How much room do you have to negotiate with a builder?

Asked by Matt, Salt Lake City, UT Tue Jan 27, 2009

We are investigating building a house and I'm curious as to what kind of room we have to negotiate price with the builder. I'm sure that it is a moving target, but I just want some idea. I don't to just take the first price they pop out, and I don't want to tick them off by offering some insulting low-ball price. Thanks!

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Chris Martin…, Agent, Midvale, UT
Thu Oct 3, 2013
I have a builder I represent. We never negotiate on the list price or pay closing cost. We do offer 5k in upgrades if you use our lender. The only thing I usually see negotiated is the upgrades get a discount or thrown in. I have worked with a ton of builders in Utah and its hard to find one that is willing to lower the price cause once they do it for you everyone else will expect it. If you want tell me what builder and I can tell you if I have ever been to negotiate with them.
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Wendy Remley, Agent, Clearfield, UT
Thu Jul 22, 2010
It really can vary from builder to builder. I used to work for a builder who did not negotiate AT ALL. Everyone got the same price on everything, regardless of whether or not they had an agent. They also used their own contracts, and any offers presented to us by buyer's agents were rejected. However, I've worked with enough builders to know that many, many builder DO negotiate on prices.

The other thing that I think you'll find MOST builders do have as a policy is that they will not pay a commission to the buyer's agent unless the agent accompanies the buyer on their first visit to the community. Some builders will actually give people with an agent a higher price to counterbalance the commission paid out. If you've already been in contact with this builder in particular, they probably won't be willing to pay a commission if you've been spending a bit of time with their sales agent.

The best thing to do if you are already in contact with the sales agent is simply ask- ask them if they negotiate on their prices or not. Ask if they use the state approved form, or if they have their own forms they like to use.

Best of luck to you, building a home is a lot of fun. I love new construction, and find it so exciting.
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Bill Eckler, Agent, Venice, FL
Tue Jan 27, 2009

By being in touch with a local real estate professional you could be a well informed as possible. A local agent should be able to provide you with the sales history of similar properties in the community along with special opportunities the builders have offered buyers including free upgrade offerings.

Be prepared to hear form the flood agent that they do not discount their product. This is a standard response that is best responded to by walking away. If they won't let you get away without additional conversation....they are motivated.

Here's the deal. ....Builders love to see buyers come in without an agent and view them a easy pickins. In their terms: "It's like shooting fish in a barrel." It is most likely that your best deal will be arrived at with the support of a local real estate professional. Let them be the shark that protects your interests.
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Dallas Texas, Agent, Dallas, TN
Tue Jan 27, 2009
GREAT QUESTION: your best option have a realtor involved who can represent you. RULE of thumb in real estate trade never purchase a home direct from builder / listing agent/ seller. Have your owner buyers agent who has your best interest. Builders at times search for "unseasoned buyers" take advantage of your lack of knowledge vs. seasoned real estate agents. Builder love future business of realtors vs. one time home buyer. GOOD luck
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Jane Becker, Agent, Worcester, MA
Tue Jan 27, 2009
You asked a very interesting question, one that many buyers are curious about. The answer, unfortunately is, it depends. For one, is the house already built, such as a model home or a "spec" home. A spec home is a home a builder puts up, speculating that he can sell it. In this market there are few of these. A model home might have many extras to show prespective buyers a sample and when it's ready to sell, can get a better buy than a new home to be built.
If you are building from scratch and negotiating with the builder, keep in mind that the builder has the cost of building the home, then he tacks on his fee which runs somewhere between 20-40 K on homes under $500K then there is the real estate fees and adjustments to the market. The basic price has very little if anything to adjust. Your best bet is to negotiate on the extras. The builder would probably get those cheeper than you can and if you really want them, this is a great place to negotiate. My advice is give the builder this base price but add into your offer things like paving, moulding, built in, appliance, lighting and kithchen upgrades, wall up attick and the like. zI have an article on my site about things you need to know when building your home. Please feel free to read on.
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