New Home - Negotiating?

[HiTempguy1]

Originally posted by macman64
The dollar is driving most materials up in cost.

Not really, but that's what they will tell you.

The major costs in any house build (besides finishing materials, but depending on the level of quality you demand, that is impossible to compare) are labour, concrete, and wood.

Those three things are sourced and priced locally. There are SERIOUS savings to be had on houses right now. If you get yourself so wound-up over a purchase that you HAVE TO HAVE A HOUSE, you'll never get a good deal. If you are willing to wait and lowball and negotiate, there are deals to be had.

Hell, last spring I was looking at a new build cookie cutter house on a pie lot with a triple detached garage out back for $375k before I even began negotiations (Edmonton however). I easily could have seen it down to $350k.

Right now I am pricing out the costs to build an acreage. Trades are easily down $10+/h in wages, concrete quotes at $210/m3, etc etc. Anyone who isn't lowering their prices are laughing all the way to the bank when people come in and don't negotiate.

OP, lowball the shit out of them. If they want the house sold, they will deal.

[403ep3]

We actually lowballed one builder hard and they countered with a measly 8k. We decided to walk away from it because it wasn't going to get to a price we were willing to pay. The lot wasn't that great.

The current builder we were in talks for 3 hours yesterday and could not agree on a price. We decided to walk away from that too. At this point we aren't willing to pass on the extra profit to the builder. If they want a sale then they will contact us.

We'll see how they are in the next few months or years.

[C_Dave45]

Originally posted by HiTempguy1



Right now I am pricing out the costs to build an acreage. Trades are easily down $10+/h in wages, concrete quotes at $210/m3, etc etc. Anyone who isn't lowering their prices are laughing all the way to the bank when people come in and don't negotiate..

Lol...the first and usually the only ones to drop their labour rates are hacks that can't find work. Most reputable and skilled tradespersons will not work for 25 year old rates.
And no better way to guarantee a tradesman will do shitty work and cut corners wherever he can, than to grind him down to working for less than half his normal wage.
But good luck with that! I hear Kijiji is a great source of trades guys willing to work for 1980 rates.

[Speed_69]

Originally posted by 403ep3
We actually lowballed one builder hard and they countered with a measly 8k. We decided to walk away from it because it wasn't going to get to a price we were willing to pay. The lot wasn't that great.

The current builder we were in talks for 3 hours yesterday and could not agree on a price. We decided to walk away from that too. At this point we aren't willing to pass on the extra profit to the builder. If they want a sale then they will contact us.

We'll see how they are in the next few months or years.

Just wondering how much are you lowballing by?

I would like to start looking pretty soon but I don't want to go in with a ridiculous offer.

[Prelude_dude]

I can share my experience, hopefully it helps.

I built with Morrison Homes in Nolan Hill about 2.5 years ago.

At the time we were comparing Morrison vs Jaymen.

Morrison had a promotion for 10K upgrade in our Kitchen, plus a nice floating fire place.
Jaymen had the finished basement promotion.

Starting price for Morrison was more expensive for roughly the same house. We bought a starter home around 1550sq feet with detached garage.

After comparing the differences between what is standard between Morrison and Jaymen; Morrison definitely had a higher standard. In the end we felt all the upgrades we would have wanted from Jaymen, the house would have cost more than the standard from Morrison.

I was pretty new to all this and it was my first home, so i did choose to use a realtor to assist with negotiations, and also i wanted someone to check in on the house regularly during the building process.

As mentioned by others, Morrison was not willing to negotiate much or budge on the price. At the time Nolan Hill was also booming, as lots were being sold very fast. Not sure if that was a factor in addition to me having a realtor as well.

[403ep3]

Originally posted by Speed_69

Just wondering how much are you lowballing by?

I would like to start looking pretty soon but I don't want to go in with a ridiculous offer.

PM'd

Good luck!

Originally posted by Prelude_dude
I can share my experience, hopefully it helps.

I built with Morrison Homes in Nolan Hill about 2.5 years ago.

At the time we were comparing Morrison vs Jaymen.

Morrison had a promotion for 10K upgrade in our Kitchen, plus a nice floating fire place.
Jaymen had the finished basement promotion.

Promotions are a bit more now, but on par with the finished basement. My friends, apparently, got nothing when they were buying 1.5 years ago.

