Real Estate

Did you buy a pre construction home in 2018? Looking for some advice

  • Last Updated:
  • Dec 11th, 2018 12:31 pm
Newbie
Dec 8, 2018
10 posts
2 upvotes

Did you buy a pre construction home in 2018? Looking for some advice

Posting this from a temp account but I am a long time RFD veteran with over 10k posts, just don't want this linked to my account

Hi all!

Going through the process of potentially buying from a new builder, they have a home that's currently in the framing stage for sale and I have some questions..

I hear new builders won't discount their sticker price. But this builder has not ever reduced their prices to reflect the slow market and the fact homes are now selling for under asking prices. We did not get what we asked for when we sold our home, and the development looks to be quite slow in there now.

1. Is it possible they are actually hurting right now? Is there still no chance of them budging on their sticker price?

2. If they won't budge on sticker price (which I still find stupid, if so), am I still legally allowed to go in there and make a stink bid? Let's say their sticker price is $600k. Why can't I offer $550?

3. To go further, if you guys come back with a bunch of resounding 'no's' to them budging on sticker price, then at least tell me what I should be asking for. Builder upgrades? Would I ask for stuff like glass shower doors in all showers, laminate instead of carpet, pot lights, things like this?

4. HOW far should I push it?

5. If I make a stink bid, and they reject it, I have a feeling they'd at least counter. Does this happen?

Thanks for all of your time and help, it is much appreciated!
26 replies
Deal Addict
Nov 22, 2004
1621 posts
766 upvotes
GTA
It depends on the seller but in my experience, they generally counter instead of outright refusing. There is no right or wrong as to how far you can push it, put in a number that is reasonable to you as a buyer and see what response you get. I've had a couple of experiences where the builder wanted to sell off their model home to wrap up their project so we made a lowball offer which got accepted, including furniture/decorations, etc. Doesn't mean all builders would do that.

I'd suggest spending some time on looking at the comparable sales in the area, builder's offerings, then decide what you want to go with.
CPA. Realtor.
Banned
Mar 13, 2018
1385 posts
679 upvotes
LeavingTheGTA wrote: Posting this from a temp account but I am a long time RFD veteran with over 10k posts, just don't want this linked to my account

Hi all!

Going through the process of potentially buying from a new builder, they have a home that's currently in the framing stage for sale and I have some questions..

I hear new builders won't discount their sticker price. But this builder has not ever reduced their prices to reflect the slow market and the fact homes are now selling for under asking prices. We did not get what we asked for when we sold our home, and the development looks to be quite slow in there now.

1. Is it possible they are actually hurting right now? Is there still no chance of them budging on their sticker price?

2. If they won't budge on sticker price (which I still find stupid, if so), am I still legally allowed to go in there and make a stink bid? Let's say their sticker price is $600k. Why can't I offer $550?

3. To go further, if you guys come back with a bunch of resounding 'no's' to them budging on sticker price, then at least tell me what I should be asking for. Builder upgrades? Would I ask for stuff like glass shower doors in all showers, laminate instead of carpet, pot lights, things like this?

4. HOW far should I push it?

5. If I make a stink bid, and they reject it, I have a feeling they'd at least counter. Does this happen?

Thanks for all of your time and help, it is much appreciated!
1. Depends on builder, but most won't discount price. And no they're not hurting (especially the big ones in subdivisions). But it really depends on area, further you go outside GTA, better the chance for "discount"

2.you can offer whatever you want, they can also just say no thanks

3. You can ask for some upgrades but don't be surprised if they won't even budge on that, again depends on the project

4. Why would you make a stink? They're not obligated to give you a discount and your home selling less than what you wanted is not their problem

5. Not with the big builders


I know of builders who sat on empty homes for years until it sells for what they wanted if it's in an area or development they think will have growth in value
Deal Expert
Feb 29, 2008
21738 posts
21353 upvotes
Tarrana & The Ri…
I've been looking to buy brand new this year all over the GTA.

It seems that the market is slow. I don't know if builders are hurting. AT worst, they'll just cancel the project. So they won't give homes away. I've been told "Builder plans on raising prices soon" (yea right) and is prepared to let the homes sit until he gets his asking price. I believe that. The will let it sit until they find a buyer.

