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We're scheduled to go with our realtor this week and make an offer to have a house built in an existing development. The builder, our agent, and the development's sales agent will be there. We've never bought new construction before. We've been given the base price and lot price with a list of what is included. Is it expected for us to try to negoiate on price, closing costs, or upgrades, etc, or is that not done? Thanks!
Have your agent do research on the builders previous sales. Some price for negotiation, some do not.
It's not always a good idea, depending on the builder, one way to assure they skimp on quality, is to negotiate the typical profits down.
You have a meeting scheduled, but no game plan? You can't really make up a plan as you go along in front of the opposition. Your agent should have already talked with you about the process in your immediate area as it's different with all builders and in all different locations.
My last two homes were new builds. The best negotation is on options, not the basic home price. Options can be had for 50% or less. If you are looking to have a stripper home built, then little room to negotiate.
If asked earlier I would have said no need for you to have an agent. Deal direct with the buider and/or their agents. You added a layer (your agent) someone is going to have to pay for.
If someone actually knew this would they actually still go to that builder?
Often times, they will. Here are some examples - code says x amount of re-bar in concrete - the builder may go with that instead of his typical "beefed up" code. Type of insulation - builder again goes with minimum instead of his preferred, and the list goes on - windows, appliances, garage door openers, AC units, sliding doors, siding and shingle grades, even interior insulation, even the flippin' mailbox.
All those may be downgrades that are very acceptable to some people. Like I said though, be careful when negotiating price down to make sure you are still getting what you wanted. Many of these things the average Joe doesn't know the difference on and when price is negotiated down and the contractor says he's putting a 20 yr shingle on, no questions are asked, even if the model home has a 30 yr.
At the end of the day if the price is consistent with the quality then the downgrades won't hurt his reputation if the home still meets code, and is within the terms of the contract.
My last two homes were new builds. The best negotation is on options, not the basic home price. Options can be had for 50% or less. If you are looking to have a stripper home built, then little room to negotiate.
My experience has been similar. Some builders offer incentives (i.e. $5000 toward closing, etc.) to use their approved lender and/or their title people, some will offer special discounts on upgrades or a credit of x dollars for upgrades, that sort of thing but usually the base prices are not negotiable. They really don't want public records to show prices less than the list base price.
At one point I was looking at new construction. The big discounts were on houses they had already built. I don't know if they were sales that fell through or what, but there were significant discounts on those houses vs. buying the same exact model that wasn't built yet.
manderly beat me to it. I was just going to say that existing new construction will sometimes negotiate. New construction custom builds usually will not. At least not on the price. You may be able to get them to throw in a fence for free, or something, but they usually will not come off the price.
I can tell you that in my area right now, because prices have dropped so low, and material costs are so high, it is difficult enough for a builder to make ANY profit on a house, that most builders here just aren't building at all right now, or are only building for people who are paying cash, or have more than 20% cash down on the loan, because appraisals may be a problem.
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