a couple of times, and a friend here in Texas.

Good point. I was guessing at this price point the neighborhood wouldn't have that many, let's say, trouble. You are right though...hmmmm.

Very doubtful that someone would come in and build a mansion. Like I mentioned above, not a true custom home, just lots of options.

[BarkMaster]

Instead of trying to get them to come down on cost, you can try having them add in extras/upgrades.

[mfer]

Originally Posted by BarkMaster

Instead of trying to get them to come down on cost, you can try having them add in extras/upgrades.

Nice point. I really want my walk in seamless shower. Maybe I'll keep that off the option list.

[JasoninDenver]

Originally Posted by mfer

Nice point. I really want my walk in seamless shower. Maybe I'll keep that off the option list.

X2.

Builders want the closing prices to be as high as possible to keep the comparable sales values high for further sales.

They may be actually more willing to throw in upgrades in the early stages rather than the later.

[mfer]

Originally Posted by JasoninDenver

X2.

Builders want the closing prices to be as high as possible to keep the comparable sales values high for further sales.

They may be actually more willing to throw in upgrades in the early stages rather than the later.

Makes sense. I didn't think about the seller wanting to keep values high for other buyers. Makes sense.

[mannyv11]

Hey Mik,
My Grandfather is a contractor and has been putting up sub divisions for almost 40 years now. He always told me to show up at the house constantly while it's getting put up, a lot of the time the subs will do their jobs, but their might be little things that you don't like and you can ask them to re-do (mostly finish work).
Also the person building the house should be more than willing to give you a few options for upgrades cabinets,flooring, etc.

Also don't feel bad about really going over the floor plan and if there are any changes you want to make ASK for them. The builder will give you his opinion on what he thinks and how much it will cost, but in the end it is your house and you will be the one living there so make sure you're happy with everything.

if you ever have any building questions feel free to PM me i've been in the construction field for over 15 years and if I could help out in anyway possible please to not hesitate to ask, I have a lot of great contacts!

Either way hope all goes well and hope you love your house and there will always be delays so don't fret about them too much =)

[Rbdport]

Originally Posted by mannyv11

Hey Mik,
My Grandfather is a contractor and has been putting up sub divisions for almost 40 years now. He always told me to show up at the house constantly while it's getting put up, a lot of the time the subs will do their jobs, but their might be little things that you don't like and you can ask them to re-do (mostly finish work).
Also the person building the house should be more than willing to give you a few options for upgrades cabinets,flooring, etc.

Also don't feel bad about really going over the floor plan and if there are any changes you want to make ASK for them. The builder will give you his opinion on what he thinks and how much it will cost, but in the end it is your house and you will be the one living there so make sure you're happy with everything.

if you ever have any building questions feel free to PM me i've been in the construction field for over 15 years and if I could help out in anyway possible please to not hesitate to ask, I have a lot of great contacts!

Either way hope all goes well and hope you love your house and there will always be delays so don't fret about them too much =)

All of this. My folks had their last 3 houses built. Show up every day, hold the contractor/site foreman accountable for schedules and finishes. My folks walked out of closing on their last house when the finishing punch list wasn't completed prior to closing.

[mfer]

Originally Posted by Rbdport

All of this. My folks had their last 3 houses built. Show up every day, hold the contractor/site foreman accountable for schedules and finishes. My folks walked out of closing on their last house when the finishing punch list wasn't completed prior to closing.

Thanks, what criteria did they put contingent that they were able to walk away?

Going there everyday sounds like a horrible pain.

[mfer]

Originally Posted by mannyv11

Hey Mik,
My Grandfather is a contractor and has been putting up sub divisions for almost 40 years now. He always told me to show up at the house constantly while it's getting put up, a lot of the time the subs will do their jobs, but their might be little things that you don't like and you can ask them to re-do (mostly finish work).
Also the person building the house should be more than willing to give you a few options for upgrades cabinets,flooring, etc.

Also don't feel bad about really going over the floor plan and if there are any changes you want to make ASK for them. The builder will give you his opinion on what he thinks and how much it will cost, but in the end it is your house and you will be the one living there so make sure you're happy with everything.

if you ever have any building questions feel free to PM me i've been in the construction field for over 15 years and if I could help out in anyway possible please to not hesitate to ask, I have a lot of great contacts!

Either way hope all goes well and hope you love your house and there will always be delays so don't fret about them too much =)

Lots of great info. I may PM in the future!

