Hello everybody, welcome! Lance Mohr here. Today we are on day #5 of the video training
series on buying a new home. Today, I want to talk about how to get a great deal when
buying a new home. I know this is really, really important for a lot of you. It’s
a lot like buying stock. You don’t make your money when you sell your home. You make
your money when you buy the home. So you have to buy right and you have to buy smart. Now,
we only talked about some of the things you need to do, like picking the right location.
That’s very, very important because if you pick the wrong location you’re going to
see the homes aren’t going to be selling and you aren’t going to get a lot of appreciation.
Other things, such as the builder reputation, the floor plan of the home, the elevation
of the home, the lot orientation of the home. There’s a lot of other things that really
come into it. But what I’m really going to focus on today is the different stages
of when you need to buy a new home. This is very important. So, let’s start off with
the first thing; let’s just say you go out to a subdivision and it’s just dirt. The
model home is not there yet, maybe a trailer’s there, the representative is in or maybe they’re
in another location, but it’s just dirt. This is a huge disadvantage, as we talked
about, for a homebuyer because you don’t know what the community is going to look like.
So, you’re taking a little bit of a gamble on the builder. Now, I talked about how to
make sure that you don’t get hurt by this, earlier in previous videos. But what the builder’s
going to do is this builder’s going to go out and they’re going to figure out where
the market is, and they’re going to underprice the home. They could underprice it quite substantially
and the reason is they want to get momentum; it’s all about momentum. When you’re dealing
with the new home market, everything’s momentum. Who wants to go into a builder on a Saturday
afternoon at 3:00 and you walk into a model home and you hear crickets? You’re not going
to want to buy there. But when there’s people and they’re motivated, excited, and they’re
looking at homes, writing up contracts, that’s something that you want. So if you go in and
you buy early in the process, what’s going to happen is they’re going to give a really
good discount because they want the first 5 people, first 10 people, in the home buying
process. And then, all of a sudden, the model home’s going to go up. As soon as the model
home goes up, they’re going to raise the prices a little bit. Now, they’re still
probably going to be a little bit lower, but they’re going to raise them. And then again
they want the momentum so they keep on going. As soon as the first home or two starts getting
completed, you’re going to see they’re going to raise the prices again. Keep in mind
when buying a new home, new homes really determine what the pre-owned do. Let’s say the federal
government comes in and they say, hey we want the homes to be even greener than they were,
you builders all have to do this in the future. Well, what happens? The price of the new home
goes up, so of course the price of all of the pre-owned homes goes up, as well. So,
there’s a lot of different factors that play into this with the new homes. But some
other areas to get a good deal is, you could be in a subdivision and it’s pretty complete,
maybe it’s 25% complete, 75% complete, well if you see a home, the closer to completion
that the home is, generally what the builder will do is one of several things. The closer
they get to, assuming it’s not a fallout, in other words a buyer bought it and then
they couldn’t close, if that’s the case what they’re generally going to do is pay
more closing costs for you or they’re going to lower the price in the home because they
want to get it off the inventory sheet. Builders don’t want homes sitting around because
they can’t afford it; they make money on homes that are selling. They don’t want
them sitting around. Let’s say they build a home and they’re almost complete. For
whatever reason it hasn’t sold. What they’re going to do, the closer it gets to completion,
they’ll generally start putting more upgrades in the home, they’ll pay more closing costs,
they’ll go ahead and maybe lower the price. Now, of course, a lot of this depends on the
market that we’re in, as well. It’s going to be a lot harder to get a builder to do
much of anything when it’s a seller’s market and inventory’s very, very tight.
But when it’s a buyer’s market, it’s certainly going to be a lot easier. So, there’s
different variables. The closer it gets to completion, you’re going to get a good deal.
I’ve bought several homes in December. I bought one Christmas Eve that was fully completed.
