Negotiating with home builders (Royal Oak, Martin: credit, budget, job)

[llm376]

We are beginning the process of negotiating a purchase price with a home builder. The home prices at $433,000, but they are offering $30K in upgrades, making the cost of the home $403,000. Being in Michigan, we obviously know we should be paying less than that because the home will depreciate more by the time it is built. Does anyone have any suggestions on how to negotiate to a lower price?

Thanks!

[Coldjensens]

Yes. Offer them 300,000 and tell them to keep the upgrades. You can usually get them done cheaper yourself if you shop around.

[jacka$$]

You can buy a built home that was going for 400k for 200k and take your pick. Why would you spend top $ on a home you are building? The builder can see you coming.
I would take what the value of the home will be when finished and deduct 30% and offer that.
If the builder does not want to play ball the one out of work down the street will.
In the end it is your money to waste.

[burgler09]

We tried hiring a builder when our house was built 6 years ago but decided to contract it out ourselves and saved 150k

[Coldjensens]

Our experience was contrary. We had a huge restoration/remodeling project. It cost more than building a house to begin with.

We contracted our work ourselves and lost as much or more than you saved.

If you contract yourself, the trade contractors do not prioritize your work like they will for a builder. You will never give them any more work, where a builder or contractor is a source of business forever. Most do not seem to care at all about referrals, especially when they have a choice of pleasing you, or pleasing a builder/contractor. They will ignore your project and cater to builders. They will put their worst workers on your project. they think that they can cut corners with you and get away with it. When you catch them and they learn that they will not get away with it, they will argue with you endlessly. Tell you that their screw up is somehow your fault, or just not show up again. You cannot reasonably sue them for $2,000 - $5,000, especially since most of the trade contractors will treat you this way. You would end up doing nothing but small claims lawsuits. You can fire them, but the next guy will be the same. You can lean on them, hold back money anything you want, it will do no good. They will not care. Your project is just filler work.

We especially had problems with the less specialized trades. We went through eight plumbers and still did not get anyone who finished the work or did it properly. We went through two electricians, and then I ended up doing most of the work myself. The window guy mess up and took six weeks longer than promised; the insulation guy messed up, had to come back three times, and still messed up; the HVAC guy did excellent work, but took eight months to get it done in tiny bits and pieces; the drywall guys took forever to show up and then managed to mud everything in the house, their finish job was poor and I ended up having to re-do a lot of the finish and/or hire someone to do it. The carpenters did OK but did not hang any doors correctly. The tile guy flaked out, the grader did about 60% of the work and then simply would not come back even though he lives nearby and I bugged him incessantly. The next guy did about 20% and then disappeared.

The flooring guy was marvelous (Martin flooring from Royal Oak vicinity). Most of the painters and the wallpaper lady were great, but expensive. The carpenter/G.C's brother ended up doing the tile after the tile guy did not show up and did a good job, although I had to make them re-do part of it and they never sealed the grout, cleaned off the spilled grout or did the caulking (more work for me to do myself).

They also seem to think that a quoted price is just a ballpark estimate and they can just invoice you for whatever they want to, even if there are no changes. Then when you argue, they want to negotiate their overcharge. If you are ever not there to supervise every minute of the work, many will do short cut cheap work and then leave you with something that is not what you agreed to, but works and too time consuming to tear out. Then you get to dicker over a credit for the cheapened work.


Of course if you order the materials, nothing will show up on time and you will get prime examples of every incredibly creative excuse int he book. You will also have to deal wth shipments of absolute c**p lumber which cannot be used, and then pay the carpenters to stand around while you wait for another shipment, t oyou have to scurry around finding pick up work for them to do.

[Driller1]

I can tell you about well drillers. Many times I just tell people to call round, someone will tell them what they want to hear. Some home contractors are very responsible but, most are looking fro the bottom line. They put 1/2 horse power pumps in deep wells, with small pressure tanks for huge houses. Sure when the home owner turns on the water, it comes out the tap. Then when they are living there, using more than one tap, they are disappointed. The pump short cycles and does not last. They call us in about a year to fix what we can. Sometimes it is a new well. Manufactured homes are the worst for cheap well systems. Always hire your own driller and septic person. Check out the new SQE or constant pressure systems, they are amazing! They are computer controlled.

[Bydand]

Coldjensens, sorry you had so many problems. Not all of us are like the hacks you met on your job.

[Driller1]

Originally Posted by Bydand

Coldjensens, sorry you had so many problems. Not all of us are like the hacks you met on your job.

AGREED!! Most problems start with just looking at the bottom line. There is one smaller home builder we work with, more than once we have went out on a job site checking our system on a Sunday afternoon and he has been there checking on the work of other subcontractors, and picking up trash. He will likely go out of business this year.

[scgraham]

Originally Posted by llm376

We are beginning the process of negotiating a purchase price with a home builder. The home prices at $433,000, but they are offering $30K in upgrades, making the cost of the home $403,000. Being in Michigan, we obviously know we should be paying less than that because the home will depreciate more by the time it is built. Does anyone have any suggestions on how to negotiate to a lower price?

Thanks!

Is this a production builder? If so, there are ways to negotiate.

[michiganalum]

Get yourself an exprienced realtor to go over the comps with you and negotiate on your behalf. The builder doesn't give you any perks for not having a realtor on your side - it's all part of their marketing budget.

We just purchased a new Pulte house and we were glad we had a realtor helping us out. We got a great deal.