Comments on: Dropping prices, new construction and the inherent risk in a changing market http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/ Tracking Charlottesville's Real Estate Market since 2005 Thu, 18 Mar 2010 20:30:38 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Rick Marnon, Howell http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/comment-page-1/#comment-11378 Rick Marnon, Howell Thu, 20 Dec 2007 13:01:27 +0000 http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/#comment-11378 I guess people should think about this before they start building. You have to have a budget in mind and not get spend happy, which is what a number of people do. Ultimately people blame builders for their decisions. He may not be involved in the financing other than getting a check from the bank to move forward with the project. What would a builder be able to change in the contract? He can't speculate that the market is going to take a dump, and with build jobs taking typically 4-6 months, depending on the type of home being built, a lot can happen in that timeframe. At this point I think the only thing that he could change is how much he will make, and why would he do that. As a real estate agent I have not had to negotiate my commissions yet, but my client wanted a home and I told him I would negotiate my commissions down if it would help the deal. He ended up saying that if I did that he was going to come up and was willing to spend a little more because of this, but the listing agent wasn't going to move, so obviously the home didn't sell and now the home is still on the market. She has called numerous times now trying to get my guy to buy it. He's livid with her. Too bad for her. I guess people should think about this before they start building. You have to have a budget in mind and not get spend happy, which is what a number of people do. Ultimately people blame builders for their decisions. He may not be involved in the financing other than getting a check from the bank to move forward with the project.

What would a builder be able to change in the contract? He can’t speculate that the market is going to take a dump, and with build jobs taking typically 4-6 months, depending on the type of home being built, a lot can happen in that timeframe. At this point I think the only thing that he could change is how much he will make, and why would he do that.

As a real estate agent I have not had to negotiate my commissions yet, but my client wanted a home and I told him I would negotiate my commissions down if it would help the deal. He ended up saying that if I did that he was going to come up and was willing to spend a little more because of this, but the listing agent wasn’t going to move, so obviously the home didn’t sell and now the home is still on the market. She has called numerous times now trying to get my guy to buy it. He’s livid with her. Too bad for her.

]]> By: Tony Arko http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/comment-page-1/#comment-11363 Tony Arko Wed, 19 Dec 2007 13:29:54 +0000 http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/#comment-11363 Good Luck trying to get a builder to change anything in their contracts. We have never had any luck protecting a buyer from a declining market price with builders here in Northern Virginia. Although they use to take contingent contracts, that backfired when people couldn't sell their houses for enough money to buy the new construction and now they don't do it anymore. We advise our clients that if they want to get a great deal from a builder, buy a spec home. You get a few less choices but you usually get a lot more home for the money and you close much quicker so there is little chance of price declines and loan issues. Good Luck trying to get a builder to change anything in their contracts. We have never had any luck protecting a buyer from a declining market price with builders here in Northern Virginia. Although they use to take contingent contracts, that backfired when people couldn’t sell their houses for enough money to buy the new construction and now they don’t do it anymore. We advise our clients that if they want to get a great deal from a builder, buy a spec home. You get a few less choices but you usually get a lot more home for the money and you close much quicker so there is little chance of price declines and loan issues.

]]> By: Jim Duncan http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/comment-page-1/#comment-11360 Jim Duncan Wed, 19 Dec 2007 12:41:44 +0000 http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/#comment-11360 Rick - thanks for the comment and I'm sorry your comment went to spam. It may be unjust, but so is the buyer not being able to get a loan because the house they contracted for is no longer worth what they contracted to pay. If you contract on a $400k house and then six months later, it's worth $320k - what options are there other than walk away or renegotiate? The builder surely can't sell it for $400k when the competing houses are now priced at $330k, and the buyer doesn't have %80k to make up the difference, because she's getting a 90% loan ... Rick – thanks for the comment and I’m sorry your comment went to spam.

It may be unjust, but so is the buyer not being able to get a loan because the house they contracted for is no longer worth what they contracted to pay.

If you contract on a $400k house and then six months later, it’s worth $320k – what options are there other than walk away or renegotiate?

The builder surely can’t sell it for $400k when the competing houses are now priced at $330k, and the buyer doesn’t have %80k to make up the difference, because she’s getting a 90% loan …

]]> By: Rick Marnon, Howell http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/comment-page-1/#comment-11359 Rick Marnon, Howell Wed, 19 Dec 2007 03:39:31 +0000 http://www.realcentralva.com/2007/12/17/dropping-prices-new-construction-and-the-inherent-risk-in-a-changing-market/#comment-11359 I like the idea of the appraisal just prior to the closing of the deal. Do you think that this is unjust to builders in that people may be putting too high end of products in their home and this may have put them upside down. I know that when I looked at building that this can become a real problem, because if you do higher end materials you may eat up your equity. I like the idea of the appraisal just prior to the closing of the deal. Do you think that this is unjust to builders in that people may be putting too high end of products in their home and this may have put them upside down. I know that when I looked at building that this can become a real problem, because if you do higher end materials you may eat up your equity.

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