Negotiating with mattamy homes??
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As long as it's a Seller's Market, they have no incentive to do you any favours and you have no leverage with which to negotiate a sweeter deal
Bass: I agree with everything you say except for the last part....it is not always a buyers market. Especially when people are paying a premium or above asking price to close the deal.
Just like the auto industry, a base house has very little profit on it. I worked for a builder in Orangeville and after all expenses (and there's a shit load) his bottom line profit on a $249K house (at the time) was $6500.00. That's it. So if you think you're going to be able to get them to knock $10K off their base house, dream on because NO builder will sell any property at a loss.
As for negotiating on upgrades: same as the auto industry, yes, margins are better on the upgrades but that is where their profit is so while they move a bit on them, don't expect freebies.
For example: I worked for a builder 2 years ago. They sold an oil finish oak floor as an upgrade. The COST of the floor was $18.49 psf. They sold it for $24.00 psf. On top of their cost they had install $3.00 psf, underlayment $1.00 psf and threasholds/transitions from wood to carpet etc. So, his final profit was $1.50 psf. On an 800 install that's $1200.00 but he also had to cover any damage to it by other trades and I for one know of one unit that needed the entire floor replaced once due to trades ruining it.
Appliance packages: for the record builders DON'T get them for free or at a deep discount. In fact, I was able to purchase appliances cheaper than the builder could via their "loyalty purchaser" program. For example: I was able to purchase a microwave range stainless steel, for $50.00 less than the builder was paying and it was 25% cheaper than the same unit at leon's. Now you say: they weren't buying as many as mattamy, but this builder bought 175 washers/dryers dishwashers, fidges, stoves, and rangehoods and this was only 1 of 3 developments they were working on for a total of approx 500 units total. That's quite the quantity....
Something that many forget about when buying a new house is the amount of money that goes into turning an empty field into a development. You have sewers, powerlines, watermains, grading, sidewalks, plus you have all kinds of munincipal levies because the area's water supply, waste processing has to be upgraded to handle the load. There are millions of dollars in the various services.
My point being don't go in there thinking the developer is rolling in cash on every house they sell......sure they make money but not as much as you think.
Just like the auto industry, a base house has very little profit on it. I worked for a builder in Orangeville and after all expenses (and there's a shit load) his bottom line profit on a $249K house (at the time) was $6500.00. That's it. So if you think you're going to be able to get them to knock $10K off their base house, dream on because NO builder will sell any property at a loss.
As for negotiating on upgrades: same as the auto industry, yes, margins are better on the upgrades but that is where their profit is so while they move a bit on them, don't expect freebies.
For example: I worked for a builder 2 years ago. They sold an oil finish oak floor as an upgrade. The COST of the floor was $18.49 psf. They sold it for $24.00 psf. On top of their cost they had install $3.00 psf, underlayment $1.00 psf and threasholds/transitions from wood to carpet etc. So, his final profit was $1.50 psf. On an 800 install that's $1200.00 but he also had to cover any damage to it by other trades and I for one know of one unit that needed the entire floor replaced once due to trades ruining it.
Appliance packages: for the record builders DON'T get them for free or at a deep discount. In fact, I was able to purchase appliances cheaper than the builder could via their "loyalty purchaser" program. For example: I was able to purchase a microwave range stainless steel, for $50.00 less than the builder was paying and it was 25% cheaper than the same unit at leon's. Now you say: they weren't buying as many as mattamy, but this builder bought 175 washers/dryers dishwashers, fidges, stoves, and rangehoods and this was only 1 of 3 developments they were working on for a total of approx 500 units total. That's quite the quantity....
Something that many forget about when buying a new house is the amount of money that goes into turning an empty field into a development. You have sewers, powerlines, watermains, grading, sidewalks, plus you have all kinds of munincipal levies because the area's water supply, waste processing has to be upgraded to handle the load. There are millions of dollars in the various services.
My point being don't go in there thinking the developer is rolling in cash on every house they sell......sure they make money but not as much as you think.
I worked for a contractor in the 90's, selling upgrades to new home buyers including Mattamy, Starlane, Greenpark etc.
If you can negotiate a "free" or cheap upgrade, great. But if you are paying the asking price from the builder, you are paying top dollar.
Most builders like Greenpark, Mattamy etc build houses to sell as fast as possible, which means keeping the cost down. They want you to take upgrades from them because the profit margin is much much higher on the upgrades.
I would strongly suggest that you do have the builder do any upgrades that are within the walls, ie wiring, plumbing, central vac lines, in wall speaker systems etc.
And if you are buying a new home, get phone cable and cat-6e network jacks put in by the builder and negotiate that up front at the start. A phone jack in the kitchen and the master bedroom is simply enough IMHO.
