Question for the Real Estate Agents on building a home (Austin: foreclosures, loans)

[kasiem]

We're planning on putting our house on the market and using our equity to purchase a house in cash.

Question is, would a builder like standard pacific, david weekly, gehan, or horton take 115k for a house they're asking 175k for? approx 1800-2500sq ft. Standard options, no upgrades-if that helps.

I'm not sure how much builders usually negotiate with cash buyers, or if purchasing a foreclosure is going to be where the better 'deal' would be...


We're going to work with an agent in the near future..I'm just curious...

[kelly katsus]

A builder wouldn't usually want to take a hit that big on a home, unless it was a home that had been sitting for months. I have just assisted 2 clients with foreclosures. These homes were less than 3 years old and looked really nice. The carpet was really the only thing that needed to be deep cleaned or replaced. What area are you looking to move to? I would really consider looking into a foreclosure if you can. If you can find one that isn’t very old and maintained, you might find a diamond in the rough.

[kasiem]

areas we're interested in are-

paloma lake
parkside at mayfield
georgetown village
or paradiso villas

I would think in this economy the builder's would be more apt to negotiate... , but buying a foreclosure is the back up plan if not.

[TheyCallMeDerek]

I'd suggest waiting to negotiate with a builder untill you're ready to buy and have a Realtor with you. If you've started already they won't speak with your Realtor at all....Also, a $60k hit would hurt anyone. Depending on a lot of variables they may go down to $160 of you pay all of your closing costs. Just a shot in the dark without knowing more.....

Good Luck!

[kasiem]

We haven't spoken to any builders yet, and want to wait until we get cash in hand first... but I'm really wanting to get a good deal in a very nice neighborhood. One house I'm looking at in Georgetown village built by Gehan is listed on their website for $160,000 -I'd think that be reasonable to offer $115. perhaps wishful thinking?

[centralaustinite]

Yes, it is wishful thinking. Big production builders have deep pockets and the Austin market below $250K for new construction is very strong. They aren't that desperate.

[FalconheadWest]

Originally Posted by centralaustinite

Yes, it is wishful thinking. Big production builders have deep pockets and the Austin market below $250K for new construction is very strong. They aren't that desperate.

I completely agree and was trying to find a tactful way of saying "In your dreams".

If cash had that much power, more people would work harder to pay in cash, but many people with the cash still finance for the tax benefits of the interest because they know there is no way they could get nearly 30% off a home just because they have cash.

$60k is no biggie if you're talking the $500k price point, but $160k? Sorry, but it's not going to happen.

[kasiem]

The main reason I'd was asking/wondering is that back in '08 we talked to Mercedes out in Crystal Falls Fairways, and they were willing to take off $40k on a house that was to be built for $280,000- and they threw in a design center allowance on top of that...

We just backed out of moving/purchasing then because the economy was faltering, and we didn't think it'd be a smart purchase at the time... Glad we didn't, and now we're ready to own a paid off house and live debt free.

Regarding foreclosures- are they really going for that much less than listing price? -Not interested in Hutto, Manor, or RRE...

[ROY DUBOSE]

Originally Posted by kasiem

The main reason I'd was asking/wondering is that back in '08 we talked to Mercedes out in Crystal Falls Fairways, and they were willing to take off $40k on a house that was to be built for $280,000- and they threw in a design center allowance on top of that...

We just backed out of moving/purchasing then because the economy was faltering, and we didn't think it'd be a smart purchase at the time... Glad we didn't, and now we're ready to own a paid off house and live debt free.

Regarding foreclosures- are they really going for that much less than listing price? -Not interested in Hutto, Manor, or RRE...

to risk overstating the obvious, what a builder was willing to do in 2008 has very little to do with current market influences -- that being said, each transaction stands on its own and each seller (like yourselves) have different goals and amounts of flexibility -- i do concur that 30% off a new construction is probably an unrealistic expectation -- get your property under contract with an extended close date (if possible) or with a "lease back" agreement -- this would require a great deal of communication but could give ya'll the time to find the perfect home for yourselves

there (imho) are a couple of issues re: foreclosures/reo's -- 1) discounts aren't going to be huge due to fact that the loans against foreclosures/reo's have been guaranteed at full loan value per government decree and 2) the absorption rate in Austin isn't as high and the volume of distressed property isn't as large as it is in other national markets -- makes a lender less willing to "cut a deal"

[dcg9381]

I've seen small builders dip into profits and take losses on homes, but we're talking homes at $500k that have sat for a long time (9 months - 2 years). Hits have been in 30k-50k below actual cost.

If you want that deep of a discount, you'll be looking for a torn up foreclosure in a neighborhood where new homes are being discounted near by... Even then, that kind of discount will be hard to find.