[naheedv]

Hi everyone


We are currently looking at some homes in Mahogany by Home by Avi. Has anyone dealt with them before? We have been working quite diligently with them to nail down all of our upgrades. We are trying to negotiate a finished basement along with their 40k in upgrade allowances.

Has anyone had any luck with them?


Thanks!

[yellowGTS]

They are a very good builder and are willing to work with you, however, a finished basement plus $40k in upgrades will definitely be rejected.

Think of it this way, you are asking them to give you $40k off, PLUS an additional $35k for the basement.

There is a middle ground to be found, but in reality, what you are asking is extremely low

[gwill]

Hitemp is such a flake. The guy purchased a Carlisle condo which caters to the lowest income bracket yet he's pretending like he was searching out houses... And now he wants to build an acreage? How does one go from buying the cheapest of the cheap to searching for house deals and now he's wanting an acreage?

Yeah listen to this champ... Mr know it all wanna be baller that can't keep his stories straight.


As to the topic at hand some of you guys with these ridiculous low ball offers when looking at brand new are so out to lunch it's hilarious. If someone came into my show home asking for $70k off a house id walk you right out the front door and tell you not to come back.

Glad to see the one poster is being reasonable and realizes for any offer he submits that it needs to be reasonable.... When you come in way too low they will counter higher just like they did to 403ep. The fact he thinks he can wait a couple years shows he's not the buyer a builder should waste their time with.

If a builder makes 20-25% margins on a house why do people expect to get 50-70k off a house? On a 550k home - 200k goes to the lot(no mark up) leaves a margin of 70k on a 350k house. And people expect 50k off?


What I find odd is how no one in the show homes for these areas ever chimes in... It's not like they aren't reading this.... It's just further proof some of the posters are so far out to lunch.

[403ep3]

Buddy, unless you work for these builders and know all their margins then you are just as out to lunch as any of us. I low balled hard, but not anywhere near 70k. To add, it's not like I am buying a 450k house either.

How I see it: if they accept, great, if they reject then great too because I keep my money in my pocket.

[Sugarphreak]

...

[InRich]

Here's what I did...

I asked the builder (sales rep) what his commission was. then I asked for half off. They'll say thats impossible. so I asked him to write me a personal check after the deal is signed. and he did. simple.

BUT...!

If I were looking right now. I would submit an offer on paper for whatever it is I wanted to pay for their home. Their choice if they wanted to accept. on a 500k home, I might want 10% off right now.

[gwill]

Originally posted by 403ep3
Buddy, unless you work for these builders and know all their margins then you are just as out to lunch as any of us. I low balled hard, but not anywhere near 70k. To add, it's not like I am buying a 450k house either.

How I see it: if they accept, great, if they reject then great too because I keep my money in my pocket.

I agree if they accept it great not a problem but if you expect to walk into a show home and demand a price then your out to lunch. Stop wasting your time and look at the used market instead where you might get luckier.

As for the new home industry i definitely know and understand it better then most as its been my full time job for the last 8 years. Margins will be 20-25% with maybe some product lines pushing 30% but that was before the tight market and latest incentives and lack of buyers.

Originally posted by Sugarphreak


We just came off the highest prices starting last summer, and builders tend to be much more slow to adjusting prices to market conditions.

As they get more desperate for cashflow, you will see more deals and prices being trimmed. The problem is that lots of these builders can end up in trouble financially and go belly up... so you are taking on more risk in pursuit of that reward.

You can certainly get more than that off a pre-build, but you have to do your research on what motivates them.

You said 2 important details here. First some builders are way slower to react then others and its extremely important to know what motivates a builder. Walking into a show home and demanding a price will get you laughed at from anyone i have worked with.

One company i know just started discounting their product in the last 6 months... up until then it was list price or get lost.

Knowing the builder is important... do they pay cash for everything or do they finance their construction? Do they push specs or just pre sell? How many areas are they in? Every builder has its strengths... and in some cases some builders have removed any liability to this downturn and gotten out of many areas. Those areas were sold at fire sale pricing if you got lucky.... I've actually seen one area where 3 of the 4 home builders closed down their show homes and had 1 builder move their office into their show home. That area would be the perfect area to low ball or get the best deal....

