new home construction question

[Clock4869]

in general can you negotiate very much on new home construction? Not a custom build, but a house that is being sold by a builder (i.e. SWM&Sons, Trails End, etc?) Is there much room for negotiation? For example have you heard of people negotiating all closing costs, curtains/mini blinds, etc?

[Karried]

Don't even think about buying a home in this market without negotiating something from the builder!

Builder's won't want to negotiate on the price because it pulls the comps down in the area. Sets a precedent for future buyers.

Negotiate very specifically in your WRITTEN and SIGNED Buyer's or ( Builder's ) contract ( I hope you have a Buyer's Agent working for you) - a good idea even with new home construction.

You can ask for sprinklers, blinds, fencing, upgraded tile, carpet, higher rated seer AC, more insulation, upgraded appliances, landscaping, etc etc.. within reason.

Unless you are in a bidding war with someone else, all that will happen is that they can say no.

[SoonerDave]

in general can you negotiate very much on new home construction? Not a custom build, but a house that is being sold by a builder (i.e. SWM&Sons, Trails End, etc?) Is there much room for negotiation? For example have you heard of people negotiating all closing costs, curtains/mini blinds, etc?

In this market? Absolutely. Ideally, nearly everything is negotiable. Closing costs, fencing, repainting to a desired color, rolling out sod, you name it...as karried said, all they can do is say "no."

If you are pre-approved for a loan, it can make you as a buyer much more attractive to a builder. If you're fortunate enough to be paying cash, you're worth your weight in gold.

If you happen to catch a home at or near the end of a construction cycle, you can sometimes strike an *excellent* deal if the builder knows he won't have to convert the construction loan once the home is completed, and you can all-but get your pick of finishes. A house in inventory is racking up interest expense for the builder every day it remains unsold, meaning he actually has (arguably) less wiggle room.

I prefer/recommend you pursue individual builders rather than a "company name," because the builder is typically the one really managing the business, although he may have a realtor handle the nuts-and-bolts of the sales transactions. It is also typically easier to get background info on individual builders than "Amalgamated Homes, Inc" who might represent a federation of who knows how many builders.

Good luck.

-SoonerDave

[kevinpate]

Everything is negotiable, to a point. house, car, fines, prison time, even a lowly pack of gum, doesn't matter.

You have to identify and deal with the person who has the authority to negotiate and what you want has to also make sense on his/her side of the scale as well.

[jclick]

As a builder, I can tell you each individual builder/company will approach and respond differently to offers and negotiating tactics.

Karried hit the nail on the head, as far as my policy goes, in regard to honoring the previous investments of my other clients. If I sell you a comparable house for $10K less than the one next door I sold last month, I've just given my previous client good reason to be upset, and I've undermined my ability to sell the next one for what I would have it priced at.

Realizing that market conditions warrant different flexibilities at different times, my approach, rather than negotiating below my asking price, is to instead work towards enhancing the value of the home by including additional amenities important to you as the client. While my homes generally come fairly packed with expected amenities, there are always things that can be added, such as an irrigation system, a fence, etc. This helps you, and it helps my comps, while still honoring the investments and property values of my previous clients in the area.

Another component to consider is that a builder may be more flexible on one home over another, depending on how long it's been in inventory.

My advice would be to make an offer that's indeed weighted to your side, but is not insulting, and go from there. Making an offer for 15% under the asking price, with some builders, may not get you a response back.

Making a full price offer asking for $20K in additional amenities may end up getting you a counter offer higher than the original asking price.

Making an offer that's close to the asking price, and perhaps asking for a few freebies to be thrown in will probably result in an offer that's viewed as reasonable and worth pursuing further with mutual respect and desire to work with one another.

SoonerDave also has some good points. If you're serious, show that you are. Come in prepared, with your budget determined and loan pre-approval already in place. You'll be more likely to get the attention you deserve as a serious prospect. If you plan on using a Realtor, and he/she's not with you, be up-front about it. Don't try to make a deal, then reveal later you have a Realtor.

My best to you in your search for your new home.