Buying a newly constructed home has a different dynamic than the typical home buying process. Instead of buying from a resident who’s lived in the house, you’re negotiating with a builder who is often trying to sell many homes in succession. And in some cases, the home you’re buying doesn’t even exist yet.
Below are some helpful tips to negotiating a new home buying transaction.
1. Hire a professional real estate agent
If you’re touring a model home, you’ll most likely be working with an agent who’s representing the best interest of the builder. Make sure you’ve got an equal playing field by hiring an agent of you own—ideally someone who’s experienced in new construction.
A professional real estate agent will help you successfully navigate the waters. He or she can help you structure your offer to best appeal to the builder, and can advise you on choices that will increase the resale value of your home.
Also, some new housing developments require you to be accompanied by a real estate agent during your first visits to the site. Ask your agent to check the builder’s registration policy, and whether there are options to register online or over the phone.
2. Research the builder
Don’t just rely on what the builder tells you about his company. Talk to previous clients and ask for their experience, and look for online testimonials. Ask your agent if he or she has any insider information on the builder’s reputation.
Of course, every company has a few unhappy customers who can’t be pleased, but look for overall trends. If a certain issue seems to be a problem, make sure the purchase agreement documents deal with it specifically (see point #5).
3. Don’t rely on the model home
Many people assume when they see a model home that every fixture and finish is standard for the builder. However, most model homes are a mixture of standard features and upgrades. During your tour of the home, be sure to ask the builder to specify what comes with the home automatically and which features will cost extra.
Your agent may be able to help you find a list of standard features and the costs of common upgrades. Keep in mind that prices can change, so make sure you know the most up-to-date costs before you make an offer.
4. Negotiate wisely
Builders have a vested interest in keeping their prices at a certain level—after all, if they give discounts to you, future buyers may demand the same. But builders may agree to “back end” discounts if they will increase your chance of buying their home. Consider asking the builder to perform free upgrades, or to pay some or all of the closing costs.
You and your agent may also want to research the builder’s style of negotiation by talking to previous clients or looking at past sales.
5. Document everything
When you’re putting an offer on a home that’s not yet finished, you want to make sure you get all the details in writing before you sign anything. Your contract should spell out exactly what the home will include, what happens if the builders miss a deadline, and so forth. Just a verbal agreement isn’t enough—a written document is legally binding, and that’s what you want.
The builder probably has templates for these contracts already on file. Your agent may be able to secure a copy of them beforehand so that you can get an idea of what to expect.
Source: National Builder Trade-in Program