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Buying new homes from builders

llee

llee

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Jun 22, 2008
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Hi,

Does anyone have experience buying new homes from the builders? The price is clearly listed, and it includes this and that (appliances, some upgrades). As a buyer, what negotiation power do I have?

They are the ones drafting the Agreement of Purchase and Sales. Can I request for a lower price?

What if I have a buying agent? Does my negotiation power drop because the builder`s listing agent needs to pay my buying agent 2.5%?

Thanks,
Lucas
 
QUOTE (llee @ Sep 28 2008, 10:16 PM) Hi,

Does anyone have experience buying new homes from the builders? The price is clearly listed, and it includes this and that (appliances, some upgrades). As a buyer, what negotiation power do I have?

They are the ones drafting the Agreement of Purchase and Sales. Can I request for a lower price?

What if I have a buying agent? Does my negotiation power drop because the builder`s listing agent needs to pay my buying agent 2.5%?

Thanks,
Lucas
its like ANY other purchase. EVERYTHING is negotiable .. especially right now: upgrades, terms, VTB, timelines and .. price !

And like any deal: both parties have to agree .. which they may or may not !

You can always ask !

in fact, keep asking until they say: NO or GO AWAY. So if you have not reached that point, you`re probably paying too much !
 
QUOTE (thomasbeyer2000 @ Sep 28 2008, 09:31 PM) You can always ask !

in fact, keep asking until they say: NO or GO AWAY. So if you have not reached that point, you`re probably paying too much !

LOL. Good tip Thomas!
 
I just called up the builder`s agent. She said the price has little room for negotiation - that means there`s still negotiation possible.

Thanks for the tip Thomas.
 
When the seller says they have little room for price negotiation that is simply there starting point. It is up to you to find the bottom and to do that you must start low regardless of how much room they want you to believe they have to move. Remember everything is negotiable.
If your agent is reluctant to take your offer to them change agents. You need an agent that supports your negotiating tactic and is willing to work to support the offer.
 
I am a builder, albeit in a small town. I have a duplex for sale one side with finished basement (easy non conforming suite since we built it with that in mind) and the other unfinished. We had it for sale ourselves for two months before listing it for another two. We have just dropped our price 14K per side. What I am saying is that yes a builder can be motivated too. In our case we have a spec LOC and a Custom Built LOC. Our spec line gets tied up when we can`t sell, the bank gets nervous, Especially now, and we wonder what we will do next without a freed up LOC. So it depends on the builder. Maybe the big guys can carry longer, but at the same time they have more to lose. No one wants to lose that buck that is on the table, therefore they say not much room for negotiation, but my bet is it is just a front. Try the waters. The worst they can do is say NO!

Mark
 
QUOTE (markbrad @ Sep 29 2008, 09:14 PM) ... Maybe the big guys can carry longer, but at the same time they have more to lose. ...
Exactly ..many (big) projects closing shop right now all over the place: Canmore, Kelowna, Vernon, Vancouver Island, Victoria .. so yes NOW is the time to ask for concessions ..
 
QUOTE (llee @ Sep 29 2008, 12:16 AM) What if I have a buying agent? Does my negotiation power drop because the builder`s listing agent needs to pay my buying agent 2.5%?

Thanks,
Lucas

I would also like to add my two cents as a REALTOR if I may. Some Builders (if cooperating with agents) may pay a flat rate ($1000.00 for example) instead of the 2.5% buyer commission. I would say ask questions because if you signed a Buyer Agency Contract and it says that you agree your Realtor should be permitted to collect 2.5%, then technically, you`re on the hook to pay the difference.

Read your Buyer Agency Contract carefully.....

When I`m working with clients in Ontario, I write in the comments "or as is listed on the MLS agreement" because I`m about the relationship and working with clients over and over, not coming after my buyer clients for commission.
 
I would strongly recommend against buying directly from developers. My experience is that many developers promise more than they deliver. Many new buildings are loaded with short-cuts and code violations (often behind walls and difficult to detect). Once uncovered you usually have little recourse and the `Builders Insurance or Warranty` has virtually no teeth.

Better to buy a building or house that is at least 5 years old and use a good building inspector. Many code violations and construction ills have been discovered by then and the inspector will add to ensuring there are no major problems. Especially when dealing with developers follow Alberta`s `Buyer be Aware` - no kidding!

