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Old 05-03-2018, 01:38 AM
 
1,528 posts, read 724,410 times
Reputation: 2062

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This is why I would never buy a new home (except if i wanted to go the custom build route which I'm not inclined to do).

As others have said, buy an existing home (builder's neighborhoods and homes are all pretty much the same anyway). The owner would have paid for all the expensive upgrades and payback on those items is generally very poor in my opinion so there is a good chance of getting much of it for free.

This is how builders make their money so trying to have a strategy to avoid this is like swimming against a strong current. Upgrading later is not going to appeal to many or most people as a strategy - for obvious reasons. I think most just go to the showroom and lose their heads and overspend.
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Old 05-03-2018, 04:10 AM
 
Location: Cary, NC
31,590 posts, read 55,295,005 times
Reputation: 30145
Quote:
Originally Posted by kab0906 View Post
I spent about 3 hours today at the showroom of a builder we are considering. Omg do they ever offer the cheapest crap as your base items then charge a ton for 'upgrades'. For example, an upgraded towel ring was listed for $80. I checked online and it only costs $20. Seriously?

So, who here has built a home with a large building company and not been bled dry? How did you do it?
I just had this conversation with a young couple last night.

Most national builders advertise a bare bones price leader model.
Then you option up from there.
it is the most common model, and pricing is continually studied so trendy and desirable options are costly.

Don't want the dog lot that backs up to the freeway?
No problem. You can select a nicer lot. That will be a $5000 lot premium.

Plan to spend 10%--20% over the base price on options. And many of those choices are definitely high margin items.
Highest margins tend to be the stuff that you just cannot do efficiently or properly after you close on the house.
But, hardware and fixtures carry enormous markups, as you are seeing.

How to avoid it?
1. Buy a resale, where all that stuff is priced in and you don't see all the line items?
2. Buy the base model and break the builder's heart.
3. Don't upgrade inky-dinky stuff like towel holders. Do it later.
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Old 05-03-2018, 08:22 AM
 
Location: Northern Virginia
11 posts, read 3,775 times
Reputation: 13
Honestly, you should never go looking at new homes without having a real estate agent in your corner. It doesn't cost you anything, and a good agent will help negotiate upgrades for you. The builders know that agents bring buyers, so they often will work to keep the agent happy.
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Old 05-03-2018, 08:25 AM
 
Location: Florida
4,223 posts, read 3,517,937 times
Reputation: 9382
Ok.. ok... using the towel ring was obviously a bad example. I'm smart enough to realize to opt out of the builder grade and just buy my own.


But here's a better example: Upper laundry room cabinets: $2,200.00. Um... who are they kidding? *This* is the type of over the top markup that I want to avoid.


There has to be some way to negotiate that won't break the bank for such stupidity. I'm fairly handy, but I don't want to have to finish the house myself.
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Old 05-03-2018, 08:43 AM
 
Location: Canada
5,119 posts, read 3,633,578 times
Reputation: 13514
Make a list of things you will buy yourself and give it to the builder so he can work them into the plans.

There is NO reason a builder can't accommodate your choices and purchases when he knows what you've bought BEFORE hand. If you buy a 2 1/2 foot sink, and he's already made the vanity for a 2 foot sink, of course bad timing won't work.

He can then subtract what the sub-grade would have cost if he'd put them in instead.

Why put in sub-grade instead of putting good quality and what you WANT, right from the start?

We bought all our own:
ceiling and wall light fixtures
paint
towel rings, TP holder, towel racks
cupboard pulls
door knobs
plumbing: sinks, toilets, bathtubs
taps/shower heads, etc
kitchen sink/tap set
we chose our own doors, flooring, ceramic tile for shower surround, glass doors for shower and tubs

Yes, it's a lot of work, but so worth it when you get what you want installed right from the start.

Other than the paint and flooring, we bought everything online and had it delivered to our detached garage (which we built first). So much easier than trekking from store to store, and saved a bundle.
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Old 05-03-2018, 09:27 AM
 
10,265 posts, read 6,491,094 times
Reputation: 10837
Quote:
Originally Posted by kab0906 View Post
Ok.. ok... using the towel ring was obviously a bad example. I'm smart enough to realize to opt out of the builder grade and just buy my own.


But here's a better example: Upper laundry room cabinets: $2,200.00. Um... who are they kidding? *This* is the type of over the top markup that I want to avoid.


There has to be some way to negotiate that won't break the bank for such stupidity. I'm fairly handy, but I don't want to have to finish the house myself.
See that's crazy and not necessary, you can put shelves up temporarily and then invest in your own cabinets later.

You can ask if there are any negotiations or wiggle room in their pricing.

