Buying from a Builder (incentive, negotiations, agent, mortgage)

[aamazing75]

Just want to say "Thank You" to all of the people who post and share info on this forum. I have been learning a lot about home buying and various terms, ect. on here. It's very helpful, I am so green when it comes to all of this.

OK, so here's another question: When buying from a home builder, do you make an offer just as you would to a regular home owner?

[Roselvr]

Originally Posted by aamazing75

OK, so here's another question: When buying from a home builder, do you make an offer just as you would to a regular home owner?

Depends on where you are buying. Since real estate is local, each market is different.

When we bought last August, we had our eye on one house that was spec'd out already, buyer backed out. Permits were pulled but the house wasn't started. Out of all the houses they had in inventory (others were built or same thing) we liked 2 but one was going on a retaining pond; think mosquitoes.

We didn't like the brick face (wanted rock) kitchen cabinet color, fireplace in the family room and faucets picked out. We ended up telling them we'll offer them such & such but we don't want $25k in upgrades, plus we wanted the cabinet color changed. They signed off on it but were not happy.

Apparently we were the 1st to do this but not the last.

While most of the builders are hurting bad here, this one is too but still able to sell houses, just not as many as they were used to.

[DavePautsch]

Preface to my answer: I work for a real estate company that has a very close tie to a builder (brothers) - I'm an independent agent and work the Open Houses. When I'm there, I am a buyer's agent ONLY. In other cases, the agent works FOR the builder but (depending on your local laws) may work for BOTH the buyer and the builder.

I would strongly recommend that you write any offer with a real estate professional (preferably a REALTOR) working as your buyers agent. As a general rule it doesn't save you any money to work with their agent vice working with your OWN agent...but you will certainly want to have someone on your side of the negotiations and transaction follow through.

*Please note that in many states there is nothing illegal or unethical about an agent representing both the buyer and the seller...but as a matter of personal preference I think it is always BETTER to have separate representation to better protect both parties.

Some builders often try to make the process extremely complicated to discourage buyers from bringing in outside agents (even MORE reason to have your own agent in my opinion). They may also push you to use THEIR mortgage lender...offering great incentives to do so. When you look closer you could find that those incentives are really not anything special and you could get the same thing from an independent lender.

Bottom line - you should be working with a real estate professional and a lender that you like and trust, and who will be on YOUR side. If it happens to be the builder's representatives too...that's ok BUT be smart.

Best of luck!

DaveP

[raisun]

I agree with DaveP, and will preface that I am a broker, but work exclusively with commercial properties and investors (so I dont have as much experience in single family home buying).

Working with a professional on a purchase from a builder is always a good idea. The builders will usually offer a "broker participation" to a buyer's broker/agent (depending on the state semantics could be more important) that brings a client in and purchases. In a deal that I just helped my parents purchase a vacation home, I am not allowed to remit any of my fee back to my folks, but we were able to get several other things.

Keep in mind, in today's environment, builders want to get homes off their books and get cash back into their system so they tend to be willing to deal. That said, they want to keep the prices up as a benchmark for other sales. Based on Roselvr's experience, its definitely different depending where you are (and I see that here as well).

My best suggestion is to know what you ultimately want and express that to your agent; keeping in mind that what is going to be a lot "easier" for the builder to swallow is reductions in closing costs, thrown in upgrades, etc (and always ask for more than you are willing to accept)

Good Luck!