If you can negotiate a "free" or cheap upgrade, great. But if you are paying the asking price from the builder, you are paying top dollar.
Most builders like Greenpark, Mattamy etc build houses to sell as fast as possible, which means keeping the cost down. They want you to take upgrades from them because the profit margin is much much higher on the upgrades.
I would strongly suggest that you do have the builder do any upgrades that are within the walls, ie wiring, plumbing, central vac lines, in wall speaker systems etc.
And if you are buying a new home, get phone cable and cat-6e network jacks put in by the builder and negotiate that up front at the start. A phone jack in the kitchen and the master bedroom is simply enough IMHO.
Good point comp, especially if you're planning on having a finished basement and use it as a media/home theatre room. Now is the time to have them either run conduit or speaker wire to the locations where you'll be putting the rear surround speakers.
No, but that really is irrelevant. If you sell 10,000 houses at $6,500.00 profit each, that is still $65,000.000.00 profit but they wouldn't have that profit if they sold the houses at a loss now would they?dcbogey said:
To put it another way: when you buy windows Vista at a computer store: do you negotiate a cheaper price? And the house that the owner of Mattamy lives in is a run down shack compared to Bill Gate's......
Anyone know those townhouses that are being built at royal york/islington just south of the QEW? About 8 yrs ago when they just were starting phase 1 I met the principal of the company building them. When we were talking about costs etc he let on that he only made about $4,000.00 clear profit per unit when it was all said and done. Now that is the company's profit and is on top of his nice salary and bonus' etc but still, when you think about it, you can make that much, and more, selling cars......
For the record BOTH developers said it was more a labour of love than a get rich business. They both said that is what they wanted to do, and that is the main reason they did it. Sure they both made a nice living out of it but they both said there is easier and less risky ways to make better money.
Think of it this way: say Mattamy starts a development and starts building houses. Then the bottom drops out of the market and they can't sell ALL the properties. Do you think they can just leave the lots vacant? I know some do but many contracts with the city etc stipulate that a house must be built on the property within x amount of time. Then the developer has to carry the mortgage on those empty houses. Same as condo developments: the builder has to carry the cost and maintenance etc on units that don't sell. That is a tremendous overhead to risk......
They do a nice enough volume that the main "family" businesses in the developers game can afford whatever they want and pay off as many regional and local councillers as they need. Some people collect stamps or coins, they collect politicans.
That is true but that only applies to the big boys...many smaller ones can't afford to do it and often get nothing but headaches. But one thing I've learned recently: in Toronto, if a developer doesn't get his way with the city, he can simply go to OMD and more likely than not, they approve whatever the hell he's asking for because the only thing Ontario cares about is the tax base. They don't care if the building is ugly, over the density, going to strain the city's resources etc.LancsLad said:
(oh yeah, and OMD isn't that band from the 80's either lol)
Yup Bass, that's how I ordered my loft too....only thing is, I turned it into a shop so never got around to finishing everything proper lol.
I am in the industry (real estate) and know that many don't budge on price and extras. I do know some agents that inflate the prices on their price list so they have some room to throw in some extras to make a sale on a slower site. For the most part , builders i have dealt with in the past 8 years in a booming market basically it's a take or leave it mentality. And yes extras like wood floors and other decor stuff are outrageously priced. Best to do structural items with the builder as in oak stairs, rough-in's , adding/removing walls and do some of the work after you move in.
Just my perspective
) and know that many don't budge on price and extras. I do know some agents that inflate the prices on their price list so they have some room to throw in some extras to make a sale on a slower site. For the most part , builders i have dealt with in the past 8 years in a booming market basically it's a take or leave it mentality. And yes extras like wood floors and other decor stuff are outrageously priced. Best to do structural items with the builder as in oak stairs, rough-in's , adding/removing walls and do some of the work after you move in.Just my perspective
Yes you can try to negotiate, but rarely ever face to face with the decision maker. The agent will require your deposit and say something like, I'll have to check with head office or the sales manager on those extra items you asked for. They will come back with a no or a counter offer with some free upgrades that they are likely giving to anyone who asks (like free A/C or built-in vac rough in).
By the way, don't think you can sneak onto site and pay the workers cash to do upgrades. The site super has seen all the tricks in the book and will physically rip out any under-the-table upgrades and make you pay for the repairs. They claim it is to ensure everything is up to code. The days of getting something done for a case of beer are long gone.
