Sunday, August 31, 2008

The Home Stretch

Of all the new home developments in the area, the one we are most tempted by is the Pulte Laurel Oaks development off Bass Lake Road in El Dorado Hills. They have single story homes, on nice sized lots, in a lovely little valley, and even managed to keep some of the existing oak trees.

Initially the prices were way too high and we had written them off our list. But they are close to finishing the development (which is a huge plus) and dropped their prices back in May to move the last couple homes, and added in some upgrades.

When we visited last time, we were incredibly tempted, but the lots weren't quite what we were looking for (odd slopes, angles etc). So it was a bit easier to pass up. At that time, there was a particular lot that I coveted, but it was already reserved. As with recent trends, the buyer pulled out....and now it's available.

When we sat down with the sales guy after looking at the home, the monthly quote he gave us was a bit surprising. It was considerably higher than we had calculated (his higher interest rate, my tax benefit inclusion). We could afford the payment, but it would really stretch us, and force us to change some of our spending/saving habits. It's also significantly higher than our current rent.

There are some not-so-minor financial issues. 20% on the home is a bit more than our current down payment, so we would have to get a loan from family to avoid PMI. Pulte won't pay our agents commission, which is really annoying, since I have been working with him for over a year to find a home. And, with all new homes, we would have to put in a backyard.

So basically, it all comes down to money, and how much we are willing to stretch. The home is everything we want, but money would be very tight in the short term. I'm just not sure the perfect home is worth the financial strain. Sigh.


Husmanen said...

I Agee Laurel Oaks has a great feel to it, we really like the area. The park and the creek in the middle of the development is very nice.

The big BUT is the HOAs, Mello Roos were not toobad if I remember correctly. Did the sales persons calculations include HOAs and Mello Roos?

Megan said...

Check out Wells Fargo home loans. Ask to speak to somebody in the Wealth Management Group. We did our home loan through them. We only put 15% down, but do not have to pay pmi, we kinda of, but it was not that expensive. The loan officer was able to squeeze an extra 1/8 point off the rate, vs. their published rate which is available to run of the mill loan officers in their branches. PMI for Wells is done by adding an 1/8 point to the rate, so in all it was a wash.

Sold in '05 said...
This comment has been removed by the author.
Sold in '05 said...

Did you write them an offer for less than the "sticker price"? New home builders are much like new car dealers and everyone knows that only suckers pay sticker price. Maybe you can find your wiggle room or a free backyard there...

Sold in '05 said...

... Also... How does your price compare with the current resale market? Don't forget to add in for the yard and window coverings (at least another 5%).

Here in 95747 Roseville, Centex and Lennar are peddling their new homes in WestPark/Fiddyment Farms, FAR above the comparable resale homes in the area. I haven't been in lately to see if they are quietly making large deals below the sticker price, but looking at size, options and super high Mello Roos, they are not even in the ballpark with surrounding neighborhoods. Their sticker prices haven't changed since the beginning of the year. Pulte on the other hand IS selling things much closer to market, but they have switched to a downgraded and noticeably cheaper feeling product. Amberly Place feels downright trashy.

mbc said...

I don't think now is the time to stretch too far on your monthly payment commitment. You want to be able to sleep at night. As Sold in '05 suggested, play hardball.

Buying Time said...

I'm terrible at bargaining. So the whole hardball thing is up to Mr.BT.

As for resales. Pulte is doing pretty well compared to Elliott and some of the others. The Mello Roos is $250.

One thing I especially liked about the particular home we looked at, was that the home was closed to finished, so there would be very little interest rate risk because we could lock in now for a 30 day close (which was a big factor in my earlier hesitation).

Deflationary Jane said...

You need me to come back to town and bargain for you. Only commission I charge is to host a killer blog party >; )

I need to do that for my friend still in Sac too. She's pissed beyond belief with her current agent (which surprised me considering who she is) and needs someone new asap. I have no clue what to tell other then to wait until the idiots have left the market.

Jacob said...

Is it really 100% perfect? Everything you want, absolutely everything?

Can you afford it on 1 income?

If prices drop another 25% would you care? Would that eat at you every day, or would you not care because you plan to live there for 30 years and are not effected by the short term price fluctuations?

I would say wait, but if the home is everything you want and you can live with the price declines, then go for it.

neverborne said...

I'd say write an offer and see if their willing to bargain. I think with the new home builders, if you can find something to throw in as an extra, they are more inclined to include it for free than to lower the sticker price.

But, with a written offer, you don't really have to play hardball... just drop it on their desk and see if they take the bite. These guys are professional salesmen. They are undoubtedly waaay more desperate than they let on.

sacramentia said...

No hardball needed, you can always negotiate with a smile. I'd spend time trying to understand what motivates the sales person to make them part of your team. The sales person isn't making the decisions anyways, so there is no reason to negotiate with them.

Patience is key and time is on your side.

Doolin said...

We went through this same exercise back in the spring. The ideal house on a greenback lot in Whitney Ranch in Rocklin - great planned community with lots of ameneties; new high school, parks, baseball fields, community pool, etc. Everything we were looking for.

The base price was great compared to resale for same size in Rocklin. Their base package included granite and stainless steel appliance packages. Looked great on paper.

Devil is in the details though - When we looked at the needed upgrades, the costs really started to add up; lot updgrade for greenbelt, basic flooring would have had tile, carpet, tile pattern in walkways to get through the house - flooring would have to be upgraded to be consistant. Lots of little updagee - computer nook didn't have outlet plugs standard (just wrong...)- upgrade to add needed lights in rooms, etc. Then add in backyard and window treatments, it really would stretch the budget.

We ended up passing, which was the right thing to do (financially). I would not have been happy being house poor. It also had a long lead time (7 months) and interest rates have gone up since then, whcih would have really pushed things.

On the down side it was everyhing we wanted. We ended buying a exsitng house in Roseveille. Nice house, good neighborhood, but just not the dream home...Compromise can be the right thing to do, but can be tough...

good luck with your decision.