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How to negotiate price of new construction down?

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  • How to negotiate price of new construction down?

    First time home buyer. Any tips to save money on the price of the house, lot premium, options, etc.? Any tips in general?

  • #2
    I think this got overlooked, bumping back up. Help, anyone?
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      If it is just between you and the builder (no realtor) you can negotiate some. Negotiating the land or land premium a little harder than negotiating final product. There is nothing wrong to say the premium is a little bit expensive can do $$xxx for me?

      They probably have a base price for the home for example; 2400 sqft, 4bd, 3 bath, hardwood floor, etc etc is $400.000 and i am sure you have some upgrades that you want in the house like, tiled showers, heated floor in bathrooms,  9 ft ceilings, lawn irrigation system, extra Ethernet\LAN cables to rooms etc. etc..  You tell the builder you will pay $400.000 (base price) but you also want those upgrades included in the base price so take it from there.

      Also check the comparable homes as well, lot size, house specs, upgrades and price etc, It will give an idea to compare.

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      • #4
        We had a negative lot premium! It was the last lot in the section and they were having trouble selling it. My theory is that they weren't trying very hard to sell it "Look we have all these wooded lots! We just opened these! Oh and by the way there's this one lot left in this other section". They knocked 10k off the house for taking that lot (we weren't thrilled about it on paper but we loved it in person). Toll also constantly had "deals" where they threw in a bunch of upgrades at no cost. Then we accidentally got a free upgrade b/c the sales woman was fairly new- we picked out a brick color, signed off on it, brick went up. Then we found out it was really a premium brick that they were supposed to charge extra for but because they hadn't told us it was extra before the brick went up, they didn't charge for it.

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        • #5
          If you book one the first released homes, you may get the lowest price (at least in CA). If you do not have a broker, some builders pass on a portion of commission to you. Negotiation really depends upon supply/demand in your area.

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          • #6
            So I got insider scoop on what the salesperson is willing to discount but what do I say to get there? I want some free options and a lower lot premium? I have no realtor.

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            • #7
              Are you buying new construction or are you building. I thought you implied in another post you were building so just clarifying...

              First of all don't tell them you don't have a realtor. Ask what kind of kickbacks you get (use a different word if "kickback" makes you feel dirty) if you don't use a realtor. If you don't use a realtor you save the selling agent / construction company / developer the 3% fee your buyer's agent would otherwise get, so sometimes you can get up to that value included in upgrades or direct discount on the price. You appear to be an orthopod so I'll do the math for you: on a $500,000 house, 3% is $15k, so it can be significant. IF they say there's no kickback for not using a realtor, then get one before you tell them you don't have one. Because if you're not gonna benefit from NOT having one, you might as well have one; no skin off your back and it makes your life easier.

              After that just ask about discounts. First house I bought was new construction, completed. I lowballed the offer to the builder and asked for upgrades worth about 10% the value of the house before we closed. They laughed at my offer but then came back halfway between listing and my offer AND included almost all the upgrades (deck, patio, upgraded landscaping, some high-end appliances included, sprinkler system, some other things). I also built recently. The lots were very popular and I didn't try to negotiate on the price. Everything else in the house I did. I was just super up-front about it. "Why does that cost xxx?" or "I found that fixture on build.com for half of what you're pricing it at... I assume you get a better discount as a builder than I do as a random guy on build.com so I'm not paying that." "I'm not paying more for that paint color, don't be ridiculous." I feel like they were making SOOOOO much money on me they just let me have my small victories a lot of the time. I got a lot off their initial prices but it's still a very expensive process.

              Long story short, no matter what you're buying just ask for what you want and see if they'll give it to you. If you found a salesperson you somehow heard is willing to discount I would literally ask "What kind of discount are you willing to give me on this lot?"

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              • #8




                So I got insider scoop on what the salesperson is willing to discount but what do I say to get there? I want some free options and a lower lot premium? I have no realtor.
                Click to expand...


                don't overthink it.

                just tell them that's too expensive.

                or

                here is the list of items i want.  they should be included in the price of the house.  throw some things in there that you know you won't get so that they can show their side that they negotiated down.  as noted previously, it is much easier to get them to add things in then to actually lower the price, although i've had prices lowered in the past (but not meaningfully).

                other things you might want to include are keeping money in escrow to address the one year maintenance visit or certain $ amount of general handyman services for the first year.

                 

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                • #9
                  I’m concerned about you not having a realtor, especially if you aren’t getting the 3% buyer’s agent commission credited to you at closing. The sales agent will tell you they represent you if you don’t have an agent, and they will collect the full 6% commission, but they work for the builder. A good buyer’s agent will be worth their money, especially if you are new at this. It’s like in poker- if you look around the table and don’t see the sucker, it’s you.

                  Since you have done all of the work up to this point, I bet you can get a buyer’s agent to work for you for 1.5%. Then, you put it in the contract that the remaining 1.5% gets credited to you at closing. That’s what we did with our first house. Our agent saved us way more money than her commission and stood up for us when our builder tried to take advantage of our lack of knowledge of the process. They can also help you with your original question as far as discounts, etc. In general, you will have more success getting free upgrades as opposed to discounts, but I would ask for both.

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