Additional Cost and Options for New Home Purchase

[irvinehusky]

This is definitely #3.  Kind of looks like my closet...er, whole house 
http://www.cnn.com/video/data/2.0/video/us/2014/08/18/dnt-twist-in-luxury-closet-robbery.khou.html

Upgrade Scenarios:
1. Investor/FCB - if they plan to rent it out when escrow closes, no upgrade or minimum upgrade(s). Landscaping - they get concrete. Window treatments - regular blinds or nothing. (Let the renter put up curtains/blinds)

2. Regular person that plans to live there. Here are different scenarios:
A. Always busy (business traveling, don't have time to shop outside, works late) - will get the upgrades through the builder.
B. Smart - gets the minimum upgrades like electrical, bathroom, etc (other upgrades such as wood flooring, window treatments will get done outside)
C. Penny Pincher/Budget - ok with the builder standard (OEM), complain why upgrades cost so much (I work hard for my money) landscape - attempt to do it them self or hires the cheapest landscaper (you get what you pay for), window treatments - regular blinds or curtains

3. High Rollers/FCB/Ballers (that plans to live there) - combination of builder upgrades and outside contractors. Money is no object. House looks like the model home or even BETTER.

 

[pricedoutJay]

If you can rent a house for $2,500, you definitely should stay there.  But most rental are $3,500-$4,000 these days.  Factoring in the tax deductions for the $5,000 PITI, you come out about even.

My current rental is 3 bed and about 30 yr old house with driveway and small backyard.  I think similar house would fetch about $750k to $780 for purchase.  I feel like I sort of missed the boat since Saratoga (no drive way or back yard but still)  in SG plan was what we were looking for but priced went up way more than we were comfortable since we first saw the model homes about a year ago.  OH's similar plans are mid 900k which is even more expensive...

We'll see in a few months what happens to the price and inventory...

 

[lnc]

If you can rent a house for $2,500, you definitely should stay there.  But most rental are $3,500-$4,000 these days.  Factoring in the tax deductions for the $5,000 PITI, you come out about even.

My current rental is 3 bed and about 30 yr old house with driveway and small backyard.  I think similar house would fetch about $750k to $780 for purchase.  I feel like I sort of missed the boat since Saratoga (no drive way or back yard but still)  in SG plan was what we were looking for but priced went up way more than we were comfortable since we first saw the model homes about a year ago.  OH's similar plans are mid 900k which is even more expensive...

We'll see in a few months what happens to the price and inventory...

I don't know what kind of home nor the price range of home you are looking for but since you mention Saratoga, you might want to take a look at that San Mateo home listed by USCTrojanCPA http://www.talkirvine.com/index.php/topic,12107.0.html

That home is nicely upgraded and ready to move in, save you the headache of selecting all those upgrades. 

 

[OCKOOLGUY]

I would be interested to know what kind of upgrades and money spent by Sagewood Plan 3 owner's ? Any sagewood owners here ?

 

[pricedoutJay]

I went to see model homes of $750k ~ $820k price range and talked to a sales person for quite awhile.  The person informed me that a quick move in at around $800k house was available with $30k upgrades already added.  Also said that the average buyer of these homes spent $20k to $30k on upgrades. That's roughly 2.5 to 4%...

 

[eyephone]

@Jay - maybe wait it out a little. There so much inventory - you might get some design credits/closing costs.

 

[paperboyNC]

I would be interested to know what kind of upgrades and money spent by Sagewood Plan 3 owner's ? Any sagewood owners here ?

Try the sagewood threadhttp://www.talkirvine.com/index.php?topic=4268.0

There are several Sagewood owners on TI

 

[ZeroLot]

Just because you are spending $1.5m, why should one expect that you are going to pour another $300k into that home?

