Is There Any Room To Haggle With The Builder?

Is everything truly negotiable in real estate? You can "make your best deal" on a car, and you can counter offer on a re-sale (used) home, but what gives these days on new homes? Is there any room to haggle with the builder? How often are offers on newly constructed homes entertained or even tolerated in a market like this?

To be honest, not often. But I guess what goes around comes around. I can clearly recall the days of huge buyer incentives (a free swimming pool with a home purchase?!), no lot premiums, and sales people saying things like "If you could make a commitment to buy this home today, what would it take to make a deal?" And that market lasted, and lasted, and lasted. Today the tables are turned and, of course, no one knows if this "seller's market" will last as long as the "buyer's market" did. All new home builders know is the usual "supply and demand" thing. Factors such as land costs, material costs and labor costs are skyrocketing, so negotiation is all but out of the question in many new home communities. For builders, turning a profit isn't a bad idea, either, after such a long drought.

So what are the exceptions to the rule, and what can you do to make a "sweeter deal" in a market like this? I suppose you have to put yourself in the builder's shoes to think up what might be attractive to him. For instance, the builder, in many instances, would not consider lowering a price or offering an incentive to a potential buyer on a house whose construction has not even yet begun. But he may blink twice when it's a house that is due to be finished within the next 30 to 45 days. Why? Because he'll incur a whopping house payment on it at completion, on top of the cost he is already incurring for carrying the land for that unit. If a house is this close to completion, he may just be getting nervous, because builders base their margins on projections for closed sales. If the builder prefers not to mess with the appraised values of home in his community, he may only deal on incentives, such as paying for your closing costs, throwing in some upgrades, or not charging a lot premium. Lowering the base price of the home may affect values later on, so he may just steer clear of that thought.

Is the home site in a location that not everyone would be crazy about, but it suits you just fine? How long has it been available for sale? Does that finished house have someone else's upgrade selections in it, but they're not all that bad? Whatever the average buyer may balk at is what a builder may soften his position for.

Sometimes becoming this shrewd a home buyer takes time and patience. It takes a watchful eye, and a good rapport with the new home sales agent as well. If you're looking for just the "right" situation, keep in touch with the agent, or drop by on a regular basis to find out what's going on in the new home community you're focused on. Ask them to call you if someone "falls out of escrow" (sounds like going into the abyss . . .). Tell the agent what home site you would like to become a "back-up" buyer on, but be willing to make a fast deal if your dream comes true. Luck, fate, and timing can also use a savvy buyer, but requires you to strike when the iron is hot. Be sure that your financing pre-approval is in hand, and your down payment money is arranged before poising yourself for this scenario.

Builder closeouts are another place to sniff around. The last few homes may become bargains, since the builder is not as concerned with exact values any longer, but you may need to take whatever you get in terms of location. Still, if values all around you are higher and home values in general are one the rise, it may turn out to be a winning deal.