[mgent]

I just built a custom home - an established community, not a new development, but can provide a few pointers:

- Go every day, or as often as you can. I used to stop by on my way home from work every evening, and caught a number of things going in wrong, which were easy fixes vs. after they were in and a big fix. Punchlist was also rather short since issues were being caught along the way.
- Make sure your 'spec list' has every little detail, or else even expected things can be counted as 'additional'.
- Make decisions well in advance of when they're needed, and be 100% sure of your decision. You don't want delays due to making a choice, and don't want to pay for changes.
- Our home was custom and on a lot we owned, so we paid along the way as milestones were reached. If you're is structured similar, I would recommend holding back a good chuck (20-30%) of the total until the entire punchlist is complete. We have a number of 'little' things and can't get anything done now...

General comment on a new development, being #5 of 60 is risky, so try and get a price that reflects that risk. For all you know, they can finish your home and go under, so no more homes or worse foreclosed homes... Or they get motivated to sell, and sell the last 20 at 60% of what you paid... Also pay attention to HOA dues, and how the builder pays them until completely sold out, and when the builder can stop.. you don't want to get stuck with 10 or 20 homes splitting the entire HOA dues... This was a huge issue in Miami condos during the crash... 200k condo with 6k a month in HOA...

[uscmatt99]

I was going to respond earlier, but let's just say that I agree with what others have posted.

We had our home entered into the local parade of homes, an annual exhibition of 1 or several homes from each builder/architect in the area. Not sure if they do that in your area. We received about 3% credit on the cost of the home and any options negotiated at the beginning of the build. Changes made during the build were not discounted. As others have said, they do not like to negotiate on price in general, but will make room for options. The other benefits of being a parade home were a guaranteed completion date, extra attention to trim/finishing, etc. The subcontractors in the area are all listed and seemed to go the extra yard. However, we still went there almost every day to check in, and there were issues that arose that were dealt with in a timely fashion.

[mfer]

Originally Posted by uscmatt99

I was going to respond earlier, but let's just say that I agree with what others have posted.

We had our home entered into the local parade of homes, an annual exhibition of 1 or several homes from each builder/architect in the area. Not sure if they do that in your area. We received about 3% credit on the cost of the home and any options negotiated at the beginning of the build. Changes made during the build were not discounted. As others have said, they do not like to negotiate on price in general, but will make room for options. The other benefits of being a parade home were a guaranteed completion date, extra attention to trim/finishing, etc. The subcontractors in the area are all listed and seemed to go the extra yard. However, we still went there almost every day to check in, and there were issues that arose that were dealt with in a timely fashion.

They haven't mentioned any possiblity of a prade home, but 3% would be significant. I'll look into that. Thanks.

[mfer]

Originally Posted by mgent

I just built a custom home - an established community, not a new development, but can provide a few pointers:

- Go every day, or as often as you can. I used to stop by on my way home from work every evening, and caught a number of things going in wrong, which were easy fixes vs. after they were in and a big fix. Punchlist was also rather short since issues were being caught along the way.
- Make sure your 'spec list' has every little detail, or else even expected things can be counted as 'additional'.
- Make decisions well in advance of when they're needed, and be 100% sure of your decision. You don't want delays due to making a choice, and don't want to pay for changes.
- Our home was custom and on a lot we owned, so we paid along the way as milestones were reached. If you're is structured similar, I would recommend holding back a good chuck (20-30%) of the total until the entire punchlist is complete. We have a number of 'little' things and can't get anything done now...

General comment on a new development, being #5 of 60 is risky, so try and get a price that reflects that risk. For all you know, they can finish your home and go under, so no more homes or worse foreclosed homes... Or they get motivated to sell, and sell the last 20 at 60% of what you paid... Also pay attention to HOA dues, and how the builder pays them until completely sold out, and when the builder can stop.. you don't want to get stuck with 10 or 20 homes splitting the entire HOA dues... This was a huge issue in Miami condos during the crash... 200k condo with 6k a month in HOA...

Yeah, I have asked about HOA's already.

The good news on #5 of 60 is that they have only been selling for 5-6 weeks now and already sold 6 now. So, I'd be 7. Seem to be moving quickly. This is a well established area (not the true sub-berbs), but the lots will be small as a result. Tiny backyard (but private). Basically someone has been sitting on this land in the desirable section of town for some time now and finally just sold it to a developer. The developer is well know (national) and has an acredited BBB rating of A+.