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New Home Construction hit worst in Market downturn

I wrote this article a few months ago for a local portal that publishes me once/month:

http://www.discoversd.com/articles/sd-real-estate/205.html

The title says it all - talks about main reasons new homes take some of the worst hits during a down market. I also have some ways that I've negotiated good values for my buyers and would like to hear the experiences of other local Realtors as to ingenious ways to get the most for your buyer's when working with builders.

One thing I'd add to this article that I've discovered lately is that although the builders are always ready to build another, and hence have a large inventory to sell, they are actually only building a very small number of homes at a time in response to the slow sales market. So after viewing all the models with a builder, I find that there are usually less than 5 homes that will be ready in the next 3 months.

Any thoughts you have on taking advantage of new home construction as a buyer's agent would be most appreciated!

Adam Pascu

San Diego Homes for sale

Posted by Adam Pascu, San Diego Realtor on 11/09/2007 03:59 PM

Comments (11)

new homes, san diego, new construction, new home construction, market

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11 Comments on New Home Construction hit worst in Market downturn

NOV

2007

My buyers are loving new home construction. They are the only ones that can truly compete with the flood of foreclosures in our area. The Builders are offering huge incentives on inventory homes and the commissions are wonderful. Lennar Homes is offering 15% commission on select homes. It only takes a few $300,000 homes to make for a good year.

Always submit a completely absurd offer that the builder is insulted over, walk away in good spirits...and wait for the phone to ring. They'll work with you. On anything that will close by the end of the year, REALLY GO FOR IT- the large companies have year end quotas that are submitted to corporate (to assess the competence of the division and determine new year bonuses...or changes).

Steve,

Wow, 15%?! I've seen as high as 6 or 7 in san diego, but nothing that high...

Laurie,

Good advice....i'll try it with my next offer! Now I just need to do some prospecting.... =0

NOV

2007

Adam,

Great post - read the article and checked out your web site. Looking good. My wife was in new home sales here in San Diego for about 12 years. In this type of market don't be afraid to ask for anything that your buyers want from the new home builders. They might just be willing to do it. I find the builders that are sitting on inventory with high "can rates" are really wheeling and dealing. Boy the shoe now is on the other foot!

Mike Lewis

Thanks, Mike. My website is a bit old and needs overhaul.....too many things to do, so little time (and money =0)

adam

NOV

2007

Adam,

We just picked up an agent from a new home community that's not doing so good. She's a great agent too and there was just not enough new home sales to keep her going.

Mike Lewis

NOV

2007

one of the older agents from my old prudential office went into new home sales a year ago in anticipation of the downturn....how are most new home sales agents paid? I would assume it's part salary part commission, but I guess it could differ greatly by builder.

adam

NOV

2007

Adam,

It's draw vs. commission for most agents working at a new home community. Agents start off with a small draw $3000 - $4000 per month and then once the sales come in that amount is deducted from the commissions.

Mike Lewis

NOV

2007

Adam,

I spoke with an agent yesterday that was telling me a new home community in Chula Vista shut their doors and walked away from the project after completing the models. They're really starting to feel the pain too. We're all in it together.

Mike Lewis

Eastern Chula certainly has been hit hard by the market correction in the last 2 years. Tons of inventory...all very similar....not much else out there - i wouldn't want to live there. I had a listing in Otay almost 2 years ago and every week we found ourselves with new competition that was undercutting our price. I told them to lower their price, but they were always too late to do so. We started out at $550-600k. Eventually, after a year and with another realtor, they sold it for $475. I certainly learned my lesson with that listing!

Adam,

I feel that pain. We have listings in Otay Ranch too and the inventory is incredible. Foreclosures and short sales galore!

Mike Lewis

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