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How much less should I offer on new construction in Austin, TX?

There are two builders that are constructing homes in the same small community.  Both look like very quality builders - one international and one local.  The base prices are fairly similar.  I will not pay retail for a home and both are already including 30K worth of upgrades.  One additional room takes up the entire budget. 

What percentage of their base price should I offer? How negotiable are builders in the Austin, Texas market? Any advice / insight is appreciated. Thanks.
  • August 20 2009 - South Manchaca
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Answers (2)

Hi there, the best way to figure out how much to offer is to review recent sales in the subdivision for similar homes over past 6 - 12 months. That way you can make sure you are not overpaying for the house. In 2008 for all homes sold in Austin the average % of list price received was 94.3%. However this amount varies quite a bit by area and it's also important to make sure the builder list price is not inflated price (shown by reviewing how much similar homes in the area have been selling for).

How long do you plan to stay in this house? I always counsel Buyers who are looking at brand-new to find out how long the builder will be building in the subdivision. It can be tough to sell a resale home when builders are still offering lots of incentives on the brand-new homes, so I would find out this information (especially if you may be selling before the builder will be out of the community). 

Another question: are the "upgrades" things that would ultimately add true value when you sell your home?  I am not sure what all the $30K entails but I am curious if all the items are really things that will pay off when it comes time for you to sell the home. I've seen lists of builder upgrades where not all items are features today's Buyer will pay full install cost for.

Almost all builders offer to pay Agent commission, so getting representation means you have someone working in your best interests and it does not cost you anything. Often just having an Agent will net you a better deal since Agents are more experienced in negotiating with builders plus the builders know they have MLS access to all recent sales.

Hope this helps answer your question & I'd be happy to go over any additional questions you may have.


Tammy DeWitt Le
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  • August 23 2009
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That will vary depending on the market and the builder and their current inventory.  If you are building a new home with them you will have a harder time negotiating with them.  If you are buying one of their existing or almost completed spec homes you will be able to negotiate much better.

By using a Realtor you can have them do the homework of finding out what has sold recently in the area to help you in making your offer.  Builders in just about every case have Realtor compensation factored into their prices and do not discount if you represent yourself.  In fact many builder agents have stated the same thing right here on these message boards.

By using a realtor who is experienced with the area you will be able to make a better educated offer and know if you just need to walk away.  Builders also want you to use their financing typically threatening to take away their promotions if you do not do so.  This can also be dangerous because if you use their lenders their homes will always appraise for the necessary amount.  Something that may not always happen if you find your own lender.

Best of luck to you.
  • April 07 2010
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