Drees, Toll Brothers, Negotiable Base Price? (Dallas, Allen: construction loan, estate, insurance)

[kaisersose]

Hi All,

We recently moved into Allen and are checking out our options to buy a new home.

We went out and looked at some models and from what we have seen so far, we like Drees in Cumberland Crossing and Toll Brothers in Saddleridge estates. We are now trying to get an idea of how low builders go below the marked up price for an inventory home and also on the base price they quote for new construction. One source told me sometimes inventory home prices can be discounted by as much as 20%, but I am skeptical.

1) Does working with a realtor have benefits when buying a new home?

2)An inventory home (contains everything I need) vs. building an identical home from scratch (takes about 9 months). Which is more cost effective?

3) What kind of discounts can I expect on an inventory home vs. building one?

Appreciate all responses.

[MurphyPl1]

We built from scratch and even though it took longer it satisfied the control freak in me. We visited lots of other homes while we were building and saw lots of things that we would've had corrected but were for a spec home and wouldn't have to be disclosed. (and confirmed our decision not to go anywhere near a Grand)

But if you go through the homes under construction by that builder in that neighborhood and feel comfortable about the quality overall, you should be fine.

As far as having a realtor, I think it would be beneficial especially if you are new to the area. They will know the trends among the different builders as far as how they like to negotiate. And they'll know what the upgrades are truly worth and how much they can be negotiated. (Different things cost different amounts around the country). And they'll also have an in on how desperate a particular builder might be. Like right now, apparently Sotherby is in DIRE straights and has over a 120 spec homes they need to unload.

[AmishlandtoDFW]

Agree w/ Murphy that working w/ a local Realtor can help a lot when moving to the area & even if you're already established, I don't think it really costs you anything to use one: a good one will save you anything you perceive you're "saving" by buying direct.

Buying the inventory home will always be less money. If the builder's long on their position, they want to move them. Period. From what I've heard, most in the Metroplex have done a much better job of late of managing their inventory, but still, the closer to completion an inventory house gets, the more willing the builder is willing to deal on it, as the full interest payments start coming due... I haven't heard of either of your mentioned builders doing 20%: my realtor told me 5 was pretty easy to get, & sometimes 10, but that was basically a great deal. I wasn't able to find an inventory house that would work for us, so I couldn't test him on it. We're building w/ Drees now out in North Ft Worth. They didn't budge on the base price or the lot premium. Got a few things here & there, but not too much imo.

Way better discounts if you can purchase an inventory home that works for you: you said that you found one that has everything & can work--best deal in $$ will be that one. However, if like Murphy, you're a control freak or HAVE to pick everything, you'll pay more & get exactly what you want.

[kaisersose]

Thanks for the responses.

From what I see, things are different now compared to a year ago. In 2006, the market was doing just fine and construction projects for a number of spec homes were rolled out. But when these homes were completed in 2007, the market had gone cold and supply was in excess of demand. Builders had no choice but to offer deep discounts and bring their inventory down to manageable numbers. They also stopped building spec homes in 2007 and consequentially there are hardly any inventory homes today in the market.

As the number of inventory homes are lesser now compared to a year ago, supply is no longer in excess of demand and hence prices are higher with a lower possiblity of discounts.

[bricor]

Are you dealing with Beau at Drees? We bought from him last Aug. before he moved to Cumberland. He's a nice guy and was easy to work with.
I think we ended up getting about 13% off what they had our house listed at. It started being built as a market house but we bought it during the framing stage.
I'm sure it's totally different now as to what you can or can't get.

[Bigtex77]

Isn't Drees having a huge inventory sale right now?

[nsumner]

Originally Posted by kaisersose

Hi All,

We recently moved into Allen and are checking out our options to buy a new home.

We went out and looked at some models and from what we have seen so far, we like Drees in Cumberland Crossing and Toll Brothers in Saddleridge estates. We are now trying to get an idea of how low builders go below the marked up price for an inventory home and also on the base price they quote for new construction. One source told me sometimes inventory home prices can be discounted by as much as 20%, but I am skeptical.

1) Does working with a realtor have benefits when buying a new home? Having a Realtor work for you when you purchase a home from a builder doesn't cost you anything. They are paid from the builder's marketing budget. You will pay the same price for the home if you are represented or not. The person at the model home represents the builder and they are trained very well to overcome objections, and make the sale making you feel that you are getting a good deal, you need someone to look after your best interest too. Some of the benefits would includes a buyer's agent telling you which builder you should stay away from, may be they have a bad reputation or are known to cut corners. Builders do a lot of heavy marketing to Realtors and many many times we know how much discounts they are giving on their homes. Most of the time, this is not disclosed to an individual that doesn't ask. A buyer's agent will counsel you on which floorplan would be best for resale, as well as which upgrades are worth having the builder do vs having them done after closing. Your agent can advise you on your loan program, many builders will give you a discount but they will require you to use their lender/title company and insurance company to get the discount. A buyer's agent will give you comparables on similar homes that sold in the community.