Builders don't want to budge on the sticker price because it alienates those buyers who purchased earlier. How would you feel if a project you bought in was now selling at $100K less?

That said, there IS some wiggle room. I have been able to get cash back at closing and/or $ in upgrades. Only discount I was able to get on the price (not sure if it was off sticker or cash back) was $10K as I didn't go through an agent. Keep in mind this is without any negotiation.

Bigger builders have no issue with not selling. They have their price set and if they don't get it, they will likely just close up shop on that project. They're not going to slash prices by $100K to be in line with 2018 prices.

It is frustrating though because a builder will be selling a project for $1M meanwhile their previous project not a few blocks away has houses sitting at $875K in the resale market.

Waiting may be a good idea...as new projects will likely have adjusted projects. But I can also see builders holding back until the market changes. Also there will be even more demand so less room for negotiation. I've never seen builders give these kinds of discounts in the past. Reminds me of 2009 or so when we had that mini drop. Builders were open for deals but wouldn't give the whole cow away. And that was a much worse time than now.


You have to understand that builders have done a lot of research and built in all kinds of scenarios. They won't slash prices if they think their price is decent. I'd say most feel their prices aren't high enough.
Banned
Mar 13, 2018
1385 posts
679 upvotes
JayLove06 wrote: I've been looking to buy brand new this year all over the GTA.

It seems that the market is slow. I don't know if builders are hurting. AT worst, they'll just cancel the project. So they won't give homes away. I've been told "Builder plans on raising prices soon" (yea right) and is prepared to let the homes sit until he gets his asking price. I believe that. The will let it sit until they find a buyer.

Builders don't want to budge on the sticker price because it alienates those buyers who purchased earlier. How would you feel if a project you bought in was now selling at $100K less?

That said, there IS some wiggle room. I have been able to get cash back at closing and/or $ in upgrades. Only discount I was able to get on the price (not sure if it was off sticker or cash back) was $10K as I didn't go through an agent. Keep in mind this is without any negotiation.

Bigger builders have no issue with not selling. They have their price set and if they don't get it, they will likely just close up shop on that project. They're not going to slash prices by $100K to be in line with 2018 prices.

It is frustrating though because a builder will be selling a project for $1M meanwhile their previous project not a few blocks away has houses sitting at $875K in the resale market.

Waiting may be a good idea...as new projects will likely have adjusted projects. But I can also see builders holding back until the market changes. Also there will be even more demand so less room for negotiation. I've never seen builders give these kinds of discounts in the past. Reminds me of 2009 or so when we had that mini drop. Builders were open for deals but wouldn't give the whole cow away. And that was a much worse time than now.


You have to understand that builders have done a lot of research and built in all kinds of scenarios. They won't slash prices if they think their price is decent. I'd say most feel their prices aren't high enough.
Exactly, in the GTA, the supply of ground related housing is all controlled by a few developers (and their affiliate builders), they've held onto land for decades, they aren't hurting and don't need to fire sale. They'll just postpone sales and sit on it until prices reach what they want just like they've done with land for decades
Newbie
Dec 8, 2018
7 posts
3 upvotes
The price a builder sells at sets a marker which all other sales are measured against. If the builder discounts to you $50k, the whole market will see that and the builder, could lose X * $50,000 where X is the number of homes they are building. For a 100-unit subdivision, that's $5M lost revenue. It is vastly different than one individual person selling their principle residence.
Newbie
Dec 8, 2018
10 posts
2 upvotes
Appreciate all the commentary and remarks, as disappointing as some of them may be..

Guess it sounds like I have no chance of them accepting my offers but I'm going to go through with it anyways. One of them is for $12.5k less than their sticker price. Second offer will be for their sticker price but $15k worth of upgrades

If they say no thanks then oh well, the quest continues I suppose!

