New construction seems cut and dry. You walk into the home, you fill out paperwork, you pick out a floor plan, write a check and the builders start work. The prices are advertised on the paperwork and website, and buying a new home feels a lot like buying a new car. Every extra feature comes with a price tag, and since you’re picking from a menu of options, the prices are firm. Or are they?
If you’re hoping to get the most out of your deal with a builder, you’ll need to be proactive. Everything is negotiable in a sluggish real estate market – so take advantage of this one.
Get an Agent
Your first step before even looking at homes in a builder’s neighborhood is to get a real estate agent. As the buyer, you pay nothing to the agent, and the agent gets money from the builder. Having an agent is this case is essentially free for you, and you benefit from the considerable knowledge that real estate agent brings with her. Seek out an agent familiar with the area before proceeding with any discussions with builders.
Once you have a Realtor on your side, let him or her handle as much of the discussion as possible. Builders like to deal with naïve couples. Real estate agents know how to handle the builders on your behalf and if there’s wiggle room, the agent will help you find it.
Research the Market
If you absolutely love a particular house plan from a certain builder, by all means get excited about it – on the inside. Just like buying a car is a game, buying a home is a game, too. Look around at the comparable properties from other builders. How much are they selling for? Why is the one you want priced the way it is? What bonuses are being offered with your builder of choice and with the competition?
Builders want your business in this market, especially if you’re a solid buyer with good credit and a down payment. They are much more willing to play ball if you can show them you know the house is overpriced for the market. Or you may be able to negotiate a bigger upgrade bonus if the competition is offering one. You can only really negotiate if the seller doesn’t know you’re practically salivating to sign paperwork, so play it cool. Act like you’re unsure of which builder to work with (or let your agent play this game) and see what sort of offers you can land.
Buy the Spec Homes
Many builders are scaling back on spec homes, or homes built on speculation of a sale. These homes are gambles for builders who are hoping the right buyer might come along. Why not become that buyer? The home is already built and sitting on the market, and it’s costing the builder money every month to hold it, just like a traditional seller. Step in and grab it after negotiating a price, just like you would on an existing home. You get a negotiated price and still get your brand new home.
You may not have made the choices in the home, but features and colors will likely be neutral. As an added benefit, the builder who sells homes on spec may be willing to add extra upgrades as part of the deal, even with a lower price. The only trick here is you’ll need to be willing to compromise on floor plans since you’re not able to pick the one you love the best – you may have to pick the one the builders chose six months earlier.
Source: Houston Real Estate Observer
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