Just made an offer on an in-progress home

minneapolisiteJune 10, 2012

Long story short: we just offered $580,000 (w/ $100,000 in earnest money) on an in-progress semi-custom house listed at $615,000. Hope to hear a counter offer by tomorrow evening.

Short story long: We looked at about 100 model homes, picked one we loved by Builder A, and had Builder B bid it out for the lot we had been eyeing for over a year (Builder B owns the lot we were interested in). Builder B came back at $663,000, which is more than we're comfortable spending. While we were chewing on that number and trying to decide what options to pull and square footage to cut to make it more affordable, I was surfing Builder A's website and noticed that they were building 3 spec homes with "our" floorplan. The spec homes are 50% closer to my husband's work, are in an established neighborhood with mature trees, and w/ the options we want they are priced at $615,000 (or $604,545 after the 1.7% discount for not bringing in a buyer's agent). The real estate agent told us that more earnest money = lower purchase price. We are young and play our cards close to the vest, so I think he was shocked when we showed up the next day with an offer for $589,860 ($580,000 after the buyer's agent discount) with $100,000 earnest money.

If any of you have been through a similar situation I'd love to hear your thoughts/advice/predictions.

(At this point, maybe I should be posting in the buying/selling forum, rather than the building forum, since our "build" is turning into a "semi custom" home rather than building from scratch as originally planned.)

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bevangel_i_h8_h0uzz

Hey that's great. I hope they take your offer or come back with a counter that you can accept! Do post on the buying/selling forum for any advice they can offer you on getting the deal done without SNAFU's but unless the house is already pretty much done, I assume you'll still get to do all the fun stuff like pick paint colors and tile and countertops, etc. Thus, you'll still be "building" for a while at least so don't feel you have to desert us. We still want to see pics and hear all the details. LOL!

    Bookmark   June 10, 2012 at 11:09PM
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lavender_lass

Min- Sounds like a great opportunity! You still get the mature trees you've been wanting...and a closer communte for your DH.

Are you still going to be able to make your changes, to the dining area and master bath? Or is this such a wonderful option that you're okay with it all 'as is'?

Don't disappear! We want updates on all your finish selections...and to see pictures, when it's all done :)

    Bookmark   June 11, 2012 at 12:32AM
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minneapolisite

We have been warned that changes will incur additional fees, in part because materials have already been ordered. I'm still going to push for those changes but it will depend on how expensive they are. Fortunately the dining area changes are pretty minor (just adding in my bench/divider idea). The bathroom floorplan is growing on me, since I can see the pros and cons of each option. At this point, I think so long as we add a Solatube above the shower, I can deal with the master bath as is.

I will come and post an update once we hear back from the builder/agent! :)

    Bookmark   June 11, 2012 at 8:30AM
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mgmsrk

Why in a house of that cost is there no light in the shower?

I love solatubes, had 8 in the house I built 8 years ago. Unless they have started making them for showers you do not want one IN the shower stall. It will spend all it�s time fogged up and make the condensation worse in the cold or hot weather depending on if you are running heat and ac.

    Bookmark   June 11, 2012 at 9:26AM
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nini804

So excited for you! Do update us!

    Bookmark   June 11, 2012 at 11:14AM
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minneapolisite

@mgmsrk I think there already is a light in the shower, I just prefer a solatube for natural light. Glad to hear you like your solatubes! My parents had a skylight above the shower for 20 years and finally replaced it with a solatube. The solatube is infinitely better--I will have to ask if they regret it.

    Bookmark   June 11, 2012 at 11:44AM
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minneapolisite

Just got the builder's counter-offer. $611,500 with $10,000 in seller paid closing costs. The problem is that our closing costs will be way less than $10,000 because we are going through our credit union. I emailed the loan officer to see if we can apply the remainder to our mortgage, but my google searching indicates that it's probably not legally possible.

We're still discussing how to respond to the counter-offer. $611,500 is outside of our comfort zone. Thoughts?

    Bookmark   June 11, 2012 at 9:54PM
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auroraborelis

What if you agree to the $10,000 closing costs, especially since you know you'll be under, and then counter at whatever you feel conformable with?

    Bookmark   June 11, 2012 at 10:45PM
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minneapolisite

There was a note in their offer that they absolutely will not go below $600,000. That's fine because $600,000 was our breaking point too.

I am waiting to hear back from our banker on how we can legally apply that $10,000 to our costs. Since our closing costs are much less than $10,000, if we accept their offer as it stands, we would lose that money back to the builder.

Right now, we have two offers printed and signed and ready to present, depending on what our lender tells us.

