I received another "Builder Incentive" email in my inbox this morning. "There will be a drawing this weekend for a hotel stay and no reasonable offer will be refused". It made me pause and ask, "What makes one offer 'reasonable' and another not?"

In the early 90's I wrote a very ridiculous offer on a Builder owned property, which of course was rejected. I was a "newbie"....I'm sure my clients had bought and sold more homes than I had, and I allowed that to intimidate me. We wrote the offer low and asked for the moon...., furniture, new deck planters and benches to be built, fence, paint....oh, and we were about 10% low on purchase price when the market was indicating homes were selling within 1-2% of List price!!! The laundry list of requests took up a whole 8 1/2 x 11 blank addendum. Of course we were shot down, the builder didn't even counter.

I remembered that offer when I received the email this morning and I know that somewhere an agent is writing a ridiculous offer that a builder will think is unreasonable. So what's the difference? How low is too low? How much is too much to ask for?

Keep in mind, that finished inventory is not a good thing for a builder. The longer he/she sits on a finished home, the more the interest payments begin to eat into the profits. How long has the house been on the market? When was it finished? Can you get a dollar amount for your area and figure out what the cost to build was and what he/she might have into it? I've found it's helpful to work from the ground up, literally. Determining how much the land was purchased for, what the hard costs of construction most likely are, and what selling costs will be. Factor in a small "face saving" profit and that's the number I suggest to my clients. Especially if the builder is sitting on lots of finished inventory. (no pun intended)

By approaching the process with a "everyone wins" attitude, you're more likely to end up with a successfully negotiated contract and happy clients!