With all the new construction happening lately in our area, I’ve received a lot of calls from clients asking about it. There are two questions they ask the most that I want to answer today.
The first is, “Can I negotiate the price of a new construction home when I’m working with the builder or their representative?” The answer is no. Why?
“Builders typically won’t negotiate with you.”
Let’s say there’s a development where 50 homes will be built. The prices of those homes are set on the margin. Out of those 50 homes, let’s say three or four sold recently for $350,000 and you now want to negotiate with the builder to get your home for
$340,000. That will affect the value of the homes that have already sold in the sense that if a few more sold at that level, those prices are down.
Remember—appraisers always look at recently sold comparable homes. The builder doesn’t have a big enough margin to risk having their appraisals come in low. That’s why they’ll typically refuse to negotiate the price of the home. Instead of negotiating
the price, you should (or have your agent) negotiate options.
The second question people ask is, “Is it advantageous for me as a buyer to go in without an agent and get a lower price?” Again, the answer is no.
The builder won’t lower the price of the house for the same reasons relating to the appraisal that I answered
the first question. Aside from that, out of the same 50 homes, they’ve already built in that 75% to 90% of them will be sold by people represented by agents. With a resale home (particularly a For Sale By Owner home), you might be able to
get a price reduction because there’s no agent involved.
If you have any questions about this topic, feel free to get in touch with me. I’ve also collected the top three floor plans from all of our local builders and would be glad to share them with you. I look forward to hearing from you!