Some things are sold as upgrades that I think are dumb, like those textured walls. I saw one in a duplex and did not like the look. I'd rather have smooth drywall. Plus the texture is a problem if you ever need to make repairs.

They are not losing money on the base model, they are just making a lot of extra profit on the upgrades.
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Old 05-03-2018, 09:43 AM
 
Location: Henderson, NV
818 posts, read 483,670 times
Reputation: 2212
Quote:
Originally Posted by kab0906 View Post
There has to be some way to negotiate that won't break the bank for such stupidity. I'm fairly handy, but I don't want to have to finish the house myself.
Passing on a laundry overhead cabinet is not leaving something unfinished. The point is some of the options you want can be done later, outside the deal for less money by breaking the monopoly of dealing with the builder's design center.

There is very little to negotiate, but there are a few tactics that might lower your final price. Builders will incentivize to close out a community, end the fiscal quarter or year, and run promotions during slow sales. You have to get everything they are "giving" before you start with the options--which calls for timing in some cases.

The salesperson will shake their head when you ask for more. They will say "I can ask, but I don't think they will go for it, they are already giving big incentives". Then they call you back and say "I cannot believe it, you are the first one I've seen get anything extra during the gala extravaganza event...congratulations! This might be the best deal I've seen here." You feel victorious. The builder wants you to feel like you won something. They bake a few minor concessions into their price--that's all you are getting.

I did my own lighting (5 fans, 3 pendants), water softener, garage door opener, exterior door hardware, interior plantation shutters (ordered online and installed myself), closet shelving and crown molding. I had $15k in options credit and still easily got to $30k total in options to get a decent grade of cabinets, countertops, and flooring--little else.

I was represented by an agent. The builder is never disadvantaged in negotiating position.
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Old 05-03-2018, 09:56 AM
 
10,265 posts, read 6,491,094 times
Reputation: 10837
One thing I would go for if it's an option would be to have a laundry sink in the laundry room, or at least the plumbing for one, you don't even need the cabinets overhead, you just need a place to store some laundry detergent and dryer sheets.
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Old 05-03-2018, 10:06 AM
 
8,504 posts, read 2,387,119 times
Reputation: 8123
Just imagine walking into the Apple store and telling them "I know (from iSupply) that this phone costs you $209, so I refuse to pay you $899 for it. What can you do for me?

This is the same deal with a new house. Those buying a new house can't be counting pennies...they should look at total value and/or monthly costs (depending on their situation).

Heck, my 90K boat only has 10K worth of materials in it.

Options are easy. You either want them or you don't. Most new home buyers are (hopefully) not broke and the difference between a 250K mortgage and a 265K one probably isn't much.

Time is money. Some people would spend an hour on the internet figuring out which towel ring to buy.

Now - if you are like me and retired AND handy, it could be different. We buy everything (houses included) cash and we have lots of time.

But, as I understand it, many Americans are busy, busy, busy with jobs, kids, parents, responsibilities, etc. and - if I were in that situation now (our kids have long ago left the nest), I would probably spend the extra money and have everything as I want it.
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Old 05-03-2018, 11:31 AM
 
Location: Denver CO
18,972 posts, read 10,032,914 times
Reputation: 27745
I built with a national builder 3.5 years ago.

I took the options price list and created my own spreadsheet with every option I was considering. Then I priced out the cost of doing it myself afterwards, which didn't include labor costs and I'm not handy and would be using paid help to do most of it.

I also kept track of things that would be unduly onerous to do after closing so I could take that into consideration as well even if it wasn't a pure dollar comparison.

I was actually surprised that in some cases, the builder price was cheaper than doing something on my own - Decora switches and outlets for instance. I paid something like $150 for a whole house upgrade, and I couldn't have bought all the switches and plates for that price, never mind the installation. Same thing with upgrading to lever door knobs.

Of course on other things, the builder mark up was ridiculous - upgraded faucets for instance were like $3000 for the whole house, which is absurd.

For cabinets, I wasn't going to do that after closing anyway, but it turned out that when I was debating between two levels, going to the next level meant I got knobs and pulls and soft close drawers included, so that made the cost difference more worth it to me.

Overall, I am extremely happy with how my house turned out. I had just two things I would have changed - my builder didn't allow change orders, even to add something and increase the prices, so I'm managing to live with out them.

I had a fairly lengthy list of things to do after closing, most all of which is done. A few smaller items are on the agenda for this year and one planned not so small item will be in another couple of years. I didn't like any of the quartz or granite the builder offered so I got laminate counters, knowing I'd upgrade in about 5 years. I'm just starting to plan that out now.
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