Can you negotiate on new-build homes?
Buying a new-build home can sound like a dream, with top-notch features and your ideal layout. However, the price tag can sometimes put it out of reach. The good news is that there is often room to negotiate; it just looks different than negotiating with a traditional salesperson.
In this Redfin article, we discuss what you can negotiate when buying a new home and strategies to get the best deal. Whether you’re looking at a new construction in Raleigh, NCor a house in Sacramento, CAthis is what you can expect during new construction negotiations.
Key Takeaways
- Negotiating the base price of a new-build home can be more difficult.
- You’re more likely to be able to negotiate upgrades, warranties, and concessions.
- You have more leverage if the house has already been built or if the builder needs to close quickly.
Can you negotiate for a new-build home?
In short: yes, but perhaps not in the way you would expect. Builders are typically reluctant to lower the base price because it affects the appraised value of other homes in the community. Instead, they’re more likely to offer incentives such as upgraded finishes, help with closing costs, or flexible moving dates, especially if the house has already been built or sales are slow.
However, some builders may be open to negotiations, so there’s no harm in trying. There are some things to consider to help you get the best deal on a new construction home.
How do you negotiate the price of a new-build home?
While builders may not budge much on the base price, you can often negotiate other benefits. Let’s look at some of your options.
Consider negotiating concessions, fees or HOA fees
One way to negotiate a new construction home is to ask the builder to pay certain fees or concessions. Sometimes your builder will have a preferred lender who offers incentives to potential buyers, such as closing costs assistance, lower interest rates or paid home inspections. It’s always a good idea to shop around before committing to a lender to ensure you’re getting the best deal.
The builder may also agree to coverage HOA fees for a certain period of time as an incentive for you to purchase the property. This can help reduce initial costs without affecting the purchase price. Keep in mind that you will ultimately have to pay for these HOA fees, so make sure they fit within your budget.
Negotiate the home’s layout and upgraded 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 can negotiate for a better layout or enhanced features.
If the process of housing construction has not yet started, you can ask if you can adapt the map to your needs. It is unlikely that the builder will agree to major structural changes once the house has already been built.
Asking for upgraded features or higher-end devices is another way to get a better deal without changing the purchase price. Some features to consider include better appliances, high-quality countertops, lighting packages, and smart home systems. These features can be more easily replaced or added to the home if it is already built or nearing completion.
Ask for a better warranty
Many new construction homes already offer a “builder’s warranty” as part of the home purchase. This guarantees typically have 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 the warranty coverage or if he can include additional items, such as appliances, in the policy.
Determine if negotiating the base price is possible
In most cases, builders will be reluctant to negotiate the price of a new build, especially if the houses have recently been listed. Lowering the price of one home may result in other buyers trying to negotiate a lower price. However, there are a few times when negotiating the price can work its way down.
If there are only a few homes left for sale, or only the model home is available, the builder may agree to a lower price to sell the remaining properties. Likewise, if the builder doesn’t see any of the new homes selling, he may consider lowering the price to take the homes off the market.
What could be more difficult to negotiate for a new home?
While there are several things you can negotiate, there are some things that are more difficult to negotiate. Let’s take a look at them:
Lot price
If all the lots in a new community are of the same quality, it will usually be difficult to negotiate the price. Some lots have a premium rate if they are in a more desirable location, so it’s unlikely you’ll be able to reduce these costs.
Earlier move date
You may be able to delay your move-in date, but it’s unlikely you’ll be able to accelerate it. Builders typically work to a tight timeline in the beginning, especially when they’re in the middle of building a planned unit development. Sometimes these timelines can even be delayed due to a lack of construction materials, backorders or construction challenges.
Base or purchase price
With few exceptions, the builder is unlikely to agree to significantly reduce the purchase price. Due to several factors, such as construction costs, it is more likely that the house will cost more than you initially expect.
Some builders have included an escalation clause that allows them to increase the price if the cost of building materials increases. A good one though real estate agent can help you deal with this and avoid an unrealistic escalation clause.
Major structural changes once the home has already been built
As mentioned above, it is unlikely that a builder will be willing to make major changes to the layout or structure after the house is built. You may have better luck if you request these changes before the home building process has begun or is in the early stages.
5 tips to help with negotiations about new construction
- Work with a local real estate agent who has experience with new-build homes. They know builder pricing strategies, contract terms, and negotiation timelines.
- Research the house and recent sales by comparable new-build homes in the area. Look at the price per square foot, the builder’s reputation and inventory, sales pace, and contract details to determine if the listing price is fair.
- Research builders before bidding. Look at their reputation, standard contract terms, upgrade prices and set timelines.
- Negotiating already built homes. If the builder has several unsold or unfinished homes on the market, he may be willing to negotiate the price.
- Make sure that any agreed negotiations are recorded in writing. Builders’ representatives can verbally promise benefits, but these won’t count unless they’re in your contract. Double-check that all incentives, upgrades, and timelines are documented.
Frequently asked questions about negotiating the price of new-build homes
What is a new-build home?
A new-build home is new construction that has never been lived in and is usually sold by builders or developers. These homes may include custom homes, move-in spec homes and homes in new residential developments.
How much do you have to negotiate for a new-build home?
If you want to negotiate the offer price, a discount of 1 to 5% can be a good starting point. You’ll likely get a better result if you negotiate other benefits, such as updates, closing cost assistance, or home warranties.
Can you negotiate on spec homes?
Yes, you can negotiate for both spec and move-in ready homes, but you’ll likely have more success with move-in ready homes. If you want to update your home, consider negotiating updates to a custom home with the builder.
How do I know if I am getting a good deal on a new-build home?
By working with an experienced real estate agent you can ensure that you get a good deal on a new construction home. Learning more about the local market, builders, comparable properties, and the home itself can help you feel more confident you’re getting the best price.
