Buying a new home from a builder is quite different than buying from a homeowner like yourself, so you'll need a different midset and different negotiating rules. Start out by focusing on the benefits of buying a new house – multiple models to choose from, flooring to select, and colors to pick that will compliment your lifestyle. Then learn what will help you get the best deal, when buying a new home from a builder.
A new home will be built more-or-less to your specifications and you won't have the headache of remodeling right away. Buying a new home, if you buy before it's finished, means you can select the finishing touches you want like paint colors and light fixtures. You get a brand new home that you can move into and immediately start building your new life.
What's important to understand is when you're buying a new home from a builder, you can negotiate on a lot of things – except the price!
Buying a New Home from a Builder
When buying a new home from a builder, you want to pay the price being asked?X|!>#&? That doesn't make sense until you think it through a bit more. You selected the neighborhood because it’s new, upscale and prestigious. You're buying a home from a builder who has a lot of homes to sell, but isn't under pressure to do so. You want the builder to maintain their pricing to protect your investment in your new house.
A builder with a development, has the financial backing to carry the costs of the land and construction for some number of houses. Unlike homeowners who only have one home to sell, builders aren't in a hurry to sell their homes, at least not at a discount. You've been pre-qualified for a specific loan amount and know what you can afford. When buying a new home from a builder, you would be wise to enter negotiations with the mindset that you're willing to pay the asking price, with some upgrades equal to the discount you'd otherwise expect. In effect you'll increase the value of your new home, and get more value for your dollar!
Are You Buying a New Home or Community?
The builder definitely wants to sell their houses. The builder also wants to maintain the integrity of their development and the quality of the homes they sell. The builder isn't just building homes, they're building a community like Highfield Commons in Rochester, NH.
When you're buying a new home, you're also buying into a community. Each community has a reputation based on the town where it's located, the quality of homes built there, the schools and other local services. The builder picked the location for these reasons, and has an obligation to the city, the town and other homeowners in the development, to maintain the reputation high. If the price of your new home is discounted, this might have a negative impact on your home's value, the loan your home can support and may impact the closing. Buying your new home and paying the established price helps to maintain the integrity of the neighborhood.
Buying a New Home & Negotiating Upgrades
While it may not be possible to negotiate price, builders are used to negotiating with people on upgrades that add value to a new home. Consider asking for landscaping, hardware floors, a specific tile or granite for the counter-tops. For example, if a builder has landscaping installed, the value added to the house will not only be visible from the street but will be an expense you save yourself from having to install later.
When purchasing my first home, I was not aware of how high landscaping costs were. Having just loam brought in was thousands of dollars, never mind the cost of brick and patio work along with mature plants and sod. Landscaping can easily exceed $10,000 when you're buying retail while the builder is buying in volume, at lower prices.
By negotiating for upgrades rather than price, everyone wins. You get the new home you envisioned, the builder gets the price he wanted and the value of the neighborhood is maintained.
So while negotiating price with a builder may not be an option when buying your new home, there are alternatives that add value to your new home. And let’s face it, reducing the price by $10,000 doesn’t add up to much when you amortize that over the life of a 30 year mortgage. You end up with the new home you wanted and a great investment in your future.