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Old 08-04-2015, 01:41 PM   #1
Yappin Tappin
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Default First Time Home Buyer - Building A Home

Hi everyone,

First off, if this is in the wrong sub-forum I apologize in advance as I'm not sure if Realtor 1 Real Estate is only meant for pre-existing homes. I also tried searching for a similar thread but could not find one.

My girlfriend and I have been looking into buying a house for the past few months. Throughout this process, we now believe we would prefer to build a home instead of purchasing a pre-existing home.

We have narrowed down our choice to two show home models, in the Nolan Hill area preferably.

My question is for those who have built a home in the past, what kind of negotiating were you able to do with the building company?

Right now given the desires of what we would like our home to be and based on our preliminary talks with the agents, I believe the houses would cost around 680-700k.

We would like to not spend anything over 650k however. Have people had success dropping the price by 30-50k in the past? The costs are well above the base price (around 60-80k in upgrades), so maybe there is more wiggle room for them including a combination of free upgrade costs and lowering the price to get it to our desired amount? I'm not sure if land costs have any wiggle room to allow them to drop the overall price, or if it is based solely on the building cost for home building companies.

Do you think if we can't initially get the price to the desired amount, if we wait a couple of months they may be willing to re-negotiate given the current state of oil prices and Calgary's current economic environment? I've noticed pre-existing homes are finally starting to look a bit more reasonable in price this past month, so that may be an indication that the market is really starting to slow down?

Basically I'm looking for anyone's opinions based on either their knowledge of the industry or their own experiences.

Thanks!
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Old 08-04-2015, 07:05 PM   #2
Travis Munroe
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You will have very little wiggle room if any at all. I often represent buyers when they are building new. It gives them someone with experience in their corner as the sales staff at the show home has 1 job and it is to sell you that house.

Often the area of savings comes from knowing what the builder does at a premium vs what they can do below the cost of a third party contractor.

Feel free to PM me if you have any direct questions.
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Old 08-05-2015, 12:42 PM   #3
ken0042
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Have you already priced out your upgrades? I just built over the last year, and we didn't have our upgrade prices until well after we had put down our deposit.

Also, make sure you tell the builder before you agree to anything that you are represented by a realtor. I ran into that issue where they didn't want to accept that I had a realtor, and then tried to bait me a couple of times into saying that I didn't have a realtor from the start. Even though it was through discussions with Travis that led to me building a new house.

I would also recommend Travis as a realtor in this area. I had one issue that was important to me- being able to bump out the garage. Travis made sure that the offer in place was one I could still back out of if I didn't get my garage, and then Travis made some calls. A couple of days later I was told that my garage bump out was good to go. My builder said it had nothing to do with Travis; and I suppose that is possible. However having somebody there who is not emotionally tied to the home offering the voice of reason likely pushed them along.

As a buyer it costs you nothing to use a realtor, and the advantage is huge if you have a good realtor.
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Old 09-30-2015, 04:37 PM   #4
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Some advice I can share:

- get a very clear understanding of what is included and what is not. Items not included may be upgrades, which require YOUR discipline to manage, or there could be items such as architectural requirements which you need to know about up front (some builders only build in a rough contingency, but it may not cover all the costs i.e. a corner lot requires additional windows.

- do you trust the area manager? do you believe they have your interest at stake? Some sales people genuinely care about their clients, others not so much. A trusting relationship can help you in setting and meeting your expectations

- who is the builder and how are they rated. Every single home built, regardless of the builder, will have issues. There is virtually nothing else in the world that is built from scratch, by hand, like a house is. Things will go wrong - where will your builder be when they do.

- Realtors can be a great asset for helping you understand your decision. However, a builder MAY have more room to negotiate price if you do not bring a realtor in. A realtors commission is most likely factored into the builders costs, but they may back this out if you do not bring a realtor with you.

- Land cost is 99.99% non-negotiable

- Have you considered a spec home? You are getting a fully warrantied home, brand new, without the wait time and stress of a new build. Builders are generally more willing to negotiate on spec because they have hundred of thousand of dollars tied-up in that house. Having homes sit completed and unsold will motivate the builder to negotiate.

Last edited by core_upt; 09-30-2015 at 04:41 PM.
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Old 09-30-2015, 10:22 PM   #5
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Quote:
Originally Posted by ken0042 View Post
As a buyer it costs you nothing to use a realtor, and the advantage is huge if you have a good realtor.
This is an excellent point that most buyers don't realize. Well put.
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Old 10-02-2015, 10:56 AM   #6
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I almost built a new home a couple years ago in Panorama. Was in discussions with both Cardel and Excel and both had little to no room for negotiation.

Also, does your budget include upgrades at the design centre?
I think most people budget about $15-$20K for upgrades there.

Once you see the basic offering of what is included vs what is available, it's hard to resist not upgrading.

Those shiny door knobs, brushed nickel light fixtures and upgraded color of backsplash add up... FAST.
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Old 10-02-2015, 12:08 PM   #7
Travis Munroe
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Quote:
Originally Posted by core_upt View Post
Some advice I can share:

- get a very clear understanding of what is included and what is not. Items not included may be upgrades, which require YOUR discipline to manage, or there could be items such as architectural requirements which you need to know about up front (some builders only build in a rough contingency, but it may not cover all the costs i.e. a corner lot requires additional windows.

- do you trust the area manager? do you believe they have your interest at stake? Some sales people genuinely care about their clients, others not so much. A trusting relationship can help you in setting and meeting your expectations

- who is the builder and how are they rated. Every single home built, regardless of the builder, will have issues. There is virtually nothing else in the world that is built from scratch, by hand, like a house is. Things will go wrong - where will your builder be when they do.

- Realtors can be a great asset for helping you understand your decision. However, a builder MAY have more room to negotiate price if you do not bring a realtor in. A realtors commission is most likely factored into the builders costs, but they may back this out if you do not bring a realtor with you.

- Land cost is 99.99% non-negotiable

- Have you considered a spec home? You are getting a fully warrantied home, brand new, without the wait time and stress of a new build. Builders are generally more willing to negotiate on spec because they have hundred of thousand of dollars tied-up in that house. Having homes sit completed and unsold will motivate the builder to negotiate.
The bolded part is not accurate or at least not in any developer/builder situation I have come across.
The worst part is when someone asks for a bunch of advice and then walks into a show home, signs the papers and starts negotiating and using the no realtor factor as a bargaining chip - I have never seen it happen.

A Realtor will know what upgrades you should avoid/consider. What can be done for cheaper than the builders quote after the home is complete, what you can get away with changing, etc. The value in using a Realtor on a new build is more obvious when you go to sell that property!
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