By the way, don't think you can sneak onto site and pay the workers cash to do upgrades. The site super has seen all the tricks in the book and will physically rip out any under-the-table upgrades and make you pay for the repairs. They claim it is to ensure everything is up to code. The days of getting something done for a case of beer are long gone.
the guy may have made $4K on each townhome, but ask him how much he made on the project management fees on the development. usually 3-5% of total budget. this is considered a "cost" to the budget and included add that to his margins and he is doing pretty good. Especially if he has a few prjects on the go.tboy said:
Well the project management fees are (in the developments I worked at) are eaten up by, ahem, project management. Each had a staff of about 10 or so overseeing the project. Just guessing that each made about $50K so that's half a mil right off the top. And as we all know, that employee costs run about 30 - 40 percent of the wage so that's another $200K. So we're talking a cool 3/4 mil.
For the record, at one development (condos) I was out with the principal for lunch. We were going over all the headaches etc and (backstory, I've known him for about 8 yrs, been to his house, know his kids etc) I asked him: seriously, how much are you going to make on this project when it's all said and done because these deficiencies are killing us. He said "honestly? about a million...." and I said "whoa, that's not much considering how much it's costing you to put up" he said "well, a million's a million no matter how you slice it...".
Think of it another way: costs 20 mill to put up a building, he makes 1 mil on it, that's what....5 %??? not very much!!!! I worked for companies that freaked if they didn't hit 50% profit......
For the record, at one development (condos) I was out with the principal for lunch. We were going over all the headaches etc and (backstory, I've known him for about 8 yrs, been to his house, know his kids etc) I asked him: seriously, how much are you going to make on this project when it's all said and done because these deficiencies are killing us. He said "honestly? about a million...." and I said "whoa, that's not much considering how much it's costing you to put up" he said "well, a million's a million no matter how you slice it...".
Think of it another way: costs 20 mill to put up a building, he makes 1 mil on it, that's what....5 %??? not very much!!!! I worked for companies that freaked if they didn't hit 50% profit......
Suk: that may have been true in times gone by but you have to look pretty fricken hard to find vacant land within the city limits. Most of the developments going on now already had buildings or something on them and I don't believe any developer has that much property in this city and is just renting whatever is there.....
By the same token, look at the surrounding areas to the N S E...most of the property was farmland and had a big for sale sign on it prior to the development being started. If it was for sale, how could the developer already own it?
Using the townhouses at evans and islington as an example: set works and alphaform exhibits used to be on what is now townhouses. I know for a fact that alphaform was privately owned.....(so that blows that theory out the window).
Sorry, but especially within the city proper, they are building on any square inch of property and re-zoning all over the place to get rid of industrial/retail/office and put up condos.....
As for $80K per unit, even then that's only 20% profit and I bet there are a lot of fudge factors built into that number so the company looks good on paper.
For the record it costs about $150.00 psf to build a house. This doesn't include property, services, levies, advertising, architecture, etc etc etc. So on a 1200 sq ft house that's about $180K. Now factor in finishes, cabinets, paving, grading, sewers etc etc etc AND the actual cost of the land itself and that number probably is up around $280 psf or a cost of $336K. COST Hell, I've seen building lots going for $200K and they ain't that big (I think the last one I saw was 1/4 acre)
By the same token, look at the surrounding areas to the N S E...most of the property was farmland and had a big for sale sign on it prior to the development being started. If it was for sale, how could the developer already own it?
Using the townhouses at evans and islington as an example: set works and alphaform exhibits used to be on what is now townhouses. I know for a fact that alphaform was privately owned.....(so that blows that theory out the window).
Sorry, but especially within the city proper, they are building on any square inch of property and re-zoning all over the place to get rid of industrial/retail/office and put up condos.....
As for $80K per unit, even then that's only 20% profit and I bet there are a lot of fudge factors built into that number so the company looks good on paper.
For the record it costs about $150.00 psf to build a house. This doesn't include property, services, levies, advertising, architecture, etc etc etc. So on a 1200 sq ft house that's about $180K. Now factor in finishes, cabinets, paving, grading, sewers etc etc etc AND the actual cost of the land itself and that number probably is up around $280 psf or a cost of $336K. COST Hell, I've seen building lots going for $200K and they ain't that big (I think the last one I saw was 1/4 acre)
tboy,tboy said:
if they only have one project on the go, why would u need 10 people. especially on a high rise condo project? they majority of the costs are contracted out to consultants, ie marketing, sales, engineers, planners designers and are considered a separate line item from mgmt fees. If you have 10 people on your payroll u better damn well have more than one job on the go. thats a lot of people sitting on their asses the majority of the time.
agreed. take Degasparis and his Seaton lands in pickering. Buy farm land at $40K/acre and rezone it to $500K/acre. obviously u quote the higher amount on your budget to the bank to reduce amount of cash equity u gotta plow in project.Sukdeep said:
lets just agree that there is good money in real estate if u can manage it right. obviously some have done better than others.