Offer A: $610,000 minus $10,000 closing costs plus $5000 in specified upgrades
Offer B: $600,000 plus $5000 in specified upgrades

The reason they won't go below $600,000 is they are building another very similar house next door and don't want our sale price to devalue the house next door. According to the agent, they undervalued those houses when they first listed them and are regretting pricing them so low. It's kind of funny--they are so used to pushing the "zoo" developments in outer ring suburbs that they didn't realize how popular a new build in an older neighborhood would be. (I saw the original plan submitted to the city planning board back in November--they originally were going to price these houses between $450,000 and $550,000. Now they plan on listing the house next door at $640,000. Wowza.)

    Bookmark   June 12, 2012 at 11:39AM
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tooskinneejs

"According to the agent, they undervalued those houses when they first listed them and are regretting pricing them so low."

First off, I wouldn't believe a word the agent says.

Second, if they are interested in keeping the official gross sales price high for comp purposes, why not offer $600,000 with $10,000 in upgrades of your choosing. That's halfway between your original offer of 580 and their supposed bottom line of 600. Tell them you are ready to sign the papers today if they accept. And they will.

    Bookmark   June 12, 2012 at 11:49AM
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minneapolisite

I like that idea. Going to follow up with my husband and see what he thinks.

    Bookmark   June 12, 2012 at 12:13PM
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minneapolisite

I think we are going to offer $611,500 (their original ask) plus $5000 in closing costs and $10,000 in upgrades of our choosing. Or maybe $15,000 in upgrades, so they have some room to counter and we'd still end up where we want to end up. Thoughts?

    Bookmark   June 12, 2012 at 4:36PM
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kirkhall

Upgrades/modifications... They are in total control of what those change orders are going to cost. So, don't be generous to them on this...
Try for "up to 15k in change orders" (and give them your preliminary ideas, if you want). They may look at them and think, oh yeah, no way will she reach 15K and you both get what you want.

    Bookmark   June 12, 2012 at 4:42PM
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auroraborelis

I think kirkhall has a great idea regarding how to ask for upgrades.

However, one additional though, why not agree to just cover closing costs, especially if you know they will be around $5000. Then they will feel like they are getting what they want, and you won't be out anything extra.

    Bookmark   June 12, 2012 at 4:53PM
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minneapolisite

They offered $10k in closing costs. Our closing costs will be less than $5k. If we accept their $10k offer, we will be leaving at least $5k on the table.

I already hit send on the email to the agent before Kirkhall responded. Do you think this wording is okay?

� Seller shall pay Buyer's closing costs, prepaids, and insurance not to exceed $5,000.00.
� Sale price of $611,500 shall include home as specified in Proposal, as well as a $15,000.00 allowance for additional upgrades of Buyer's choosing to be determined by June 22, 2012.

We do already have a the builder's price list for most of the options we're interested in, so I think they will have little opportunity to screw us over.

    Bookmark   June 12, 2012 at 5:14PM
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auroraborelis

I think you have worded it well. If they have any issues you can discuss with them the upgrades you are interested in as in my experience the listed cost has little relation to the builders cost on these types of homes!

The only thing I might have worded different is that I may have agreed to pay the closting costs up to $10,000 as you know it won't cost that much. Then they get what they want, and you get what you want and it is all just semantics!

    Bookmark   June 12, 2012 at 6:10PM
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kirkhall

The fact that an upgrade price list already exists takes that guess work out of the contract. So, I think you are fine.

    Bookmark   June 13, 2012 at 1:35AM
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minneapolisite

Thanks everyone! They flat-out rejected our counteroffer (frustrating). We talked about it and agreed even at the $611,500 price it was still a steal, especially since the location/lot/floorplan is as close to perfect as we've found in 7 years of house hunting. They agreed to $5k in upgrades and $5k in closing costs and we just handed over the purchase agreement this morning.

We will still have some designing to do (part of our proposal is a full wall entertainment center to replace the fireplace that we did not want). We need to have that designed and ready to go by June 22. I'll be starting a new post to troubleshoot that! :D

    Bookmark   June 13, 2012 at 12:24PM
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auroraborelis

Congrats! That is great news! I'm a bit jealous as you will be able to move into your new home SOOOO soon! :)

    Bookmark   June 13, 2012 at 12:30PM
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minneapolisite

Yeah the new house will be ready sometime between Oct 15-30!

    Bookmark   June 13, 2012 at 4:29PM
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scrapbookheaven

Congrats!

    Bookmark   June 13, 2012 at 4:34PM
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auroraborelis

Wow! That is soo soon. Very excitting.

    Bookmark   June 13, 2012 at 5:13PM
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