Yea, I'm not sure the % route is the most accurate way to compare costs.  The qwerty example you cited is a good one.  Or for example, prices in PP have gone up $150-250k from Phase 1 to current phase pricing.  Using the same 7% interior % figure, are current phase buyers spending $10k+ more just because they bought 9 months later than phase 1 buyers for the same house?  When I buy a new house, I budget upgrade dollars based on configuration & bathroom count.  Having 3 full baths versus 4.5 baths can be a high 4 figure/low 5 figure difference in upgrade dollars spent.  Having flex spaces & loft areas are also added $.  For me, smaller bedroom closets means more $$ to organize/build a system whereas bigger closets, I can get away with doing less space saving dollars.  I went into my new home purchase with a 15% upgrade budget.  So far, I've been able to hit my #s.

I'm with WTTCMN and I don't go with the %.  But I DID break it down:

- 3.2%  through builder (electrical, many ethernet upgrades, ceiling fan prewire, extra canned lights, upgraded air filter, caesarstone throughout, upgraded tile flooring in all 3 bathrooms)

- 4.2% outside contractors (upgraded wood floors throughout, whole house painting (including garage), epoxy, upgraded closets & custom pantry, water softener, landscaping).  What really put me over was landscaping.  Without landscaping, I would be at 2.6% .

The included builder upgrades is nice.  I looked at the list for the extension for Marigold and they pretty much picked all the items I had to pay for out of pocket.  It's very nice of them to include all those items.  Less thinking and negotiating with the design center for future new homeowners.

 

[O Hills]

I'm not against new home construction... I'm just not down with new home builder tactics.

And if the new home smell and the FCB bank accounts weren''t so powerful, the consumer could actually have some say in what type of products they get.

Dang... I feel like BK from the IHB days.

I feel the same way but these builders know two things.  They know they don't make much from the homebuilding cause TiC charges a shit load for the land.  They know the human psyche that pride in ownership coupled with "roll your upgrade costs into your low rate mortgage" equals big revenue and profits if you balance standard vs. options just right.


The upgrades is how every homebuilder makes their profits.  One part because that is the market they play in (the only way to get decent profits in Irvine) and the other part is that human psyche of pride of ownership and economics of rolling in big expenses into a 30 year loan.

The only way to effectively change the industry is to come up with a business model that allows for great standard features at an affordable price in Irvine while still taking home a decent profit.  Good luck.  Trying to change things up from a consumer demand perspective is futile.

Lennar rolls in a lot of upgrades as standard and markets it as "everything's included."
They aren't throwing in top of the line upgrades, but you dont feel like you're getting nickeled and dimed for minor items.

I don't know how it impacts their bottom line, but you feel better when your builder isn't bleeding you dry.

If their approach is successful, other builders will adopt it. 
Not that it did any good, but I mentioned it several time at design center appointments.

 

[Irvinecommuter]

I'm not against new home construction... I'm just not down with new home builder tactics.

And if the new home smell and the FCB bank accounts weren''t so powerful, the consumer could actually have some say in what type of products they get.

Dang... I feel like BK from the IHB days.

I feel the same way but these builders know two things.  They know they don't make much from the homebuilding cause TiC charges a shit load for the land.  They know the human psyche that pride in ownership coupled with "roll your upgrade costs into your low rate mortgage" equals big revenue and profits if you balance standard vs. options just right.


The upgrades is how every homebuilder makes their profits.  One part because that is the market they play in (the only way to get decent profits in Irvine) and the other part is that human psyche of pride of ownership and economics of rolling in big expenses into a 30 year loan.

The only way to effectively change the industry is to come up with a business model that allows for great standard features at an affordable price in Irvine while still taking home a decent profit.  Good luck.  Trying to change things up from a consumer demand perspective is futile.

Lennar rolls in a lot of upgrades as standard and markets it as "everything's included."
They aren't throwing in top of the line upgrades, but you dont feel like you're getting nickeled and dimed for minor items.

I don't know how it impacts their bottom line, but you feel better when your builder isn't bleeding you dry.

