Negotiating with a Home Builder

When considering a new construction home, negotiating with a home builder is all but certain. How do you go about it? How do you assess market prices within the community? Among other things, these are just a couple of the questions to ponder.

It's important to establish that most new home transactions are different, so there aren't any hard and fast rules when negotiating with a home builder. Henceforth, I will only address working with existing new homes. If you are dealing with a spec home, which is also known as an inventory home, then there very well could be sales data that a licensed buyer agent would have access to; this data details how, and if, the home builder is negotiating with other home buyers -- and it is very valuable information if it's available. It will give you a sense of what you can or cannot expect in terms of real dollars. Once, and if, you armed with this data, then you can construct an offer that reflects how you need these savings, or funds, applied to your specific transaction; emphatically speaking, make sure the offer is conducive to your particular new home and situation, not a general one.

Making a bid based on price and financial terms is only part of the overall equation. A home buyer needs to be concerned with issues after an actual contract is in place. Are any of the incentives (closing costs paid by builder, free upgrades, etc...) tied to using certain service providers, like a certain preferred mortgage company or closing attorney (learn more)? What about home inspection contingencies? Financing contingencies? What person or entity will hold the earnest money (builder deposit)? What about the home warranty? What happens if the builder goes out of business? Who or what entity has control of the HOA (Home Owner's Association)?

As you can see, negotiating with a home builder is a very nuanced transaction that takes real world experience to extrapolate. By obtaining as much information and guidance as possible, you can buy a great new home while minimizing, if not eliminating, many landmines.

Disclaimer: This new homes and real estate blog post is intended to be informational reading only, not legal advice. Each real estate transaction is unique unto itself, so this content may or may not apply. Hence, you may not copy, use and/or redistribute this real estate information about new homes, home builders, tips and/or ideas without prior expressed consent from the author. All Rights Reserved 

Stephen Graham - Associate Broker - Realty Professionals, Inc (770) 491.1494