Home Builder Austin

what are the best arguments to negotiate incentives with new home builders?

we all know the market is still slumping, what are the best points to present to ask for discounts, incentives etc...on a new home purchase from a home builder?

Public Comments

1. I would hope you have enlisted the help of an expert? You have no real leverage as a buyer without a Realtor. If you believe you can get stuff free, think again, they add it in somewhere. I know, I represent builders. Make a fair offer. If you're looking to make a deal, shop on ebay. If you're looking to buy a home, make a fair offer.
2. If you wait until you have selected the home and are sitting with the builder’s sales people and signing papers, you have little or no negotiating power. So, here are the steps I use for my clients. Also, understand that I am a Realtor in Las Vegas so some of what I am saying may not apply to where you live. Know also that whether you have a buyer’s agent or go alone, you are offered the same initial deal. What happens afterwards is where the savings occur. For a log of what I typically do to find a great deal for a client, see the following webpage where I logged all the tasks, hours and phone calls it takes to find the best deals: http://www.iselllvhomes.com/typicalNewHomeHunt.html Before you start looking, decide upfront whether features or value are more important. If you must have a very specific set of features and are willing to pay significantly more to have that set of features, then an agent has a lot less to negotiate with. If you are more interested in value than a specific set of features then you can get a lot more for your money. Where do I find the biggest savings for my clients? On fall-outs; homes that are complete (standing inventory) and fell out of escrow. Builders pay 1% or more per month on construction loans so costs stack up fast when a completed home just sits there. So, narrow the possible subdivisions to a few and let the builder’s sales people know you are looking for a deal. I do this for my clients and invariably, within a couple of weeks, a home has fallen out of escrow and I get my client in there before anyone else knows about it. I start the negotiations by telling the builder’s sales person, “My client is equally happy with the DR Horton model xxxx, the Lennar model xxx or your model xxx. Bottom-line price will decide which home my client selects so what can you do for my client?” See here for some examples of what I have negotiated: http://www.iselllvhomes.com/results.html While I sometimes get direct price reductions, most often the builder’s lower the price by discounting the upgrades already installed in the home. I focus as well on the builder paying my client’s closing costs (usually between 2.5% and 3%). When I max out what they can do on price I then move towards smaller things like landscaping, appliances, window treatments, waving HOA fees for a year, etc. I also check with other agents who recently had deals with the subdivision to find out what they were able to negotiate. Once I have the best deal I think I can get for the moment, I tell them that I will confer with my client and then head over to a competing builder’s subdivision and do the same dance telling them what the other subdivision is already offering. They will usually match it and the dance continues. Once I have the best deal I can get for my client, but BEFORE they sign the documents, it’s off to the builder’s lender. All the builders I know of have a relationship with a specific lender and you only get the incentives if you get a loan through this lender. So, BEFORE you sign the papers on the home, we sit down with the mortgage people and see what they have to offer. Have the first mortgage company you visit pull your credit report on the understanding that you get to have a copy. On subsequent visits to lenders, show them the credit report and tell them they may not pull your credit until you decide to select that home. Remember that every time someone pulls your credit report you credit score drops slightly. The game here is to get the mortgage companies to compete and for you to get the best rate and terms. Go to http://www.ditech.com/index.html and check out their rates before you go. Remember that as long as you have not signed the papers, they (the builder’s sales people and the mortgage people) will compete for your business. Here is one more page you might find useful - Using Builder Incentives Effectively: http://www.iselllvhomes.com/usingBuilderIncentives.html Hope this helped. Eric Fernwood Eric@ISellLVHomes.com http://www.iselllvhomes.com/