Probably have way more luck with resale then
Deal Addict
Dec 23, 2010
1897 posts
969 upvotes
Moon
Generally developers will never negotiate with you on the sticker price of the house but the homes are generally fairly valued. If you are going resale you MAY get a better deal but you may also get a worse one and not even realize it. Just because someone gives you a discount doesn't mean you are buying the house cheap at all. It could have been listed at an overpriced value in the first place and you just a sucker that bidding 10k less when it actually worth 50k less.

BTW although developers won't negotiate on sticker price they are definitely more open to negotiation on upgrades. You can ask for 5-10k extra credit on upgrades and see if they budge. Also I suggest trying to purchase the 'quick move in' homes rather than the lots that haven't even started construction as those quick move in homes would be more negotiable.
Banned
Aug 24, 2018
196 posts
119 upvotes
Hate living in construction zone noise of new homes going up.
Deal Addict
Dec 23, 2010
1897 posts
969 upvotes
Moon
otismod wrote: Hate living in construction zone noise of new homes going up.
Also this. However I hear that new construction properties tend to have very high price growth compared to buying resale in fully completed neighborhoods. Basically their value tends to be much higher after construction has fully completed in neighborhood than when you bought it in during the construction of the neighborhood. If you are an investor that can take a little noise during the work days then it is well worth it.
Last edited by Applesmack on Dec 9th, 2018 7:04 pm, edited 1 time in total.
Newbie
Dec 8, 2018
10 posts
2 upvotes
Applesmack wrote: Generally developers will never negotiate with you on the sticker price of the house but the homes are generally fairly valued. If you are going resale you MAY get a better deal but you may also get a worse one and not even realize it. Just because someone gives you a discount doesn't mean you are buying the house cheap at all. It could have been listed at an overpriced value in the first place and you just a sucker that bidding 10k less when it actually worth 50k less.

BTW although developers won't negotiate on sticker price they are definitely more open to negotiation on upgrades. You can ask for 5-10k extra credit on upgrades and see if they budge. Also I suggest trying to purchase the 'quick move in' homes rather than the lots that haven't even started construction as those quick move in homes would be more negotiable.
Awesome, thanks for that info. This is indeed the approach we are taking! They have a build that's in limbo right now, with the first floor framed and nothing else until I am guessing they find the right buyer. There are some things not to like; given the fact it's partially built, it means the layout was to someone elses spec who walked away from the deal. There are only 4 of the model in the entire subdivision. Also, because it's a bizarre lot location I have a ton of grass that I don't really care about and a smaller kitchen footprint as a result.. so by no means am I absolutely dying to get this house. If they want to work with me even ~$15k in flexibility for either upgrades or straight discount, I'd close the deal. I don't think it's unreasonable considering the current climate
Last edited by LeavingTheGTA on Dec 9th, 2018 7:06 pm, edited 1 time in total.
Newbie
Dec 8, 2018
10 posts
2 upvotes
otismod wrote: Hate living in construction zone noise of new homes going up.
Didn't consider this, but, noted! Thanks
Banned
Aug 24, 2018
196 posts
119 upvotes
LeavingTheGTA wrote: Didn't consider this, but, noted! Thanks
Nothing like construction material delivery at 4:00AM with the back up bells on fork lifts ringing like an alarm clock. Subcontractors pickups with seemingly no muffler.

Neighbors landscape workers is round 2, just when you thought it was all clear.

Goes on for years.
Newbie
Dec 8, 2018
10 posts
2 upvotes
otismod wrote: Nothing like construction material delivery at 4:00AM with the back up bells on fork lifts ringing like an alarm clock. Subcontractors pickups with seemingly no muffler.

Neighbors landscape workers is round 2, just when you thought it was all clear.

Goes on for years.
LOL, damn. Double noted. Appreciate the grim but realistic outlook lol. FML!
Banned
Feb 23, 2009
1670 posts
1496 upvotes
Oshawa
After a few years your new build will be an old resale just like everything else.
The only thing about new builds are you get to live in mud, wait for grass, trees to grow, roads to get finished. You also get to make repeated trips to Lowes and Home Depot as you work on completing your house.
You also get to call the builder and complain about everything that is broken or not done right and hope that they come back to fix it.
Builders are still holding out and trying to keep prices up as are the flippers who thought their precon was going to be worth way more than they paid.
I would put in a lower bid, be patient and wait.
Lots of better value in resale.
Deal Expert
Feb 29, 2008
21738 posts
21353 upvotes
Tarrana & The Ri…
LeavingTheGTA wrote: Appreciate all the commentary and remarks, as disappointing as some of them may be..

