New home construction questions

[kdibattista]

DH & I are considering building a home in one of the developments that is to be started in the next few weeks. We have started the mortgage preapproval process and are just beginning to familiarize ourselves with everything. My question is...

Is there any room for negotiations when building a home in a new development or are you stuck paying exactly what they say for both the house and any upgrades? How about closing costs? We were quoted a mortgage where the seller can pay half... would that be able to apply to builder?

Sorry if these are stupid but I would rather sound stupid in front of friends then in front of the builder!!!!

 

[FreshTressa]

It depends on the market.

We got 1500 off and they paid closing costs, but housing is pretty tight right here.

And you can negotiate, just like any other real estate deal. Do you have an agent?

 

[scarlett873]

we just finished building our home...there was no negotiation whatsoever with our builder.

 

[kdibattista]

not yet... we are just starting. I guess that's what I'll do next then.

Thanks!!!

 

[tar heel]

Our builder paid closing costs, but there wasn't much negotiating on the price of upgrades/changes. Our neighborhood is semi-custom in that you choose one of their plans, but you can do whatever you want to it if you are willing to pay the price. The interesting thing was that there was no uniformity about what changes/upgrades cost. They might charge us $500 for something and our next-door-neighbor $1,000. We did have some things priced that we did not do because of cost. Our changes ranged from $65 to extend the huge kitchen island so that bar stools could be put there (I would have paid more for this -- well worth the $) to $1,750 to upgrade from popcorn to smooth ceilings -- my neighbor was quoted less for this and her house is larger!

One thing we found is that the builder had huge overcharges on some things. For example, my neighbor has a wonderful tile kitchen floor with a design (the tiles make a design). She was able to contract the floor for less than the builder offered as an upgrade. So she got the standard vinyl floor and immediately had it ripped up.

The biggest piece of advice I can give you: No matter how nice the builder's rep is, don't ever forget who he/she works for and that his/her bottom line is $$$$. Learned this the hard way . . .

 

[elgerber]

We built a year and a half ago. We were not able to negotiate with the builder on his prices. We were able to negotiate with his agent however, we got the agent to take $2500 of his commision off the price in return for letting them list our current house (for a slightly reduced fee). As far as the sellers paying closing costs, when you do this, the purchase price is raised to cover those costs. Sellers do not actually pay them, they are just put into the purchase price and you can finance them. Does that make sense?

Erika

 

[kdibattista]

Thanks guys!!!

P.S. Erika - that makes perfect sense... thanks!!!

 

[dvcfamily41801]

Congratulations and lots of luck on your decision!!

Normally things are not negotiable with a builder, however, you may if you use their mortgage companyand title company receive a discount with that, and I have heard in some cases, builders not charging a "lot premium" if you use those companies. However, keep in mind, that normally the builder has a financial interest in the mortgage and title company so technically its not really costing anything if that makes any sense. I do real estate closings for a living (and I am in Phila Suburbs too...Bucks County) and have heard that offer many of times from people calling us for title insurance rates.

If you have any other questions, I would be happy to try to help you out. My mom is a realtor in this area, so any other questions if I can not answer, I could always ask her.

Good luck!!

 

[DVC-Don]

When we built, we could have saved by adding the central air after we moved in. We paid the builder (in 1991) $3600 for central air. Our neighbor had the same subcontractor come in after they moved in and only paid $1800 for the same AC system.

 

[FloridaCat]

As a former builder I can tell you most upgrades are very over priced. The basic house is kept low to entice you to look. There is a very small profit margin for the builder if the buyer elects no upgrades. Upgrades fatten up the bottom line. Also make sure you do not make any changes after you have made your contract as this will be like handing them a blank check. They are going to get “well” fast when you do that.
Anything you can do or know someone that can do it, go that route. Garage door openers are simple to install, better sinks, faucets, Kitchen cabinets and numerous items.
Upgrades should be kept to better grade of roof shingles, larger rooms, patios or anything that is hard to do after construction.

Keep in mind, the Builder does not build the house, but contracts it out to sub contractors, so if you want more electrical out lets or the like, watch for the electrical contractor on your home and you can make better deals directly with them.

 

[Shelby5514]

How right you are Floridacat. We finished our basement ourselves and saved a fortune. We had a friend get us carpet pad for $10.00 a roll. Bought the carpet for a killer price and paid the installer $300. We estimated a $800 savings on carpet and installation alone!!! We also contracted the electrician to add sconces and recessed lighting for HALF of what the builder was going to charge us. We also found that we could get the builder discount for a year on anything we needed from any of the vendors we used. We had wanted to put cabinets in our laundry room but the quote was too high when we were building. A year later we went back to the orig. cabinet company and ordered the cabinets for less than the orig. quote. We installed them ourselves and only paid the cabinet company $75.00 to come back and do all the trim/crown moulding work!! We also saved quite a bit by running all the phone/CAT-5 cables ourselves. The builder only included 3 phone outlets and 3 cable outlets. By doing it ourselves we have phone and cable in EVERY room. Some rooms maving multiple locations and costing us nothing more than the cost of the cable. (Which we got with the builders discount!)
There are ways to save when building, you just have to ask and be willing to do a little "sweat labor".

Shelby5514

 

[ToyStory Fan]

CONGRATS!

