Negotiating with Builders on New Construction

avatarthumbnail.jpgThis question came from Trulia Voices today, but it’s one that I’ve been asked many times in the past:

“How much less than the list price should I offer on new construction?”

The answer, if you want the house, is zero. Because builders don’t negotiate on list price. Rather, they negotiate with the incentives and/or upgrades that they offer. List price is list price but that doesn’t mean that’s the price you have to pay.

There are several items that often can become negotiable if a builder is motivated to sell a home – lot premiums, upgraded packages, price incentives, etc. This is especially true if you’re looking at an inventory or “spec” home – a completed or nearly-completed home that the builder is holding in its inventory.

Builders’ agents generally are upfront with the incentives currently being offered at any particular point in time. That doesn’t mean that’s all that may be available, though. One of the keys is knowledge of the overall market – incentives that have been offered by the same builder elsewhere, incentives being offered by other builders in the same area, etc.

That knowledge comes with experience, which is one of the several reasons I recommend bringing an agent with you on the first visit to the models. (If you visit the models without an agent on your first trip, you’ve almost certainly lost the right to have personal representation in the transaction and instead will be dealing with an agent who’s first concern is the builders’ best interest.)

Another key is a lack of emotion … keeping a poker face. If a builder’s agent knows you really want the house, they’re less likely to pull out all the stops to sell you the home. If they know you’re willing to walk away, however, that’s a different story. And again, an agent can help here as they can be the unemotional force that’s often needed to help gain the best deal possible.

Buying new construction isn’t like buying resale from an unrepresented seller. You’re often dealing with a builders’ agent with considerable negotiating experience. Having that experience yourself will help but even that will only get you so far if you’re asking the wrong questions from the start.

[tags]Phoenix real estate, new home construction[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at


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