Author Topic: Discounts on standing inventory of new construction  (Read 520 times)

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Offline Irvinehomeseeker

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Discounts on standing inventory of new construction
« on: February 13, 2020, 07:41:34 PM »
So I was seeing Redfin for the recent sales of SFRs in Eastwood and noticed that the last few quick movins of Avila sold for big discounts based on the Property history - like the one below.
It was listed at 1.5 million and then after 6 months sold at 1.35 million. The property possible had quite a few upgrades as well. How is this possible? The buyer made good equity I feel.
https://www.redfin.com/CA/Irvine/105-Allenford-92620/home/166746633

This is another such Avila home - listed at 1.45 million and sold at 1.3 million with all the upgrades.
https://www.redfin.com/CA/Irvine/123-Lovelace-92620/home/148523892

Now KB homes is building around the lots left by Richmond Avila at possibly a price of 1.5 million.



Offline USCTrojanCPA

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Re: Discounts on standing inventory of new construction
« Reply #1 on: February 13, 2020, 07:58:25 PM »
Yup, the longer the homes sit done unsold the better deal that you can negotiate with the builder.  I'd done a few $100k+ discounts for my new home buyers last year.
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Offline Irvinehomeseeker

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Re: Discounts on standing inventory of new construction
« Reply #2 on: February 13, 2020, 08:15:26 PM »
Those are really big discounts. Thanks for the info USC!

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Offline Soylent Green Is People

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Re: Discounts on standing inventory of new construction
« Reply #3 on: February 14, 2020, 06:13:38 AM »
Best time to buy new construction homes is somewhat contingent on the buyer not being too picky on lot location and exterior features. Most publicly owned companies will gleefully accept  low offers on standing inventory and/or "last second cancellations" when their fiscal year end is looming. I've seen as high as 25 percent discounts from list price over the years on a few zero hour purchases. Average accepted  discounted offers are between 10-15 percent though. Still, "Ask not, get not".

Some publicly traded builders have fiscal year ends in June so it's not always a December purchase play. Discounts exist as well each end of quarter, although not as dramatic as FYE, on standing inventory and last second cancellations.

To the very nimble come great rewards!

My .02c

Offline irvinehomeowner

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Re: Discounts on standing inventory of new construction
« Reply #4 on: February 14, 2020, 07:03:32 AM »
While I tend to favor resale, this is one of the benefits of new home buying is the ability to negotiate on standing inventory.

You can negotiate large discounts but this is all relative because they have bumped up the price of these homes by the "upgrades" the previous buyer had chosen. Years ago, we put in an offer that was $200k below the sheet price and the builder accepted (as this was the range that their current models were being built out for) but we ended up canceling because it was really stretching our affordability and we weren't sure about the floorplan and location after multiple visits (I really didn't like how the laundry room was a walk through from the garage... which was tandem not 3CWG). Hindsight says we probably would have been okay but I can say that for dozens of homes we looked at. :)

And even if not standing inventory, if it's a "slow" season (or as SGIP said, "make the books look good time"), builders can be plied for design center credits or "free" upgrades.
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Offline relaydiver

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Re: Discounts on standing inventory of new construction
« Reply #5 on: February 14, 2020, 07:16:09 AM »
How does one "negotiate" for such discounts?

Is it just a matter of asking or are sophisticated negotiating tactics and playing hardball necessary? Is it something that the buyer's agent is much more likely to successfully pull off than the buyer themselves?

Offline Soylent Green Is People

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Re: Discounts on standing inventory of new construction
« Reply #6 on: February 14, 2020, 07:34:50 AM »
1) Have a Buyer's Agent. A MUST.
.
2) Have your financing or cash 100 percent ready to go - full approval and $$$ liquid.
.
3) Ask for the moon, but be ready / expect to meet 1/2 way.

It's that simple.

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Offline USCTrojanCPA

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Re: Discounts on standing inventory of new construction
« Reply #7 on: February 14, 2020, 08:07:53 AM »
1) Have a Buyer's Agent. A MUST.
.
2) Have your financing or cash 100 percent ready to go - full approval and $$$ liquid.
.
3) Ask for the moon, but be ready / expect to meet 1/2 way.

It's that simple.


+1  Also emphasize how there are a lot of other resale options and that you really don't like the selected options by the builder (cabinet color, countertop, etc) even if you like it are OK with their upgrades.  One of the big draws for most new home buyers is to select their own upgrades so that is doable for their completed standing inventory homes.
Martin Mania, CPA
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mmania001@yahoo.com
714-747-3884 cell

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Offline irvinehomeowner

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Re: Discounts on standing inventory of new construction
« Reply #8 on: February 14, 2020, 08:54:08 AM »
And also depends on demand and timing. For my example, this was when housing was in a lull (late 2000s) so we had the advantage.

Right now, since housing is flattish (or is it a slowdown?) it may be a good time.

The one caveat about having a buyer's agent, there will already be some money out of the deal because of their commission so you may or may not have less to negotiate on. But if you use a good agent, you could get both a discount and some money back as a "rebate".

If you don't have a good poker face.. go with a buyer's agent. :)
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Offline Compressed-Village

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Re: Discounts on standing inventory of new construction
« Reply #9 on: February 14, 2020, 09:48:25 AM »
Typically, with standing inventory, builders will put in nicer upgrade to have good eyes candies for lure prospective buyers. However, they do have a hard stop on pricing downward as this is an even pendulum market.

They do want business and moving products, I tried to lowball and they did not take me seriously, when I came back 2 weeks later, it listed and dotted sold.

And they were not nice to me after that. Don’t blame them.

Offline Mety

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Re: Discounts on standing inventory of new construction
« Reply #10 on: February 14, 2020, 09:52:33 AM »
How about instead of lowball offer on the price, ask for full high-end upgrades?

Offline irvinehomeowner

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Re: Discounts on standing inventory of new construction
« Reply #11 on: February 14, 2020, 10:16:36 AM »
I live and die by the lowball.

:)
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
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I recommend:
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