Also to keep in mind is how big is the builder, how reputable are they? The smaller they are the more likely they will be to negotiate.... as you mentioned there is so much that goes into it that its not as simple as going in and demanding a price.

People here seem to think you can pick any house any area and from any builder and get any price you want. LOLOLOLOL.

Originally posted by InRich
Here's what I did...

I asked the builder (sales rep) what his commission was. then I asked for half off. They'll say thats impossible. so I asked him to write me a personal check after the deal is signed. and he did. simple.

BUT...!

If I were looking right now. I would submit an offer on paper for whatever it is I wanted to pay for their home. Their choice if they wanted to accept. on a 500k home, I might want 10% off right now.

A sales person sharing their commission isn't unheard of but it depends on how good the builder pays their reps. If you use a Realtor their commission can be cut in half and can get you less... Commissions will vary from 1.5% up to 3% with some smaller builders... can also vary from a fresh build to a spec.

Again what people don't understand if a sales person refuses to write a deal its because his company will slap him around for bringing in an offer he knows will get refused... people need to listen to the sales rep as they know what may or may not get accepted. Take the offer to the area that makes the sales rep a bit unsure and write it there... a sales rep shouldn't write a deal he knows won't get accepted... especially if it means looking bad to his bosses. Its better to not write a low ball offer then look like an idiot and bringing in an offer they know won't get accepted.



Back to the topic though..... it surprises me new home sales reps don't utilize this forum and offer their services.

[Sugarphreak]

...

[gwill]

That relationship can make or break a deal for sure... If the builder hears or knows you low balled other builders they'll counter higher for you then the person who's been seriously looking. Coming back to the sales person on your second visit after speaking to them for an hour previously will give them all the info they need on how to handle your low ball offer.

If your ignorant and don't want to listen to the new home sales person and just want to low ball the crap out of a spec you should look for the realtors who list with the builder and save yourself a few hours of paperwork. Your low ball offer will be countered or laughed at anyways so you may as well take the route that requires the least amount of paperwork.

[The_1]

lots of good info in this thread
i'm going to look at a brooksfield home in symons gate this weekend
was looking at it back in sept/oct and they have jacked up the price by about $3600 but added 14K in free upgrades

[core_upt]

For anyone looking in Symons Gate, ALBI Homes is now building in there too.

[Quizzes]

Originally posted by naheedv
Hi everyone


We are currently looking at some homes in Mahogany by Home by Avi. Has anyone dealt with them before? We have been working quite diligently with them to nail down all of our upgrades. We are trying to negotiate a finished basement along with their 40k in upgrade allowances.

Has anyone had any luck with them?


Thanks!

My previous home was with Avi and overall a positive experience.

One thing to remember when building a new home is this - All the big box builders will have shoddy work here and there, but it's the service after possession that's important. We had some minor issues with our Avi home, but their response and service time in handling these issues were excellent.

[Kari_310]

Originally posted by naheedv
Hi everyone


We are currently looking at some homes in Mahogany by Home by Avi. Has anyone dealt with them before? We have been working quite diligently with them to nail down all of our upgrades. We are trying to negotiate a finished basement along with their 40k in upgrade allowances.

Has anyone had any luck with them?


Thanks!

I recently purchased a new home with them and can agree that the service afterwards was/is very good.
I was able to negotiate $20k off of a new build but my situation was a bit different, the townhome was already built and sitting on MLS, we tried low balling them but they wouldn't bite.
The sales rep said that they would rather eat the costs of letting it sit empty for months than compromise their reputation since the selling price would be revealed on MLS. Even though a sale is a sale, they would rather not discount their product just to keep their high reputation. I seen people walk away from a deal on the other ones that were still up for sale and they didn't chase after them.

[403ep3]

Bit of an update here:

So, we ended up looking more into one builder and were going over the numbers and didn't like the numbers they gave us. We ended up walking away as an offer wouldn't be written if it wasn't for the price they were already giving us.

We came back to the show home to grab our cheque and their opinion changed and wrote an offer that they thought would absolutely get countered. We opted with the "take it or leave it" and they took it.

Seems like new construction sales aren't as hot as the salesman say they are and you can definitely find a deal if you are patient enough.

Worst they can say is no...

In the process of going through the paperwork, finances, and have yet to waive conditions yet though. Tim Lacroix is very helpful though