I think alot of it will depend on how many other homes have sold and what levels of upgrades they have done. If you are one of the first you may have more room to negotiate, but as more homes sell you will likely be stuck with whatever the market is willing to pay, and that may mean no negotiating and depending on how tight the housing market is for that area/style/size home, you may go to a bidding war.

I know in our development there are still 9 of 17 homes to be built, and the pricing has been pretty much what the builder asks for. My BIL is also a builder and he has sold houses before they are even built and given up certain concessions like finishing the basement, or upgraded appliances, higher grade granite counters etc. also taking a small hit on asking price. To some builders it is worth it to not have to advertise or deal with the nonsense of taking 100 people thru the house when you have a livewire there ready to go with a only a few concessions.

So, I guess my best advice would be to try, you are not going to insult anyone by doing that and ultimately you have more to gain than you do to lose.

 

[Chris2597]

We are in the process of talking to a builder....today while we were going over what was included in the price...he brought out a special package deal.....I dont even want most of the things on the package, but he convinced us to take it....because it was such a good deal....We still have time to re-think this added expense. the package was an additional 4500 for upgraded appliances, garden tub/shower (instead of reg. tub/shower), insulated roofing material, custom paint selection....We were planning on taking the insulated roofing material which was a 608 upgrade, but were not even considering the rest. This whole building experience can become overwhelming.
We are looking at a 7 months wait for the house to be built....I am already stressing that interest will make this an un-affordable thing for us.

 

[kdibattista]

Thanks everyone... this has been extremely helpful!!!!! We will be one of the first (the models are not even built yet but we checked them out in a different development).

 

[FloridaCat]

Originally posted by Chris2597
We are in the process of talking to a builder....today while we were going over what was included in the price...he brought out a special package deal.....I dont even want most of the things on the package, but he convinced us to take it....because it was such a good deal....We still have time to re-think this added expense. the package was an additional 4500 for upgraded appliances, garden tub/shower (instead of reg. tub/shower), insulated roofing material, custom paint selection....We were planning on taking the insulated roofing material which was a 608 upgrade, but were not even considering the rest. This whole building experience can become overwhelming.
We are looking at a 7 months wait for the house to be built....I am already stressing that interest will make this an un-affordable thing for us.

Tell him to forget it. Builders buy appliances that are short on features and performance. All major appliances manufactures has special units for builders. Keep in mind it is part of your mortgage and you are paying on it for 30 years. The appliances will be long gone beforw you pay it off and replaced.
Most retail appliances stores will give a pretty good discount if you purchase several items at one time. Do the shingles and forget the rest Do your own painting or get a friend to do it. Next month he will be dangling some other Carrot and I assure you the cost was already built in.

 

[chager]

I agree with watching out for upgrades. We were one of the few that didn't do alot of upgrades. Our upgrades were: Full basement with the extra block height (very expensive,but worth it), carpet padding, one grade on carpet (not a big price difference),cabinets, and a rough in for a bathroom in the basement. TO be honest I wish we would have just put in cheap carpet then bought what we really wanted. Not that what we got is bad it just isn't the color we wanted. Oh we also upgraded the fireplace. A word to the wise (as told to me when we first started)...get to know the people building the house. I brought them cookies I also had a friend walk through as they were building it. (He inspects homes in IL) He pointed out a few problems....like the fireplace frame wasn't actually attached to the house frame. The gap was too large so the nails didn't reach. Overall everything went fairly smooth. The site supervisor and I did not get along so it was helpful to get the assistent and the workers on my side. (The guy was fired shortly after we moved in. I guess he made too many people mad) We had a few issues but I would most likely build again over purchasing an already built house. (Unless of course we were offered a deal to good to pass up )
Good luck!!

 

[Shelby5514]

We opted to purchase our own appliances, got exactly what we wanted and saved a bundle. Lowe's has a New Mover program that you can sign up for and they will send you a coupon for 10% off an entire purchase! My In-laws just did this when they moved, they purchased all of their appliances, garage door openers, mailbox, mini blinds, ceiling fans and even some stuff for our house and got 10% off EVERYTHING!! (Some High End items are excluded as is Labor). They also will price match with other stores and even threw in FREE delivery! I think anyone can register and get the coupon. Here's the link...

https://www.lowes.com/lkn?action=createUser&rn=none&rn=none
*Scroll down and select "New Mover Program"

good luck with your decisions,
Shelby5514

 

[sgtdisney]

Building a new house can be a pretty confusing process, can't it? We are living in the 2nd home that we had built (first one was a townhome) and both of the buying processes were learning experiences. When and if we build again I know now that there are a few things I will do differently. I agree on the upgrade costs, most of them are a rip off. We were pretty careful with our choices because we planned to do some of it later. A few things we had done that we skipped on the first house because we knew we wanted them and didn't want to wait on someone else to do it for us like a porcelain sink in the kitchen. There were a few things I regretted though too. We passed on a ceiling fan outlet in the family room since we were gonna have someone do it later. Well we have yet to do it. We also added extra cable jacks in the bedrooms, which we really didn't need and still don't use.

In terms of discounts, our builder offered a 4500.00 credit toward upgrades when we bought as long as we selected a lot in a phase that they wanted to close out which was no problem for us. We used that to upgrade the exterior and make some modifications to the window spacing in the master bedroom to accomodate a large bedroom set and to split a closet between a laundry room and the den. As a previous poster mentioned it is best to upgrade the things that are next to impossible to change after the house is built and wait on some of the stuff that can be done rather easily later for much less cost.

Good luck on your purchase!