Guess it sounds like I have no chance of them accepting my offers but I'm going to go through with it anyways. One of them is for $12.5k less than their sticker price. Second offer will be for their sticker price but $15k worth of upgrades

If they say no thanks then oh well, the quest continues I suppose!

Probably have way more luck with resale then
Are you buying with an agent? Keep in mind, the builder will be more willing to give upgrades than take $ off the price. I'd ask for even more in upgrades. Worth a shot I guess, don't expect them to drop the price.
Deal Expert
Feb 29, 2008
21738 posts
21353 upvotes
Tarrana & The Ri…
Applesmack wrote: Also this. However I hear that new construction properties tend to have very high price growth compared to buying resale in fully completed neighborhoods. Basically their value tends to be much higher after construction has fully completed in neighborhood than when you bought it in during the construction of the neighborhood. If you are an investor that can take a little noise during the work days then it is well worth it.
Why is that though? Maybe this was the case before but I wonder if people feel this way now given market conditions and the clamp down on affordability. I see a 10-15% difference on the same exact home resale. I can't for the life of me understand that. 2 years from now that new home will be resale and no one will care the difference in age between the 2 year old and 4 year old house. At least that's my opinion. Maybe I'm undervaluing being able to pick your own finishes.
Newbie
Dec 8, 2018
10 posts
2 upvotes
pkrash wrote: After a few years your new build will be an old resale just like everything else.
The only thing about new builds are you get to live in mud, wait for grass, trees to grow, roads to get finished. You also get to make repeated trips to Lowes and Home Depot as you work on completing your house.
You also get to call the builder and complain about everything that is broken or not done right and hope that they come back to fix it.
Builders are still holding out and trying to keep prices up as are the flippers who thought their precon was going to be worth way more than they paid.
I would put in a lower bid, be patient and wait.
Lots of better value in resale.
Appreciate the commentary and thanked you for the post! I totally am looking at resales too; especially since closing would actually line up with my end of Feb. closing from my own sale!

I'm going to try and put in a lower offer regardless. Two of them actually. One for less than sticker price, straight up. One with sticker price, but a bunch of upgrades including pot lighting, flooring, and glass shower doors

My agent didn't shoot the idea down and cringe like I thought she might. This might have legs!
Newbie
Dec 8, 2018
10 posts
2 upvotes
JayLove06 wrote: Are you buying with an agent? Keep in mind, the builder will be more willing to give upgrades than take $ off the price. I'd ask for even more in upgrades. Worth a shot I guess, don't expect them to drop the price.
I am, unfortunately. And she's been really nice to us and helpful, I couldn't in good conscience cut her out of it at this point, she's put time into me and my wife and we both do appreciate it.. I've been told this as well! :(
Newbie
Dec 8, 2018
10 posts
2 upvotes
harryjwhite636395176072327869 wrote: The price a builder sells at sets a marker which all other sales are measured against. If the builder discounts to you $50k, the whole market will see that and the builder, could lose X * $50,000 where X is the number of homes they are building. For a 100-unit subdivision, that's $5M lost revenue. It is vastly different than one individual person selling their principle residence.
Sorry, I missed this post earlier and was waiting for this logic.

I hate this answer, and I'll tell you why: you are implying that people that bought at a previous time, in a previous market climate, with impatience, are now held in a state of perpetual price safety?

Why would the guy who bought during a hot market be entitled to some kind of ridiculous price protection vs. the person who is buying at a time when development is at a near standstill, market is cold, and all houses (including my own) sold for under asking price

Just because a bunch of soccer Mom's paid $50k more to buy at the most convenient possible time shouldn't afford them any kind of protection from future price drops

The prices should go up or down to reflect conditions. If I waited until the spring or summer it wouldn't surprise me that the prices increased.

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