If their approach is successful, other builders will adopt it. 
Not that it did any good, but I mentioned it several time at design center appointments.

Lennar has done this for awhile and is basically the only builder who does it.  I get a sense that they just price it into the homes (like those "free years of maintenance" with your car).

I never felt nickeled/dimed when I was going to through the process.  If I was pressed on a budget, I could have lived without the upgrades that I got. 

 

[O Hills]

I'm not against new home construction... I'm just not down with new home builder tactics.

And if the new home smell and the FCB bank accounts weren''t so powerful, the consumer could actually have some say in what type of products they get.

Dang... I feel like BK from the IHB days.

I feel the same way but these builders know two things.  They know they don't make much from the homebuilding cause TiC charges a shit load for the land.  They know the human psyche that pride in ownership coupled with "roll your upgrade costs into your low rate mortgage" equals big revenue and profits if you balance standard vs. options just right.


The upgrades is how every homebuilder makes their profits.  One part because that is the market they play in (the only way to get decent profits in Irvine) and the other part is that human psyche of pride of ownership and economics of rolling in big expenses into a 30 year loan.

The only way to effectively change the industry is to come up with a business model that allows for great standard features at an affordable price in Irvine while still taking home a decent profit.  Good luck.  Trying to change things up from a consumer demand perspective is futile.

Lennar rolls in a lot of upgrades as standard and markets it as "everything's included."
They aren't throwing in top of the line upgrades, but you dont feel like you're getting nickeled and dimed for minor items.

I don't know how it impacts their bottom line, but you feel better when your builder isn't bleeding you dry.

If their approach is successful, other builders will adopt it. 
Not that it did any good, but I mentioned it several time at design center appointments.

Lennar has done this for awhile and is basically the only builder who does it.  I get a sense that they just price it into the homes (like those "free years of maintenance" with your car).

I never felt nickeled/dimed when I was going to through the process.  If I was pressed on a budget, I could have lived without the upgrades that I got.

Yeah, sure they get their money one way or the other, but I think you did come out a little ahead vs. comparable product.
The process just felt more "upfront."

I've bought a couple new construction homes, so I'm a little numb to it.
But to go through a 27 page upgrade list where every wire, switch, can, and fan adds a few hundred dollars gets tideous.

It doesnt have anything to do affording the upgrades I want.  I would have much rather have paid upfront and saved the time at the dc. 
 

 

[incognito]

Looking at this poll result seems to suggest the majority are $1m+ property owners. I feel poor ??? ...lol

 

[irvinehomeowner]

- 3.2%  through builder (electrical, many ethernet upgrades, ceiling fan prewire, extra canned lights, upgraded air filter, caesarstone throughout, upgraded tile flooring in all 3 bathrooms)

- 4.2% outside contractors (upgraded wood floors throughout, whole house painting (including garage), epoxy, upgraded closets & custom pantry, water softener, landscaping).  What really put me over was landscaping.  Without landscaping, I would be at 2.6% .

So without landscaping, 2.6+3.2=5.8%... not far from my 5%.

I still don't think my 5% number is outrageous... not like 30%.

 

[qwerty]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

 

[Arman]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

Not to get off topic, but the appraisal process for a new home is a total scam to get a few more dollars out of you (or, I should say, a few hundred dollars). I did a couple hundred thousand dollars worth of upgrades through the design center and my home appraised for the exact to-the-dollar odd-dollar amount that I had purchased the home for (base cost + cost of upgrades through design center). I needed to pay someone to tell me that they could punch in two numbers in a calculator?

 

[Joe61022]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

Not to get off topic, but the appraisal process for a new home is a total scam to get a few more dollars out of you (or, I should say, a few hundred dollars). I did a couple hundred thousand dollars worth of upgrades through the design center and my home appraised for the exact to-the-dollar odd-dollar amount that I had purchased the home for (base cost + cost of upgrades through design center). I needed to pay someone to tell me that they could punch in two numbers in a calculator?

