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How to Negotiate with a Home Builder for a Good Deal

Home Building Negotiation

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Here are 10 ways to negotiate a good deal on your new construction home with a home builder. 1) Purchase your new home without a real estate agent. 2) Ask for upgrades at a discounted price or for free. 3) Ask what sales or incentives they are offering. 4) Ask if they will cover your moving costs. 5) Have them cover your closing costs. 6) Get the cheapest mortgage rate. 7) Request them to pay for utility hookups. 8) Request a premium lot. 9) Get a discount on an inventory home. 10) Have them include a home theater system, furnishings, appliances, or patio set

In this list, you probably noticed that some of the methods were pretty standard and others were pretty creative and unusual. Your job is to try them and see which ones will work with your home builder. Because, just like all people are different, all builders are different and view things differently.

Let’s look at my 10 ways to negotiate with a home builder to get a good deal.

Purchase Your New Home Without a Real Estate Agent

First, let me be clear. I am not trying to keep you from hiring and using a real estate agent, or any professional for that matter. Professional assistance can be very valuable when you need it or when you enjoy having service. In fact, our specialized services in new home construction are designed to get you the home building experience you want.

But, I want to point out a few things to consider about finding and using a real estate agent. Finding a good real estate agent to help you with a new home build is not always easy. Many agents don’t specialize in new construction, and, believe me, you want someone who knows the ins and outs of it. Also, many agents avoid new construction homes because there is so much work involved and because they don’t receive their pay until the end of a long build.

Now let’s say you are the type of person that wants to learn the basic skills to purchase a new construction home. (We can help you acquire those skills with our free articles, free subscription, and Get-a-Builder Guide.) And you’re not interested in the service aspect that an agent can provide. Then, why use an agent? They are just going to cost the builder about 3% of the price of the house. Keep in mind, you can still always hire an attorney if you would like help from a licensed professional, and you can do it for a fraction of the cost.

What happens when the builder doesn’t have to pay thousands of dollars to a real estate agent? You can ask them for pretty much anything you want, up to the cost of the agent fees.

Now, some people will say that builders don’t operate that way. They say the builder budgets for the cost of your agent, and if you don’t use one, then you’re just out, and there’s no negotiating using that money somewhere else.

Well….maybe some builders think that way, but I guarantee not all builders think that way, and maybe only a few think like that. Let’s just say…… I have seen deals negotiated in exchange for the price of the agent fee. So, I know it’s possible.

Ask for Upgrades at a Reduced Price or for Free

Another area you can try to negotiate is to ask for free or discounted upgrades. Upgrades can be in the form of cabinets, floors, appliances, countertops, fixtures, or physical framing features of the house itself, like arches and coffered ceilings.

Often, upgrades already have significant upcharges built into them, so asking for a discount on them is not that big of a deal to the builder. In fact, at times, builders even publicly advertise half off upgrades. So, it’s really not out of the norm to ask for a large discount on them. And, some upgrades, such as minor physical changes or improvements, will not cost the builder much at all, but can dramatically affect the look or practicality of a house for you and how much you love it.

Inquire About Sales, Incentives, Discounts

Depending on the time of year and housing market, builders may offer sales, incentives, and discounts. But don’t assume the builder will always tell you about them. You need to ask about them.

These promotions could be in the form of cash, discounted prices, or freebies. Just to mention a few of these, I have seen $10,000 taken off the price, free garage door openers, fully sodded yards and landscaping, upsized water heaters, and partially finished basements. You never know what a builder may offer, and you might be really surprised. So make sure to inquire about them.

Ask to Have Your Moving Costs Covered

Moving is one of the most dreaded and costly parts of buying a new home. Why not make the move more enjoyable and less expensive by asking the builder if they will provide a moving service? You could either have them set up the move with their preferred movers, or have them reimburse you for your moving expenses. Even if you can only get the builder to pay for a rental truck, it’s better than nothing.

Have the Builder Pay Closing Costs

Buyers often don’t think about the expense of closing costs, usually $1000s, until it’s time to finalize the purchase of the home. By remembering this in advance and asking the builder if they will pay all closing costs, you can save yourself a chunk of money that would’ve surprised you at the end of the build.

Paying closing costs may be more attractive to builders than other forms of negotiation, because they don’t have to pull money out of their pockets and they don’t have to absorb big discounts. The closing costs are simply deducted from their proceeds of the home sale at the end.

Get The Cheapest Mortgage Rate

Builders have preferred lenders, but using them is not always in your best interest. Just because they are preferred doesn’t mean it’s a good deal for you.

Yes, you may get cheaper closing costs, discounted upgrades, or faster approval in exchange for using their preferred lender. But, what is their mortgage rate and origination fees? These factors could more than outweigh any benefits. For example, a higher mortgage rate could cost you tens of thousands over the years. Now, if you understand this and you’re willing to pay more to get the house you want, then that’s fine. But, if that’s not your goal and you would rather save that money, then you should shop around for a lender.

Inquire about Paying for Utility Hook-Ups

After you buy a new construction home, don’t think all the utilities are hooked up and in your name. Some of the utilities may be turned on, but, usually, there are additional expenses. The utility companies charge to have the utilities turned on in your name as the new owner.

To offset this cost, you can ask the builder if they will pay for the cost of the hookups and transfer. This may only be a few hundred dollars, but every little bit helps when your spending a lot of money on a new home build.

Request a Premium Lot

Requesting a premium lot instead of the builder’s standard lot is a great way to get something important to you but that the builder may not need to make a profit on.

Why would a builder do this? The builder’s premium lots may all be considered bonus money, where they make their profit on the home itself. So anything above the break-even point on the lot value is extra money to them.

When picking a lot for your new construction home, look for premium lots that have characteristics you really like. Do you want a bigger yard, better view, level yard, sets back from the road, or no neighbors? Find lots with these features, and then request the builder to include the premium lot you want but at the standard price.

Get a Discount on an Inventory Home

Builders often have homes they build as displays or that they build before contracting to sell, called speculating. These types of homes can be a source to offer a discounted price to the builder. Why? Their money has already been spent on building the home and the builder wants to recoup it. Depending how badly they want to get that money back will determine what they are willing to accept.

Have Them Include a Home Theater System, Furnishings, Appliances, Patio Set

Think about all the items and extras you need to finish your home after moving in, stuff the builder doesn’t normally include- a new TV or home theater system, furniture, refrigerator, washer, dryer, or patio table with chairs. There are a lot of items to make that perfect home. So why not ask the builder if they’ll throw in one, or some, of these for you?

Negotiating Creatively

Negotiating with a builder takes creativity. It’s a balance of what you want and what the home builder is willing to give or give up.

Be considerate, not demanding. Trying to force a builder to do something will not work well. Building a home is a lot of work, and if they feel they are going to have to sacrifice too much, they will end the negotiation and move on. On the other hand, be willing to stop the negotiations if the deal doesn’t seem right or doesn’t work for you.

In the end, try to understand what makes the builder tick. Throw some offers and requests their way. And, then, see how they react. All you can do is try. You never know, you may be surprised what kind of deal you can get on your new home build.

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