Closing Cost Negotiations in the Austin RE Market (West: comparable sales, sales) - City-Data Forum

XLadylawX · 08-18-2010, 06:47 PM

Please do not tell me to retain a RE agent.

I'm looking for tips on negotiating the closing costs with the Seller/Builder. What luck are people having with local Seller/Builders on this issue?

Here is my preliminary plan:

I'm going to ask the seller to pay all of the closing costs. I think the Seller/Builder is likely to counter with a request that I pay an increased price for the house in exchange for their agreement to pay all the costs. If this happens, I will then ask them to throw in backyard landscaping. Any thoughts? Any tips?

Please do not tell me to retain a RE agent.

Thank you.

TheyCallMeDerek · 08-18-2010, 07:32 PM

Well, you're negotiating, no set rules here. The only problem with raising the price to compensate for their addl layout of $$ through closing costs on their end is that the house has to appraise for that sales price (assuming you're financing). If it does then eveyone is happy and you're not paying over market value. The problem is you don't know what the comps are without help from a realtor. That being said it's a shot in the dark and no one knows what the numbers SHOULD be. OR, they could accept your offer and all's well.

It's my opinion that sodding/landscaping should be brought up from the beginning. You can sometimes have them agree to that before you make your offer. Then it's a done deal and not an item of contention.

centraltex_sara · 08-18-2010, 07:37 PM

Sounds like you already know and don't want to hear the answer that's likely to get the best results.

To address your specific questions, though, can you share more detail? Are you considering an existing inventory/spec home or one that is yet to be built? What city? What subdivision? Paying cash or financing? Through your own lender or the builder's? How quickly can you close? The answer to your question depends a great deal on the combination of these and other factors.

In some cases, depending on demand and comparable sales in the neighborhood, whether the home is already on the ground, how much the builder will make on the loan, and everything else, it might be reasonable to get all closing costs and title policy paid for, as well as a big price reduction and some landscaping to boot. In other cases, you might get a portion (say 1 or 2%) of closing costs paid and end up with some added upgrades.

Conditions vary widely across the Austin market, so you really have to know the neighborhood and the builder to be sure you're not overpaying. Also, it may be better not to respond to their initial counter with just a request for landscaping; I'd work on getting a reduced net sales price first, then ask for upgrades in response to their final counter. Austin-Steve had a great post about this in another thread this week.

ROY DUBOSE · 08-19-2010, 09:10 AM

Sounds like you already know and don't want to hear the answer that's likely to get the best results.

nice -- i like your style

XLadylawX · 08-19-2010, 11:10 AM

Quote:

Originally Posted by centraltex_sara

Sounds like you already know and don't want to hear the answer that's likely to get the best results.

To address your specific questions, though, can you share more detail? Are you considering an existing inventory/spec home or one that is yet to be built? What city? What subdivision? Paying cash or financing? Through your own lender or the builder's? How quickly can you close? The answer to your question depends a great deal on the combination of these and other factors.

In some cases, depending on demand and comparable sales in the neighborhood, whether the home is already on the ground, how much the builder will make on the loan, and everything else, it might be reasonable to get all closing costs and title policy paid for, as well as a big price reduction and some landscaping to boot. In other cases, you might get a portion (say 1 or 2%) of closing costs paid and end up with some added upgrades.

Conditions vary widely across the Austin market, so you really have to know the neighborhood and the builder to be sure you're not overpaying. Also, it may be better not to respond to their initial counter with just a request for landscaping; I'd work on getting a reduced net sales price first, then ask for upgrades in response to their final counter. Austin-Steve had a great post about this in another thread this week.

The house is a spec and we would like to move in within one week of completion. There are other spec homes in this community available that are sitting and waiting

. I think we are ripe for a good deal because the builder will be fairly desperate to get this house off the books.

I understand that an RE agent can give me the magical comps but I think I can make a fair assessment of the home's value by extrapolating upon information that is publicly available.

The builder has an advertised price on this spec home however, without any negotiation, the builder has already agreed to come down $25k off that price. The whole $25k discount thing is just a gimmick; you know it and I know it. So operating from the price the builder has already told me he would take, I'm going to undercut that with an offer of 3% off that price. In formulating my offer, I'm concentrating on square footage price plus a reasonable premium for a new house. I am hoping the seller will be pleased to get this house off his inventory in a relatively short period of time.

Thank you for your valuable feedback.

TheyCallMeDerek · 08-19-2010, 11:25 AM

Builders expect to have houses on the ground at any given time, it's when they have LOTS of built houses vacant and waiting that puts them at a disadvantage. Also, there's nothing "magical" about comps, but they are REAL numbers. Publicly avaliable numbers could only be asking prices and tax information (which has nothing to do with market value). Tax information in a newer subdivision might only show taxes on the land....so if one address shows $25k appraisal and a list price accross the street is $320k will you offer $172k? A bit extreme I know but it begs the question.

FalconheadWest · 08-19-2010, 11:50 AM

You "only" want 3% off their asking price? The builder spotted a sucker a mile away!

XLadylawX · 08-19-2010, 12:02 PM

Quote:

Originally Posted by FalconheadWest

You "only" want 3% off their asking price? The builder spotted a sucker a mile away!

Excellent feedback.

So 3% plus closing costs is a sucker deal? A'right, I will ask for more.

woodinvilleguy · 08-19-2010, 01:11 PM

Quote:

Originally Posted by XLadylawX

Excellent feedback.

So 3% plus closing costs is a sucker deal? A'right, I will ask for more.

For use we originally offered; 86% of the asking price for our new construction and ended up at around 91% of the asking price. ours wasn't a spec so we were able to play games with the incentives that they wanted to give. Having comps is very helpful to state your case, we also bought 2 years ago so the market was different.

misswonderland · 08-19-2010, 02:32 PM

I was able to negotiate $65K off of a spec home (recently finished) and 3% closing costs. I closed within a month. Ask for more....all they can do is say no! I did not use a agent. I find if you talk with other people who live in the community and see what has sold recently you will know the value of the home. Plus the builder told me (off the record of course) that if I didn't use an agent I would likely be able to negotiate a better deal....and I did!