Buying a New Home at a Discount

New home builders are starting to struggle a bit.  As the housing market continues to slow, new home sales are dropping.  Prospective buyers wind up stuck in their current homes as they struggle to sell, leaving builders with an ever increasing inventory of new homes.

To move those properties, builders are starting to offer substantial incentives and discounts.  Some homes have been slashed in price by as much as twenty percent.  Other builders pay closing costs on the mortgage loan or offer gift certificates for free furniture to help seal the deal.  Home loan related offers also include builders paying points on the mortgage which can help to reduce the mortgage rate.  Still others are offering perks such as free rooms or upgrades.

While this situation is getting sticky for some builders, it is a wonderful opportunity for those in a position to buy a new home and take advantage of lower home prices and reduced cost mortgages.  For the first time in years, you are now able to negotiate with builders to secure your brand new home at a sizeable discount.  Or at the very least take advantage of standard rebates and other incentives builders are throwing at buyers.

Spec Homes

The best deals to be had are on existing inventory.  When builders start a home without a buyer lined up, it is called a spec home.  These are the “quick move-in” homes advertised by builders for those who don’t want to wait for months to start new construction.  These spec homes are also what are weighing heavily on many builders.

When a spec home doesn’t sell quickly, it is costly to builders.  An undeveloped lot or even a home in progress is appraised far less than a completed home.  As a home nears completion, the taxes are higher and builders feel greater motivation to sell.  This motivation is the key to your future great deal.

Builders complete a specific number of spec homes every month depending on market conditions.  Of course, new homes can take four to six months to complete, so it can be challenging to judge the market conditions that far in advance which is one reason there are so many spec homes to be found.

Another reason is that many potential buyers start building a new home only to find they are unable to sell their existing home.  If they started their new home on a contingency, the builder assumes responsibility of the started home and it becomes yet another spec home for the builder to try to sell through rebates and substantial discounts.

The internet provides an excellent way to begin your research and even complete many of the home buying steps to secure a great deal on a new home with a builder.

Builder Websites

If you know of builders in your area, start by searching their websites for existing inventory.  There may be advertised specials on the website, but even so, send an email to the builder requesting additional information on spec homes in the neighborhood and asking if any additional discounts or promotions are available.  You’ll likely see a rapid response if the builder is able to move on his price at all or make other incentives to move the house.  If the builder isn’t offering to pay mortgage points or mortgage closing costs they may offer upgrades to the property for free or even male the first mortgage payments on yourun new home loan.

Aggregate Sites

Even if you have no idea what companies are building in a certain area, you can still find new homes online along with discounts on those homes.  Sites such as inest.com and move.com allow you to search for all new homes in a certain area.  These sites may have incentives listed as part of the description on the new home.  If not, you can still contact the builder through the company website or possibly through contact information provided by the aggregate site to see if additional discounts exist.

Web Searches

Finally, a web search may help you find additional discount opportunities.  In a major search engine, such as Google, type in “Your City New Home Discounts” and see what results you find.  Many may be repeats from other research methods, but you may find a hidden jewel or two from custom builders or real estate companies.

Yahoo, among other websites, offers a real estate service that plots new neighborhoods and builders in the area.  On Yahoo’s site, a pull down menu in the real estate section allows you to locate new homes in any city you request in the search box.

Local newspaper websites will not only display real estate listings including new homes, but you may also be able to find banner ads displaying the various incentives builders are offering.  Search for newspapers in your desired city and then comb through the online real estate section to see what you can find in the way of new homes and possible incentives.

Remember that you are looking for “Available” or “Fast Move-in” or “Move-in Ready” homes from these builders, so vary your keywords when you search to be sure you catch all possible opportunities.  Seek out additional discounts and negotiate as much as possible.  Even if the builder is not offering financial incentives you can ask if they will negotiate to get your mortgage rate lower.  You may just land yourself your dream home and low cost mortgage loan for far less than you ever imagined.