2)An inventory home (contains everything I need) vs. building an identical home from scratch (takes about 9 months). Which is more cost effective? No brainer here, the inventory home is the answer. Every day that it is on the market, it costs the builder money. They will negotiate on the price. It may be more difficult to negotiate certain items in the house that you want changed, but if it's a deal breaker, let them compensate you for compromising.

If you build from scratch, you pretty much can't negotiate anything. You would be lucky if you are able to get any kind of discount at the design center. You may be able to get a discount on a premium lot.

3) What kind of discounts can I expect on an inventory home vs. building one? (You would be amazed at how many people think that they can't negotiate the sales price with a builder) There is no formula, but never pay sticker price. The discount varies from builder to builder and community to community. It will depend on how long the builder has been there, how many lots are left. Most builders will give the more discount in the middle of the month March/June/Sept/Dec. They want you to close by the end of that quarter to meet their forecast or plan.

Another thing, don't limit yourself at looking at new homes only. There are many many homes on the market that are resale that are only a couple of years old, that the owners upgraded a lot and they have to sell for whatever reason. You can get a good deal on a resale too.

Also, 20% discount is doable if it's a close-out community. Some builders mark up their prices to begin too and then present to the buyer that they are coming down in price soooo much like 30K or plus... but that's not a discount if it was overpriced to begin with.


Appreciate all responses.

Sorry for the long message, I tend to get passionate about certain subjects.
Good luck,

Naima

[Amyund]

I seldom see a builder negotiate off the base price. Most incentives are given towards upgrades on a build job, or a lot premium. An inventory home is always less expensive than building an identical home with the same upgrades, since const. costs always go up, and builders don't like paying on construction loans on inventory homes. Incentives can very by location, even with the same builder. Most builders have different divisions too..like the Dallas, or Ft. Worth division for example. A builder like Drees for example, might have more incentives on the Dallas div./vs. the Ft. Worth Division.

A new home is always more energy-efficient than an older home - even one built a year or two earlier. Government regulations regarding energy efficiency continue to change each year, sometimes more than once a year. Ex: Higher seer rating for AC units, better grades of windows (vinyl), tech shield.

To answer your question...In regard to working with a RE agent, some agents/realtors have relationships with builder reps that give the agent bottom line pricing. This allows the buyer to know that they have gotten the best deal. Also, make sure your agent is knowledeable of the NEW home market. A buyer's agent never costs you a penny, and they take care of alot of things for you like: negotiations, walk-throughs, financing, inspections, etc.. So, if you are busy, I would opt for a RE agent to work on your behalf. Good luck with your home buying!!Blessings..Amy

Moderator: I'm not soliciting business, just sharing my experiences with new home builders, and answering questions by poster. Amy

[allenresident]

Hi All,
I have had the displeasure of dealing with Mr. Beau at Drees home in Cumberland Crossing. The guy seems to be okay to work with until you start negotiating. I happened to mention to him that the price of home/SqFt which he is quoting me is much higher that the average price of drees homes in that community (Welcome to the Collin Central Appraisal District).
This thew him in a totally different zone altogether. I really did not like him mentioning that "we were wasting his time". This is not what you would expect when you are buying a 500K house in dallas area. I would assume that negotiating is part of the sales process and he is getting paid for this, I think I wasted a lot of my time working with him.

Take my advice guys:
[1] don't deal with him.
[2] look into some other community ... really hate the access rode to cumberland crossing.
[3] Try Saddlerige or Saddock park ..

My 2 cents !
Allen Resident.

[Big G]

Toll Bros. usually prices their inventory homes aggressively. They stay on top of their inventory and don't let it get out of hand, like K. Hov., Sotherby, and others have done.

What they do is price the house at $X and see if anyone bites. 2-4 weeks later, they'll cut the price by $20K and look for action. Repeat until sold. They are continually chopping the price so that it will sell eventually, rather then putting a phony high price on it and waiting for a sucker, or someone to chisel it down to its true value in negotiations.

So I wouldn't expect them to chop off a whole lot from what they're asking. Maybe 10% if you're lucky - it really depends on how long the specific house has been on their books, or if they're in closeout.