In todayâ€™s market, when looking at buying a new home, there are a number of factors to keep in mind:
1. Everyone wants to discount the price on new homes â€“ everyone wants to walk away from the table with the best possible price. The chances of getting a discount in the current market, however, are very slim. There are all kinds of urban legends out there about buyers whoâ€™ve managed to get a big chunk of the price knocked off when buying a new home. Quite frankly â€“ those days are gone â€“ they existed at the beginning of the housing crisis a number of years ago when zealous builders overbuilt and then had standing inventory they had to dump. And the irony is that the prices they got became the new baseline for everyone else, so they didnâ€™t really get the deal they thought they were getting after all.
2. You will be paying a premium because you are paying for the actual current market cost of building the home (think approximately $250 sq/ft) PLUS the cost of the land. In reality, there are currently plenty of homes on the market at substantially less per sq/ft than new homes. Unless you have to have that â€œnew-homeâ€ smell, you might want to consider other options.
3. ALWAYS ask for a discount â€“ HOWEVER, be aware that you more then likely wonâ€™t get one. Home builders are not very willing to lower the price on any specific home because that lowered price then becomes the baseline for all new buyers. Many buyers want to knock down the price because they want the bragging rights that go along with it. They fail to realize that they will usually be further ahead by going after as much soft costs as they can score and by playing by the builderâ€™s rules. In addition, soft costs do not show up on tax records â€“ prices do. Builders are usually not willing to knock prices down because they will become public record and will be viewed by every new buyer coming over the hill looking to hit the builder up for a deal. Many buyers search out the local tax records for sold prices before making an offer â€“ they donâ€™t want to pay more than anyone else paid.
4. Instead of trying to hammer the builder on price (hard costs), go after the soft costs instead. Ironically, these are often the areas where the builder makes the most profit and therefore are the areas with the greatest flexibility. These include things such as upgrades, prepaid HOA fees, closing costs and so on.
3. Many new home builders are publically traded companies with shareholders that are interested in Units Sold Per Quarter. There is often a push to get units sold at the end of each quarter, ESPECIALLY if there are units in standing inventory. The builder will usually establish sale prices for a few units they want sold quickly. In most cases, these prices are the best deals you will get during the quarter HOWEVER â€“ they are not usually negotiable because they already represent the lowest point to which the builder is willing to go.
4. Consider going with the builderâ€™s preferred lender: they will often provide significant incentives such as closing costs or a set amount of money you can use to buy down rates, pay for upgrades, pre-pay HOA fees, etc.
And ALWAYS make sure you take with you a Realtor who has experience negotiating with new home builders â€“ you have nothing to lose â€“ and a whole lot to potentially gain.