Buying a new construction home it can sound like a dream, with its high-end features and its elegant design. The price tag, however, can sometimes put it out of reach. The good news is that there is often room for negotiation – it looks different than negotiating with a traditional dealer.
In this Redfin article, we’ll cover what to negotiate when buying a new home and strategies for getting the best deal. Whether you are looking for a new construction in Raleigh, NCor a Home for sale in Sacramento, CaliforniaHere’s what to expect during new construction negotiations.
Important takeaways
- Negotiating the price of a foundation in a new construction home can be very difficult.
- You may be able to negotiate upgrades, warranties, and agreements.
- You will have more power once the home is built or the builder needs to close quickly.
Can you negotiate a new construction home?
In short, yes, but maybe not in the way you would expect. Builders are often reluctant to lower the base price, because it affects the estimated value of other homes in the community. Instead, they may offer incentives such as advanced completion, help with closing costs, or flexible move-in dates, especially if the home is already built or sales are slow.
However, some builders may accept negotiations, so it doesn’t hurt to try. There are some things to keep in mind to help you get the best deal on a new construction home.
How to negotiate the price of a new construction home
Although builders may not budge much on the base price, you can negotiate other benefits. Let’s take a look at some of your options.
Consider negotiating HOA permits, fees, or expenses
Another way to negotiate a new construction home is to ask the builder to pay certain costs or covenants. Sometimes your builder has a preferred lender that offers incentives to prospective buyers, such as closing costs assistance, low interest, or a paid home inspection. It’s always a good idea to shop around before committing to a lender to make sure you’re getting the best deal possible.
The builder may agree to cover HOA fees a fixed period as an incentive for you to buy a property. This can help reduce the initial cost without affecting the purchase price. Remember that you will eventually need to pay these HOA fees, so you will want to make sure they fit into your budget.
Discuss the home’s layout and features
Buying a new construction home can give you more freedom to design a home that meets your needs. While you may not be able to negotiate the purchase price, you may be able to negotiate a better layout or upgraded features.
If i home building process hasn’t started yet, you can ask about changing the floorplan to meet your needs. It is unlikely that the builder will approve any major structural changes if the home is already built.
Asking for upgraded features or higher-end appliances is another way to get a better deal without changing the purchase price. Other factors to consider include better appliances, high-quality countertops, lighting packages, and smart home systems. These features can be easy to replace or add to a home if it is already built or nearing completion.
Ask for a better warranty
Many new construction properties already offer a “builder’s warranty” as part of the home purchase. These guarantees typically has one year of coverage for structural and flooring issues, and two years of coverage for electrical, plumbing, and HVAC systems. You can see if the builder is willing to extend warranty coverage or may include additional items, such as electronics, in the policy.
Determine whether negotiating a base rate is possible
In many cases, builders will hesitate to negotiate the price of a new building, especially if the houses are newly listed. Reducing the price of a single home can cause other buyers to try to negotiate a lower price. However, there are a few times when negotiating a lower price may work.
If there are only a few homes left for sale, or only model at home is available, the builder may accept a lower price to sell the remaining properties. Similarly, if a builder doesn’t see any new homes for sale, he may consider lowering the price to get the homes off the market.
What could be more difficult to negotiate for a new home?
While there are a few things you can negotiate, there are things that may be more difficult to negotiate. Let’s take a look at them:
Great price
Generally, if all the lots in a new community are of the same quality, it will be difficult to negotiate a lower price. Some lots have a premium fee if they are in a highly desirable location, so it is less likely that you will be able to lower these costs.
Previous entry date
You may be able to get your check-in date out, but it’s unlikely you’ll be able to rush it. Builders often work with a tight timeline to begin with, especially if they are in the process of building a planned unit development. Sometimes these timelines may be pushed back due to material shortages, backorders, or construction challenges.
The basis or purchase price
With few exceptions, it is unlikely that the builder will agree to reduce the purchase price significantly. Due to various factors, such as construction costs, there is a good chance that the home will cost more than you originally expected.
Some builders include an escalation clause that allows them to raise the price if the cost of building materials increases. However, good real estate agent it can help you navigate this and prevent an unreasonable escalation clause.
Major structural changes if the home is already built
As mentioned above, it is unlikely that the builder is willing to do major construction or structural changes after the house is built. You may have better luck requesting these changes before the home building process begins or is in the early stages.
5 tips to help with new construction negotiations
- Work with a local real estate agent experienced in new construction houses. They will know builders’ pricing strategies, contract terms, and negotiation timelines.
- Research the latest home and auctions of which are comparable new construction houses in the area. Look at the price per square foot, the builder’s reputation and materials, the sales rate, and the contract details to determine if the listing price is fair.
- Research builders before making an offer. Check out their reputation, standard contract terms, upgrade prices, and construction times.
- Discuss pre-built houses. If a builder has several unsold or unfinished homes on the market, they may be willing to negotiate a price.
- Get any agreed negotiations in writing. Builder reps may promise benefits verbally, but they don’t count unless they’re in your contract. Review all incentives, promotions, and timelines in writing.
Frequently Asked Questions about negotiating new construction home prices
What is a new construction home?
A new construction home is a new building that has never been lived in and is usually sold by builders or developers. These homes can include custom builds, special move-in ready homes, and new residential homes.
How much should you negotiate on a new construction home?
If you want to negotiate the listing price, a 1 to 5% discount would be a good starting point. You may have a better outcome by negotiating other benefits such as updates, help with closing costs, or home warranties.
Can you negotiate for certain houses?
Of course, you can negotiate both foreclosures and move-in ready homes, but you may have more success with move-in ready homes. If you are looking to customize your home, consider consulting with a home builder.
How do I know I’m getting a good deal on a new construction home?
Working with an experienced agent can help ensure you get a good deal on a new construction home. Learning about the local market, builders, comparable properties, and the home itself can make you more confident that you are getting the best price.
