low-balling builders (or not) in buyer's market (flat fee, sales)

[devongirl]

I hope someone can help with my questions. Friends have just purchased a new home in one of the new golf course communities in the north of the city. I was pretty surprised to hear they only got it for $9k less than asking price.(they offered $15K less and accepted the builder's counter) Is that the norm with new builds? I assumed one could get a much better deal with a flooded inventory and the market in the dire mess it is in.
My family is moving to COS shortly also so I am very curious about how the market operates there. Our friends were also told there is only one counter between buyer and seller. How is that? Who determines that rule? Where I live, on the west coast, we can counter numerous times till a deal is agreed.
Any info. is appreciated.
Thanks

[Bideshi]

They agreed to the price so that's that. If people insist on buying into a declining market, it's on them. Caveat emptor.

[Bob from down south]

Originally Posted by devongirl

Friends have just purchased a new home in one of the new golf course communities in the north of the city. I was pretty surprised to hear they only got it for $9k less than asking price.(they offered $15K less and accepted the builder's counter) Is that the norm with new builds? I assumed one could get a much better deal with a flooded inventory and the market in the dire mess it is in.

I would suspect one could get a much better deal, especially if they're willing to wait a bit, and have some flexibility in what/where they want to buy. It all goes to negotiating skills of the buyer and his/her agent...and patience. If somebody gets laser-locked onto a particular house and the builder can sense that, there won't be much negotiating going on.

Originally Posted by devongirl

My family is moving to COS shortly also so I am very curious about how the market operates there. Our friends were also told there is only one counter between buyer and seller. How is that? Who determines that rule? Where I live, on the west coast, we can counter numerous times till a deal is agreed.

There is no such rule. Sounds like somebody had a hungry realtor running them around coaching them in a way that'd get a deal closed quickly...to benefit the realtor. Moral of the story, choose your counsel well, because the bad ones will try to steer you where they want you to go, and that may not be in your best interests.

[2bindenver]

The rule is for written counterproposals. After one counter, there needs to be a new contract written.

What a willing buyer is willing to pay a willing seller is specific to that property. There is no rule of thumb, one builder may take $15,000 less than asking and another only $5,000 - same with individual sellers. There is no rule.

[Luke9686]

I agree with 2bin's analysis. Although, I will say in this market even a $15K "discount" is not much. You should never buy a personal home the way you would buy an investment.

And to the poster that doesn't believer in buying in a declining market, as an investor, there is no better time to buy. If you buy when everyone is buying you will get no deal. If you buy when everyone is selling, deals are all over!

[Bob from down south]

Originally Posted by Luke9686

If you buy when everyone is selling, deals are all over!

Agree. And for that I counsel folks to wait another 6-24 months at least. Gonna be a whole lotta sellin' goin' on.

[wink182]

About buying in a declining market...it's kind of like playing the stock market in a decline...if you try to time the bottom, it's like trying to catch a falling knife. That said, I think anytime between now and 1.5 years from now is not a bad time to find a bargain!

FYI, we bought a new house last october and got them to give 5% of the houses value in closing costs and upgrades. The market has gone down since then.

[pablo-me]

Realtors' who tell you to buy now....are as dirty as 5 day old underwear.

[Luke9686]

Just to let you know I'm not a reator, nor dirty. I'm an investor, so playing the game I keep my best interest at heart. I have no hesitations about buying now. People are still buying. More people are selling and prices are falling.

If I had to give someone advice, it would be don't buy at market or list price. Buy at least 20% below that. In todays market, BUYERS can write their own rules. As a buyer today, you dictate what youre going to pay, how youre going to pay, and when you're going to pay it. Sellers, banks, etc. are NOT in the postition to be dictating the sale. If you're a buyer, make the rules dont follow them.

[Bob from down south]

Originally Posted by Luke9686

Just to let you know I'm not a reator, nor dirty. I'm an investor, so playing the game I keep my best interest at heart. I have no hesitations about buying now. People are still buying. More people are selling and prices are falling.

If I had to give someone advice, it would be don't buy at market or list price. Buy at least 20% below that. In todays market, BUYERS can write their own rules. As a buyer today, you dictate what youre going to pay, how youre going to pay, and when you're going to pay it. Sellers, banks, etc. are NOT in the postition to be dictating the sale. If you're a buyer, make the rules dont follow them.

This works if you have, you know, actual money. If you do, then you are in a position of real strength, generally speaking, but not with all sellers on all properties in all markets. So if you're willing to walk away in a heartbeat from a seller that's still in love with his house at bubblicious market peak pricing, you can do OK. One of the traps buyers fall into is falling in love with a house and losing their negotiating position when they forget that there are lots of suitable houses out there to be found.

That said, one needs to remember, at all times, who in the game is motivated by what. Realtors want a sale...any sale. They don't get paid until that happens. And realtors--even buyer's agents that are working for the buyer rather than the seller--are paid as a percentage of the sales price. So in theory, your agent should be negotiating the lowest possible price for you, but if he's too good at it, he loses money. So your realtor's advice should always be considered with that inherent conflict of interest in mind. Same goes for a mortgage broker who's getting paid what amounts to a legal kickback called a yield spread premium by the lender--and he may be getting an increased YSP to steer you into a loan that has traps (prepayment penalties, hidden fees, rates above what you might otherwise qualify for etc) that can cost you big. You should ask your mortgage broker to disclose up-front what he's getting paid, and if he won't, get up and RUN out of there.

I'm an advocate for using a RE attorney even in places like Colorado where it's not always customary. He's paid a flat fee by you...he's not motivated by sales price, loan terms, or even whether or not the sale closes.

All that said, I still recommend waiting for market forces to work in your favor. Just read an interesting think piece on RE market prices:

Discussion of a "Bottom" One Year After a 7 Year RE Market Run Up is Pure Ignorance!