How Do You Negotiate Price of Brand New House?

disneyrshJune 8, 2008

I went and looked at a new subdivision that's about 70% built, and talked vis email to the realtor with the listings for the remaining lots. She had a list of house and prices and lots, and was running a special of 20k off any house/lot.

I still came away feeling like it would be walking into a new car dealership and paying sticker price.

How does the new home buying process work? I've always bought houses from people before, not builders, and negotiated and walked away and hammered at people and was generally an obnoxious b*tch unti I got the price I needed to be at (or at least close).

But the whole buy a lot and we'll build your house-the concept is so new and unknown to me that I was like, wow, I can't even consider this route until I ask the gardenwebbers...

So, what's the dealy-o with buying from a builder? Let me tell ya, up where I'm looking, there's a TON of inventory of both existing and new homes, so I should have some negotiating leverage. I just don't have a clue how to apply it!

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marys1000

I'm no expert but I think some subdivisions are one builder only or one builder prevelant and some subdivisions have all sorts of builders building in them.
Ok - I just cut the rest of the reply I started because I realized you would probably get better advice on the Build a Home forum, also here on Gardenweb.

    Bookmark   June 8, 2008 at 11:25AM
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scdeb424

Hi disneyrsh:
Lucky you--a brand new house!

You just answered your own question--there is a ton of inventory of new houses. This gives you leverage to either ask for the all the upgrades without paying more for them or making an offer that slices off some of the $$$.

Look at another new neighborhood or 2 and compare options and price to get an idea of the competition. Also see what options for upgrades etc. are offered.

Here in SC some of the builders are discounting up to $30,000 and offering a sunroom or bonus room or granite in kitchen etc. You might be able to add square footage or a screen porch, fencing, landscaping, sprinkler system...they can only say no. You might be surprised at what you can get for your money.

Good luck in getting your dream home.

    Bookmark   June 8, 2008 at 11:30AM
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disneyrsh

Hmm, I'm trying not to look at this potential purchase as a "dream home".

Because I use the words "dream home" and the sound "cha CHING" immediately follows.

I dream of being debt free, not getting the exact tile I always wanted in the kitchen.

This particular subdivision seems to me a good mix of location, build quality and amenities.

I actually don't want to get more "stuff" for the money, I just want to pay LESS money. I'm still trying to figure out how I tell them, hey, you have this house listed for X. I want to pay Y without them telling me to take a hike ;)

Thanks Marys1000, I'll also post this question over on the build a home forum...

    Bookmark   June 8, 2008 at 12:02PM
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chisue

I see plenty of new houses, finished and not, up for auction. I wonder if buying one might not leave me living in a ghost town. (Not so different from living on a street where every other house is foreclosed, vacant, weedy, vandalised.)

Where builders are 'dealing', it seems most are offering incentives rather than lowering the price. (Free granite, mouldings, wood floors, etc.)

I just read that some big building companies are selling off huge parcels of land -- hundreds of thousands of acres. They don't see a turn-around any time soon.

A few blocks from my childhood home in a Chicago suburb was an are with just sidewalks and street lights -- no homes. A developer had started project just beore the Depression. It was the mid-1950's before anyone built there.

    Bookmark   June 8, 2008 at 12:12PM
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mariend

Whatever you do, get everything is writing. If you are buying in a tract, new etc. you might want to look around to see how many have sold, when, have they moved in, kept them up, work full time, etc. How do they compare with older neighborhoods? Schools--promised--parks etc utalities etc. Kind of start a notebook, with pictures, so you can refer back. How many homes for sale in area? Bank owned? etc
Good luck

    Bookmark   June 8, 2008 at 4:47PM
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rockmanor

In our area, builders are beginning to negotiate on spec houses because inventory is too high. However, they are not yet negotiating on to-be-built houses. The savings on buying an existing new house may be worth the trade off of not getting exactly what you'd like.

For example, a couple I know recently bought a builder's spec house that was originally listed for $849K for just $699K after some intense negotiating. They loved the lot and location, but weren't entirely wild about the house. However, they believe they can put $50K+ into changes and upgrades and still have a good value. A RE agent friend has recently persuaded a few builders to come down $100K - $200K on houses reduced to $1.1MM - $1.3MM. These same floorplans sold two years ago for $1.5MM - $1.7MM with similar finishes and on equivalent premium lots, so you can see that the builders thought they had already reduced their prices to rock bottom.

Folks who insist on building here are not seeing any reductions. Whatever savings there may be in materials costs are more than being offset by increased fuel prices, and we're seeing higher labor costs and higher delivery fees.

That's a long, round about way to get to the answer. Sorry. I think that if you find a new house that you like well enough you could try to get a bargain by putting up a large earnest money deposit along with an offer to close quickly, and give the builder 24 hrs. to respond. If the answer is anything but yes, walk away and try a different builder. If you really love the first house, give it a week or two and try again, perhaps with 10% or 20% earnest money to show you mean business.

    Bookmark   June 8, 2008 at 7:49PM
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parkejo

What my DH and I was researched all the builders in the area to see what they were offering in incentives and what was included in the base prices. After a couple of months talking to several builders we settled on one neighborhood that had 2 builders. The builder had a 3% off the base price discount as incentive but we asked how they could do better. After several times back and forth with the sales manager we got our house for about 10% off what the "sticker price" would have been. Though in the end the manager kept saying whatever offer they had on the table was the best that they could do. We finally told them this is how much we are willing to pay. Take it or leave it or we will build with another builder. While you might get a better deal on an inventory home I still think there is room for negotiations. Good Luck!

    Bookmark   June 8, 2008 at 8:36PM
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mary_md7

When DH and I were looking at a develop in FL in February, they were offering pretty low prices on a group of homes that had already been built and were ready to move in to. My guess is that these are ones the buyers walked away from or the buyers didn't qualify for.

One home we liked had a "sticker price" of $379K. The sales rep told us they were willing to close for a net $300k.

    Bookmark   June 8, 2008 at 9:57PM
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disneyrsh

Wow, Mary md7, that's a huge reduction!

I decided not to pursue the original builder that I was looking at because it really was at the top of my comfortable price range just to start out with, and I don't think I could negotiate my way into a more comfortable number. I'm thinking I just stick with a house that already exists and save myself (and my poor husband, who really doesn't want to move) any additional headaches...

    Bookmark   June 9, 2008 at 8:08AM
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freezetag

Well, you'll know if you push too far. We asked a semi-custom builder to price out a home in a neighborhood we liked. The "base" price was OK, but the options seemed way overpriced. My husband (plumber/HVAC guy) pointed out specifically where he thought they were asking too much, and we gave them our best offer (can't remember how much of a reduction we asked for, but it wasn't a crazy amount). I really thought they would call us back to accept it, but they never did. They sold the lot to someone else, and we ended up using a custom builder who let dh do a lot of the work, which worked out better for us anyway.

    Bookmark   June 9, 2008 at 9:00AM
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