Interested in buying new construction but want to be well positioned for negotiation
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[{"id": "ihlsnqu", "text": "I think you might be in the wrong sub?", "replies": [{"id": "ihlv47a", "text": "Thanks for the heads up! I was mainly curious about tips for negotiating with developers and contractors. For example, I recently learned that each home a developer constructs will be segregated in an LLC, which I can then monitor to see if the property goes into bankruptcy. Maybe this additional information will give me negotiating power?\n\nIs this the right place for me to be looking for that type of guidance? Or do you know of a better sub?", "replies": [{"id": "ihlvhud", "text": "I definitely see what you\u2019re getting at. \nI don\u2019t think you\u2019ll be able to find any hard data like this that would give you negotiating power though (could be wrong). Macro data shows that home developments have faced a lot of contract cancellations, that might help? \nUltimately though, as least based from my experience, new constructions are still relatively competitive. \nIf you don\u2019t have a broker I\u2019d recommend getting one, you don\u2019t pay their commission when you\u2019re buying a property.", "replies": [], "depth": 3}, {"id": "ihm05wy", "text": "A developer buys the land, develops into lots, and sells the lots to home builders usually. \n\nIf you\u2019re talking about custom or spec home builders, those can be held like you are referring to, but in that case you wouldn\u2019t know they were filing for bk until it happened. \n\nThis sub is for commercial properties like office buildings, apartment buildings, retail, industrial. You are looking for residential builders. They are in the business of buying lots and building homes, but they are not called commercial.", "replies": [{"id": "ihm0r5d", "text": "Got it thank you. Seems like I learned a lot posting in the wrong sub \ud83d\ude42. I appreciate the kind feedback!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ihlyjqt", "text": "Best to you. There\u2019s probably a better sub for your questions as this one is not for residential real estate. \n\nAs far as the premium, just watch the comparable property sales in the area and compare the two types to establish the delta. Zillow is great for this if you aren\u2019t using a Realtor with MLS access. \n\nAs I don\u2019t need to tell you, any change in interest rates will require an adjustment. A 1% raise in rates should be roughly equal to an 11% reduction in home value, but it takes time for asking and market prices to adjust. Be careful and try not to sign a contract right after an interest-rate increase. \n\nTrack the large public residential home builders\u2019 stock metrics and listen to their earnings calls to keep your finger on the pulse of the new-home market. \n\nBest to you.", "replies": [], "depth": 1}]