Home Buying in 55082>Question Details

Chris, Both Buyer and Seller in 55082

Negotiating New Construction

Asked by Chris, 55082 Sun Jun 29, 2008

Is buying new construction like buying a car...do you negotiate or pay sticker price? I'm looking at an already completed new home. Do you ask for a percentage off the asking price and/or a free deck, fence, finished basement?

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9
Chris,

It all depends on the builder. Believe it or not, there are builders out there that will not negotiate their prices. Having just finished building our new home early this year, we found a builder that was giving a lot of incentives to buyers. During our search, we found some builders willing to do so, but we also found builders that just dropped their prices, refusing to give any further incentives. A couple we visited were holding out for the market to correct itself, so they would not even consider an "offer" from us unless it was full price. Many times, the incentives offered by new home builders have a major string attached...you have to use their lender to get the discounts.

It seems most builders are more willing to throw in a finished basements, free upgrades, etc, then take money off the price. They have deals with vendors and typically pay less for products because they "buy in bulk". In our case, we negotiated more in closing costs paid by the builder, a finished basemement, a deck, and more money for landscaping.

One thing we did learn is that to not listen to the agent that sits in the model who tells you "we can't do that". They do not make final decisions, the builder does. We were told numerous times that what we wanted could not be done, but when we pushed the issue and made the agent actually ask, we (and she) found that the builder would in fact fulfill our requests.

Good luck, and I hope this helps!

P.S. Don't go to a new home builder without a buyer's agent representing you. I was able to negotiate more because I knew the system and the builder agent knew I was an agent. If you don't have an agent representing you, builders typically won't bring things up that could save you money.
1 vote Thank Flag Link Mon Jun 30, 2008
Chris--Absolutely negotiate! I have had clients negotiate tens of thousands off the price with vacant completed new construction. If a home is completed you are in a great negotiating position. If you do not have an agent and area working with the builder directly or their representative, remember that person works for the builder. Just like a car, be willing to walk away and you will be able to get a good deal. Builders are sellers and there are still more sellers in this market than buyers.

Good luck!
1 vote Thank Flag Link Sun Jun 29, 2008
Hi Chris: You have heard some good advice. I have always looked to additions such as finished basements, bathrooms etc on pre-construction and for price on already built (spec) homes. It would be helpful, if you have an agent, to have him or her do some research about the development, such as percentage sold and comparable pricing of those homes. it makes sense to have that information before you just throw something on the wall. An agent can find those those important issues that will have a bearing on what the lowest price may be. Have the agent write everything in that is not there and easily included such as water softener, washer dryer, etc and can be bundled into the price. Call or email with any questions. Regards, Bruce Durham
Coldwell Banker Burnet
Apple Valley, Mn
612-868-7784
Bruce@BruceDurham.com
1 vote Thank Flag Link Sun Jun 29, 2008
Hi Chris, Yes most things are negotiable. If you have an agent they should be able to write your wants into the contract. If the sellers don't want to give they will let you know with a counter offer. Just ask and you may get what you want weather its a dollar amount allowance or to have the home tailored to your needs.
I hope this helps.
Good Luck!

Christine Wrobel
Edina Realty
White Bear Lake
1 vote Thank Flag Link Sun Jun 29, 2008
Chris,

The rule of thumb used to be that you couldn't negotiate new construction. However, with the fall off of new construction activity, builders are much more willing to look at reduced prices. However, keep in mind that it is a business decision for them and there may be some, but certainly not as much emotion as when you are dealing with a seller who is selling their personal residence.

One key point is to make sure that you have a realtor involved asking question and running interference for you with the builder. They have already built a commission into the price for the buyer's agent and if you don't have one, they get a nice little bonus so it only makes sense to have someone working for you.

If you want to email me or give me a call and get me the address I can email you some comps in the area and help you with a history of new construction in that development that will help with you negotiations.

Cameron Piper
612-839-4202
Web Reference: http://www.campiper.com
1 vote Thank Flag Link Sun Jun 29, 2008
Hi Chris,

Absolutely negotiate the price. Since builders are sitting on a lot of inventory now is a great time to negotiate price and/or options. You will be amazed at some of the great deals out there for qualified buyers. Be ready with a signed contract which includes what you'd like from the builder, an earnest money check and a letter from your lender indicating you have an approval for the mortgage the contract says you will be getting to purchase the home. Once you submit your initial offer is when the negotiating begins in earnest. Good luck!
0 votes Thank Flag Link Tue Jun 23, 2009
Builders have always been amenable to offers on completed properties- they don't want standing inventory. If the house has what you desire with respect to upgrades, know that there is a bit of leniency when you choose such a property, because your choices (which is often a motivating factor for many new home buyers) has been eliminated. If the on site agents indicates no flexibility, ask if there is anyone else with whom you can negotiate- sometimes the builder (or VP of sales) can finagle a discount, but has told the on site people that it's not possible (the guys/women at the top sometimes cave).
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Wed Jul 9, 2008
Chris,
The others are right, just ask! Also, look around the development and see how many models/specs are for sale, that might tell you how negotiable the builder is. If you're looking for a pre-built, check out the Parade of Homes guide. The other agents are also correct in suggesting you use a Realtor for representation. Good luck! Lisa
0 votes Thank Flag Link Wed Jul 9, 2008
Chris I have had many clients negotiate prices with new construction and even with the national builders. As far as what is better, money or upgrades just depends on what you need. If you dont need the extra sq ft you may want to get a lower price to help lower payments and finish it as you need.
Web Reference: http://www.lennyfrolov.com
0 votes Thank Flag Link Sun Jun 29, 2008
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