I totally agree. Same thing here. The preferred lender charged $575 (we didn't end up going through them - long story). They just take a few pictures during construction to prove that they physically came to the property, then use the data from the price+upgrades along with the comps they used previously. Copy, paste, done.

 

[Irvinecommuter]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

Not to get off topic, but the appraisal process for a new home is a total scam to get a few more dollars out of you (or, I should say, a few hundred dollars). I did a couple hundred thousand dollars worth of upgrades through the design center and my home appraised for the exact to-the-dollar odd-dollar amount that I had purchased the home for (base cost + cost of upgrades through design center). I needed to pay someone to tell me that they could punch in two numbers in a calculator?

It seems silly but it is necessary for a 3rd party appraisal for the loan process.  Frank-Dodd requires independent appraisal.

Also, it is basically impossible for an appraiser to do a appraisal for a new home as there are no comps.  The price that you paid is the best estimate because...someone (you) is willing to pay it.  Also, you wouldn't want the appraiser to find the value to be lower than what you are paying for it because you wouldn't qualify.

 

[Arman]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

Not to get off topic, but the appraisal process for a new home is a total scam to get a few more dollars out of you (or, I should say, a few hundred dollars). I did a couple hundred thousand dollars worth of upgrades through the design center and my home appraised for the exact to-the-dollar odd-dollar amount that I had purchased the home for (base cost + cost of upgrades through design center). I needed to pay someone to tell me that they could punch in two numbers in a calculator?

It seems silly but it is necessary for a 3rd party appraisal for the loan process.  Frank-Dodd requires independent appraisal.

Also, it is basically impossible for an appraiser to do a appraisal for a new home as there are no comps.  The price that you paid is the best estimate because...someone (you) is willing to pay it.  Also, you wouldn't want the appraiser to find the value to be lower than what you are paying for it because you wouldn't qualify.

I don't disagree that it's needed. What irks me is the several hundred dollars I paid for this estimate when it required no work on the part of the appraiser. The appraiser sat there, punched in 2 numbers into a calculator and collected several hundred dollars for that 1 minute of work. That's what I should be doing: An appraiser for new homes. Corner the market. Become an expert at punching in numbers into a calculator for several hundred dollars a pop.

 

[Irvinecommuter]

the design centers typically recommend 10% in upgrades through them. they said after that the homes have a harder time appraising.

Not to get off topic, but the appraisal process for a new home is a total scam to get a few more dollars out of you (or, I should say, a few hundred dollars). I did a couple hundred thousand dollars worth of upgrades through the design center and my home appraised for the exact to-the-dollar odd-dollar amount that I had purchased the home for (base cost + cost of upgrades through design center). I needed to pay someone to tell me that they could punch in two numbers in a calculator?

It seems silly but it is necessary for a 3rd party appraisal for the loan process.  Frank-Dodd requires independent appraisal.

Also, it is basically impossible for an appraiser to do a appraisal for a new home as there are no comps.  The price that you paid is the best estimate because...someone (you) is willing to pay it.  Also, you wouldn't want the appraiser to find the value to be lower than what you are paying for it because you wouldn't qualify.

I don't disagree that it's needed. What irks me is the several hundred dollars I paid for this estimate when it required no work on the part of the appraiser. The appraiser sat there, punched in 2 numbers into a calculator and collected several hundred dollars for that 1 minute of work. That's what I should be doing: An appraiser for new homes. Corner the market. Become an expert at punching in numbers into a calculator for several hundred dollars a pop.

I believe they're required to charge the same rate as a "regular" appraisal.  Also, I think the appraiser is chosen by your lender/loan agent.

 

[pricedoutJay]

Looking at this poll result seems to suggest the majority are $1m+ property owners. I feel poor ??? ...lol

Exactly how I felt even though I'm making pretty descent salary and living.  Maybe this is a sign that my goal/happiness of life should be something other than brand new house in Irvine (jk)