Negotiate on a new construction? (incentive, recommendation, negotiating, agents)

[gkleoni1]

Going to sign our contract soon and was wondering if it is normal to negotiate on a new construction home that is already low priced with upgrade and closing cost incentives? Kind of feel like we should at least try...

[HereinDenver]

Definitely negotiate. What do you have to lose?

[gkleoni1]

Any agents out there with some advice?

[DavePautsch]

Kind of "it depends" response (sorry!).

Is the house already completed (standing inventory)? If yes, there is significantly MORE room to negotiate than if ground hasn't been broken yet. Builders borrow money - and incur interest charges and other carrying costs that eat into their profit each month. Their motivation to sell a home - and negotiate a little more increases.

If the house is still just on paper - you have LESS room to negotiate (although their still may be some, depending on the pace at which the builder is still building). If he's at a standstill...it may be good to get something moving and keep the sub-contractors working. There are other schools of thought on this too...each case stands on its own. The issue is that in this instance, the builder does not KNOW what the final costs are and any price commitment made up front can be impacted by changes in labor costs, materials costs, etc...so there isn't as much flexibility.

Many people will tell you that the most room is in 'stuff' rather than price because it doesn't impact the comparable sales as much. Get the builder to throw in upgrades...instead of bringing the price down is a common (and very solid) recommendation.

Good luck.

Dave

[austin-steve]

Normally you would negotiate before signing anything. You make an offer just like any other purchase. You offer can only be:
1) Rejected
2) Counter-offered
3) Accepted

My personal experience in dealing with builders is that you get your best deal on the third try. That is, make an offer then walk away after it is rejected or countered. Then try again a week later (if they don't call you back sooner), and walk away again. Then make a final offer.

It also helps if you have two strong candidate properties from different builders, and you'd be happy with either. Then go with the one who provides the best deal.

Also, don't let the builder say "we're giving you $15K in upgrades", and try to use that in negotiating with you. Their cost on those upgrades is 50% or less of what they are "giving" you, so they'd much rather work those in at retail cash value than discount the home price. You're better off taking the price right off the home or obtaining some interest rate buydown money.

Steve

[gkleoni1]

TY everyone. We made our offer, they countered, we countered their counter and they accepted. In the end we did come out ahead of their original asking price & incentives. So thanks again!

[ladybug07]

Congrats on the house!