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Old 08-25-2007, 07:17 AM
460 posts, read 1,668,265 times
Reputation: 142


New to this forum. Thanks in advance for any advice you can give -

any tips for negogiating for new construction in Montgomery County, specificially the Clarksburg developments?

I know the market around here is not as depressed as say, Florida, but I think builders still have a lot of excessive inventory to move and there are so many existings on the market.

I have a situation in where I could possibly negogiate a good deal because the lot I wanted was sold off to another developer. Could have been a bait and switch but so what, they are trying to get me to buy and I won't buy unless I get exactly what I want.

I was thinking of going for prepaids on taxes and either insurance or hoa for 2 years plus buying down the interest rate. What else should I ask for?

Other questions -

do builders have monthly sales quotas and is the last day of the month the best to write a contract (similar to car sale quotas?)?

what is the profit margin for builders on options - I'm thinking if you bought the base model with NO options whatsoever, they still make a profit, so its a matter of a lower versus higher profit margin on a particular house when negogiating.

Should I ask for the 3% they built into the price for a realtor back, since I have no realtor with me - and on the base price, or the total price (which is how they would get a commission on an existing - total price of sale).

Thanks again!
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Old 08-25-2007, 07:28 AM
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Is the house already finish building? if not you can have them upgrade it for you or add some figures that you want them to add on. They have done this for my neighbors. Builders have to sell all their inventories before the 2 yrs expired. The bank will come asking for their money so they have to get rid of the house.
I would ask for a large discount on the home. I builder is no different then a home owner. Start the asking price low because they will counter you. Builders usually can loose about 30k-50k off the price of the home without a problem. I would lower my asking price by 50k.
Buiders are desperate right now so I would make a desperate offer to them. You will be surprise what they will except.
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Old 08-25-2007, 08:22 AM
460 posts, read 1,668,265 times
Reputation: 142
Thanks for your response,
the house is not built yet. they made a major boo boo with the lot.
i was thining of proposing the following:

2 years propety taxes/hoa prepaid
buy down interest rate for 2 years
3% realtor comission that will not be used taken off the price.
$90K in options for $30K
house to sell contig. or they do a gauranteed buy b4 settlement if it hasn't sold
financing cont.

They have a spec house that they are trying to unload but that is not what we want - totally different model. However, they are trying to sell us this model - the midrange of 3 models - for the same price they are asking for the lower model already built (with every possible upgrade in it, of course).

Do builders have incentives at the end of the month to sell their houses - lie car dealerships trying to make a quota by the end of the month. Next wee is the last week in August. . .
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Old 08-25-2007, 09:12 PM
1,389 posts, read 5,610,009 times
Reputation: 286
Is the name of the Builder Charleston Homes.
When you buy down interest rates, Its stays the same rate until the rate adjust. So if you have a 30yr fix buy down,the rate is fix at the buy down rate for 30yrs or until you refinance or sell.

90k in options sounds good to me.
I know the Builders have to sell all their inventories before the 2yrs,which is how long the bank lend them the money for.
The Real Estate agents who are the sale associates make commission off each sale. They might have a quota for each month but the builder jus thave to sell all home before the bank comes after them.
Ask for 4% of the sale price for your closing cost.
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Old 08-26-2007, 07:28 AM
460 posts, read 1,668,265 times
Reputation: 142
Thanks again for the response -

I didn't realize the rate buydown stays put until a sell or refinance. I see new home builders - like Lennar - advertising rate buy downs I guess like a 3-2 buy down (I thin they are advertising in Md right now 3.99 1st year, 4.99 2nd year, 5.99 for remainder, fixed).

So, that's why I assumed I could only get a buydown for 2 years. But, hey, I'll take it for the life of the loan.

We would have to do an 80-15-5 to avoid the PMI.

The builder is Michael Harris. Anyone familiar with them? In fact, I may put in another post just to see if I can get info on them.

Their preferred lender called us yesterday and was working up some scenarios and was going to talk to the Long ad Foster guy working with them. It was a saturday so I'm sure he was busy with people out shopping, though it was so hot. So we'll see what happens this week. The payment he was quoting was so far out there that right now it looks like a dead deal.

Ryan homes in our area is doing a guaranteed buy program if you have a house to sell. They are building in the same area as Michael Harris in Clarksburg. Should I go for that too? Basically, I know I would get what I need to get into the new house and no more but that may actually work for us, as we have equity but not a WHOLE lot of it.

hows this-

4% closing costs
3% that would have gone to a buyers agent knocked off the finalized price
rate buydown for life of loan
subject to sale contingency OR guaranteed buy of our townhome by M.Harris
prepaid property taxes and HOA for 2 years.
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