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We signed a contract to buy a townhome in Atlanta last October, and put down a non-refundable $7500 deposit. The home is scheduled to be finished in late March.
Yesterday the builder called and said they are planning to drop base prices by $20,000 in order to spur sales. They said they decided to give everyone under contract a $10,000 discount off their negotiated purchase price. They also said they considered not giving us the discount, since we negotiated the best deal of anyone currently under contract. But in the end they granted exactly $10k to everyone.
Not sure how to feel about this. I'm disappointed they had to drop prices, but on the other hand the extra $10,000 off is a nice bonus. What would you guys think in this type of situation? Do builders typically do this when they need to drop prices? My agent said she has never seen anyone do that.
I would think "That's Great!" They didn't have to do that...they could have just lowered the prices and you would have been sh*t out of luck, so to speak. I think it is wonderful that they are doing that. UNLESS, this means they are replacing certain items for cheaper versions...so if standard was corian, maybe they will be putting in formica. I don't know. I would ask to be sure that what you signed for is still being put in...other than that, I think it is great.
The only neg I see would be the continued lowering of prices....
Once your OTP was accepted, they surely didn't have to give the discount.. Sure was stand up of them to do so. Of course, they don't want current owners with a bad taste in their mouth either, so the builder was between the proverbial 'rock and a hard place'.
Sounds like the builder is desperate for buyers. I doubt they'd want you to back out of your contract and stick them with another spec home that they have to sell for $20K under their previous price. Perhaps if you made them aware of your understanding of this fact, they might reconsider their pricing policy and apply it uniformly to all customers both new and existing?
After all, the extra $10K reduction for new customers is now the market price for your home. If you have to give up your $7500 deposit to take advantage of this $10K lower price, you still come out ahead...
Sounds like the builder is desperate for buyers. I doubt they'd want you to back out of your contract and stick them with another spec home that they have to sell for $20K under their previous price. Perhaps if you made them aware of your understanding of this fact, they might reconsider their pricing policy and apply it uniformly to all customers both new and existing?
After all, the extra $10K reduction for new customers is now the market price for your home. If you have to give up your $7500 deposit to take advantage of this $10K lower price, you still come out ahead...
This would probably be too risky. When we signed the original contract, we were able to negotiate $33,500 off list price. Yes, we could back out of the contract, forfeit our deposit, and ask to re-negotiate using the new lower list price. However, they would likely be unwilling to go $33,500 off the new price. So I think it makes sense just to stick with the current contract and accept their $10,000 goodwill offer.
There are builders who lower their prices and don't offer any discounts to the buyers who are already under contract. Your builder shows goodwill. Accept the rebate and hope that prices won't continue to go down much further.
This happened to us when we were building. The base price of our house was dropped $7,000 after we signed the contract. We called our sales rep and complained. She talked to her boss and called us back and said they would take the $7,000 off our contract. I'm not sure if they did that for everyone, or only the people who complained.
This would probably be too risky. When we signed the original contract, we were able to negotiate $33,500 off list price. Yes, we could back out of the contract, forfeit our deposit, and ask to re-negotiate using the new lower list price. However, they would likely be unwilling to go $33,500 off the new price. So I think it makes sense just to stick with the current contract and accept their $10,000 goodwill offer.
Oh, didn't know how big of a cut you got in the initial negotiation. That does make a difference Still, it might not hurt to make them squirm a bit and see what happens. I really doubt they'd cancel on you just for probing around a bit to see how soft they are (it's not 2005, after all).
Recently in the Tampa area a friend of mine told me that the builder had raised the incentives althought when they went under contract, the duilder told them the price wouldn't be any lower. I suggested to tell the builder that he would drop out of the contract unless the builder would do something with the price and they paid $ 10K less. I don't think it is just "nice" from the builder. They have to in order not to loose business. I also guess that they only do it to the people who complain and I hope everybody complains. it's your money and value of the home.
I've never heard of a builder doing that, but I think it is just good business. Buyers are walking away from earnest money and just dropping contracts. They are trying to make a compromise with you knowing that you might do the same thing.
It might be on the newer homes they are building that they will drop quality, such as a lower grade of carpet or flooring, countertops to make up for the $20,000 price reduction. If you are happy with your home, I would take the gesture for what it is. Good business sense on the part of the builder.
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Still, it might not hurt to make them squirm a bit and see what happens. I really doubt they'd cancel on you just for probing around a bit to see how soft they are (it's not 2005, after all).