In my books, building from a developer is worse than buying an IPO (initial stock offering).

Hope this helps.
 
QUOTE (thomasbeyer2000 @ Sep 29 2008, 09:48 PM) Exactly ..many (big) projects closing shop right now all over the place: Canmore, Kelowna, Vernon, Vancouver Island, Victoria .. so yes NOW is the time to ask for concessions ..


In Alberta we have a builder realtor cooperating agrreement were they gaurente that the price will not drop becaus of using a realtor

There are many good advantages to using a realtor in the Negoation. A good agent has done this negoation a number of times and understand the tricks that the builder can play,, I have 2 clients that bought on there own, and now I am trying to resell these properties,, and having a difficult time because of location and other design issues i could of straighened out at purcase time.. it is going to cost them both 30 to 50 k on resale

My advice is find a good agent and let him help with the negoation,, good luck,, if you need help findiong one let me know what city you are in
 
I agree with gwasser, the build quality of the new homes are very poor, I have owned a new house and I can tell you that it felt like i was living in a cardboard box, poor construction and even poorer material being used. Stay away, and as for Tarion forget about them enforcing anything. I sold my new house 6 months ago and I am still wating for Tarion to call me in regards to an ongoing problem I had with that house..lol..so much for enforcement
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QUOTE (bigbabba @ Oct 3 2008, 05:50 PM) I agree with gwasser, the build quality of the new homes are very poor, I have owned a new house and I can tell you that it felt like i was living in a cardboard box, poor construction and even poorer material being used. Stay away, and as for Tarion forget about them enforcing anything. I sold my new house 6 months ago and I am still wating for Tarion to call me in regards to an ongoing problem I had with that house..lol..so much for enforcement
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I think it is important to point out that not all builders/developers are alike. In the past five years I have built a home with three separate builders and have had three very well built homes. Building/buying new homes is much like anything else; you get what you pay for. If you choose to buy from the cheapest home builder you will receive the cheapest product. If you research the company`s and check their references you will find the better builders.

On the other hand, I have also experienced the lack of service from some builders. I built during the boom period in Calgary and Winnipeg and learned very quickly that the squeaky wheel gets the grease.

I have also used a Buyer`s Agent for two of the three homes and would do so again. Our agent was able to guide us to the best properties and away from future deterrents. I would highly recommend a Buyer`s Agent if you are every considering resale.

Good luck,

Nick
 
QUOTE (NICKEED @ Oct 20 2008, 10:51 PM) I think it is important to point out that not all builders/developers are alike. In the past five years I have built a home with three separate builders and have had three very well built homes. Building/buying new homes is much like anything else; you get what you pay for. If you choose to buy from the cheapest home builder you will receive the cheapest product. If you research the company`s and check their references you will find the better builders.

On the other hand, I have also experienced the lack of service from some builders. I built during the boom period in Calgary and Winnipeg and learned very quickly that the squeaky wheel gets the grease.

I have also used a Buyer`s Agent for two of the three homes and would do so again. Our agent was able to guide us to the best properties and away from future deterrents. I would highly recommend a Buyer`s Agent if you are every considering resale.

Good luck,

Nick

Well for one, my personal house was bought from Mattamy Homes, who won home builder of the year for the last several years now..so your argument for a poor builder dosen`t apply here. Secondly, unless you are a tradesperson who understands construction at a full spec, your not going to be able to really dissect a house as far as workamship and material used. You may think you have a great built house but wait 15 years and see how it holds up. A house looking good with a great layout is going to be alot different then what is behind the walls, on top of your roof and the concrete used for your foundation. Take a townhouse or semi for instance, 20 years ago they used cinder blocks between dividing walls, now they leave a space of one inch with insulation. You want to listen to your neighbours every move, buy one of these and then tell me how great your house was built.

I have a number of friends who bought new homes, and yes they look nice but they all had their share of problems, snow in the attic, cracked foundations, leaky windows, no insulation behind walls and I can go on for ever. Some of this should never happen or fail especially in the first year of ownership. I can understand foundation settleing and cracking but it happens way too often, the only reason is poor material being used.
 
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