And I’ve had other homes I bought in November with the closing before the end of the year
so the builder could get it off their books and they wouldn’t have it on their books
for the next year. So, a lot of these things play on their mind. Always talk to your real
estate agent, get an agent that understands new homes. And the other one is, let’s say
it’s at the end of the subdivision. Like, I was out the other day and I looked at a
home. It was the last home in the community, and they really discounted the home. They
discounted it around $30,000 because they just wanted to get out of there. Now, a lot
of times builders will save the worst lots for the end. They’ll put big discounts on
them. But just keep in mind that if they’re doing that, if you’re getting a big discount
because of backing up to a street, you’re probably going to have to pass that discount
on to the next homebuyer. But sometimes if you just catch the builder where they may
have 1 or 2 or 3 homes left and they’ve already moved out of the subdivision, then
you’re probably going to be able to strike a good deal. And, again, a lot of this is
going to have to do with if you have a real estate agent and what that real estate agent
really knows about new construction. Let me give you another real quick story. I think
this will really illustrate it. Several year ago, I remember, I had a client call me up
and it was David and Tracy. So David calls me up and says, hey Lance, Tracy and I are
thinking about buying a new home, we spoke with you about a year ago and you seemed really
nice and knowledgeable, you knew the market, we want to work with you. But we’re thinking
about buying this home and it’s brand new. And I said, ah, where are you looking at buying?
And they told me the subdivision, and I said, well is it with this builder? And they said,
yes, and I said, okay, what are you getting the home for? And they said, we’re getting
it for $198. And I said, oh, I said, okay, that’s good, but I could do better. He’s
like, what do you mean? I said, if you work with me, I’ll get it to you for a better
deal. He said, okay, and I said, I’ll tell you what, let me call up Carey, I know the
builder rep over there, so let me call Carey and I’ll give you a call back. I picked
up the phone and I called Carey. I said, hi Carey, it’s Lance, I’ve got this couple,
I think you’ve already spoken to, David and Tracy, they’re thinking of buying a
home out there, what’s the rock bottom you could do? I said, just tell me the lowest
you could give it to me. I said, why don’t you give Jeaniette a call and get back to
me in 5 or 10 minutes. Now, Jeaniette is the President of the company, and they’re a
pretty big company. They built a lot a lot of homes. And I knew Carey, etc. So, he calls
me back and he says, alright, well we will bottom line do it for $193. I said, okay,
fantastic. I said, okay, does this include a garage door opener? And he’s like, well…
And I said, okay, great, it does (laughter). Subject to close. So I went back and I went
to Dave, and I said, I could get the home to you for $193 and a garage door opener thrown
in on top of it. He yelled back to Tracy, hey Tracy, Lance could get us the home for
$193 and a garage door opener. And I heard Tracy yell; she said, how in the heck – she
didn’t say heck though – did he get us the home for less of a price? And I said,
hey Dave, put Tracy on the telephone and let me explain this to her. So, she gets on the
telephone and I said, Tracy hey I understand your concern. She said, well that’s impossible,
they have to pay your commission and they’re giving you a better deal than they would give
us, why is that? And I said, well let me ask you a question. I said, over the next year,
5 years, 10 years, I said, how many homes do you think you’re going to buy through
this builder? One? She said, yeah. I said, you think they know that? And she said, yeah.
I said, how many of your friends, family members, coworkers, are you going to tell about this
builder and they’re going to go and buy this home because you told them about this
builder? And she said, I don’t know. I said, yeah, probably zero. I said, you think the
builder might know that? She said, yes. I said, they do know that, and they also know
they want my business because I sell a lot of new homes. I said, as a matter of fact,
with this builder, I sold 19 homes last year with them alone. Now do the math; with this
particular builder you’re probably running a 15% profit margin, not counting the upgrades
and an average sale price of probably $200,000. I said, you think they might know this? She
said, yes. I said, does this make sense that I could get you a better deal on a home than
you could get yourself. I said, worst case scenario, even if I could get you a better
deal, you have nothing to lose by working with me, but I know I could, and I did. She,
it, actually went really well, but the funny thing is, we go to write the contract and
she brings her mom in and everything’s going great, we get all the way to the end and she
looks at Carey and she goes, I still don’t know how he got a better deal than us and
you have to pay the commission. And Carey just shrugged it off, didn’t say anything.
So, there’s a lot of ways to get a good deal, but you have to buy smart. Sometimes
it’s just knowing what you’re doing and implementing that. If you have any questions
at all, don’t hesitate. Click on the link below, email me, give me a call, write a comment
and let me know. If you like this video, please share it. Give us a thumbs up and write us
a comment and let us know. Subscribe to the channel. Thank you very much, and I look forward
to seeing you. Have a great day.