Profile picture for bailey15418

What is a fair offer on new home construction?

Arrived at total cost of home with options. Builder concessions included 1/2 off options. We were asked to make an offer...what is deemed fair?
  • October 21 2010 - Aldie
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Answers (12)

Congrats on beginning the process to purchase your home. In new construction, I find buyers tend to be less apt to negotiate. There is no reason for that, IF the home is over priced, lacking details, upgrades etc.

Have you researched the builder? A quality builder often, through experience, will effectively price homes based on the current market and the construction of the property. Also make sure you realize you are buying a relationship with the builder as well. What type of warrantly program do they utilize? Have you asked for recommendations from previous home purchasers? Also, have your agent set up and interview with the builder/project manager to answer questions.

The more you know about who is building your home, the better. It will also give you more insight to the price!! If the builder used higher grade construction materials (insulation, hardiplank siding, type of flooring, etc) that should be considered in pricing, if it is all basic (ask your agent for the difference in the two, if you don't know) then obviously you wouldn't want to spend top dollar!!

Best of luck to you. This is an exciting time, just make sure you educate yourself.
  • November 06 2010
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What will the market bear? That is the question. Run the comps, assess the Seller's situation, and make an offer that you'd be comfortable living with for a long time. It never hurts to put in an offer...negotiations can always take place from there!
  • November 01 2010
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Bailey,

Is this a first batch of new construction in a new neighborhood or a close out inventory?

The fact that the builder suggested to you "to make an offer" means they are willing to negotiate and want to earn your business. The best time to purchase from the builder at bargain prices is when the builder is closing and needs to sell out its inventory. 


  • October 23 2010
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I don't know where you are writing from? So, market conditions will vary.  Here in Central Jersey, new homes that are built will be discounted until sold.

New homes that are not built offer more choices and negotiations are conducted on options and extras, not on the base price. 

Usually,  a builder may give you a few more options to make the sale on a new home to be built.  On a home that is already completed the negotiations would be closer to that of a re-sale, based upon other similar home prices that have already closed in the recent past. 
  • October 22 2010
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First get an agent to represent you, it's free to you the buyer. Next, do not be shy to offer them 20-30% less. You can always go up on your offer whatever it is. Builders are doing everything to sell homes and if they want your business then let them fight for it.
  • October 22 2010
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I agree that you should make an offer that works for you. Do look at comps and see what other properties have sold for. If the numbers work for you, make an offer
  • October 22 2010
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Hi bailey15418, not sure the term fair is appropriate. Look at this transaction as a business proposition, where you wish to buy low, and the builder wishes to sell high. Fair is not part of that equation.
Now, not knowing much about the transaction at all, it is hard to help you come up with a starting number, but I would say open with an offer around 25% below their asking price, and do not be shy about it. Let them counter you, and start a true negotiation. Assure yourself you are not paying too much, rather than fair.
Jim Ryan, Home Savings of America, Chantilly, VA.
  • October 22 2010
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I would have an agent help you with your offer.  They can look up the comps in the area to help you determine a fair price to offer.  You can also  work with the builder regarding their incentives... closing costs, rate buy downs.  The builder upgrades that are included are soft dollars, they typically have more room to play with as far as reductions, ask for more than 1/2 off on the options. 
  • October 21 2010
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There is a reason its called Fair market value, usually because it is a fair price for oth the buyer and seller.  You should get your self a Realtor and have them crunch the comps, and market data for your area. That way you can make an informed decision and in the end buy a house that you know you paid a fair price for.
  • October 21 2010
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Are you working with a buyer's agent who is representing your interests?  If so, what is his/her recommendation?  If not, why not?  More than a few consumers have been taken to the cleaners by a builder and their representative/lender.  Remember, their loyalty is to the builder, not you.  Strongly recommend you have your own agent.
  • October 21 2010
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Profile picture for kirk Glover

You need to look at what comparable homes have sold for in the last 3 months. Used to be you could go back six months, but everything is changing quicker. Also can very by builder and how motivated they are to sell.

  • October 21 2010
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Profile picture for Mills Realty
Who cares about fair?  Make an offer that makes sense with the current market conditions and that you can comfortably afford.
  • October 21 2010
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