Have your eye on a brand-new home, but it’s just out of budget? There’s actually ways to negotiate new construction homes so you leave with a good deal and your dream space. Whether you have your eye on a new-build in Rock Hill, NC or are about to buy a new construction home in Palm Springs, CA, take a look at everything you need to know about how to negotiate a new home price with builders in this Redfin article.
Key takeaways
- New construction homes typically have less wiggle room on base price, but plenty of room on incentives.
- Working with an agent familiar with new construction is your biggest advantage.
- You’ll have the most leverage when the home is already built or the builder needs to close quickly.
Table of contents
What is a new construction home
A new construction home is a new-build that has never been lived in and is typically sold by builders or developers. These homes include custom-builds, move-in-ready spec homes, and homes in new residential developments.
Pros of a new construction home
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- Modern: Most new construction homes come with modern features like layout, design, and smart home technology. They could also include money saving elements like energy-efficient HCAC systems, thermostats, or double-pane windows.
- Lower maintenance and repairs: Since everything is brand-new, you’re unlikely to face major repairs or maintenance issues for a while. Many new homes also come with warranties that cover structural defects, systems, and workmanship.
- Customizable: If the home is still under construction, buyers may have the opportunity to choose design elements like flooring, cabinetry, and other fixtures.
Cons of a new construction home
- Higher upfront costs: Most new construction homes are often more expensive than resale homes, especially with upgrades and customization.
- Move-in timeline: If the home isn’t finished being built, you may face move-in delays due to construction schedule changes, weather, or supply chain issues.
Can you negotiate with a new construction home?
In short, yes – but maybe not in the way you’d expect. Builders are usually reluctant to drop the base price, since it affects the appraised value of other homes in the community. Instead, they’re more likely to offer incentives such as upgraded finishes, assistance with closing costs, or flexible move-in dates – especially if the home is already built or sales are slow.
Keep reading for strategies to help you get the best deal possible when buying a new construction home.
7 ways to negotiate the price of a new construction home
1. Work with a real estate agent
Opt for a real estate agent in your area with experience with new construction homes. They’ll be equipped with knowledge about the local market, builder pricing strategies, contract terms, and timelines to best advocate for you and help you secure the best deal.
2. Research the home
Take the time to look at recent sales of comparable new construction homes, price per square foot, builder reputation and inventory, sales pace, contingencies, and contract details to better understand the listing price. By understanding the home, you can determine if the price is fair, identify areas for negotiation, and gain leverage during the negotiation process.
3. Understand the local market
Similarly, being knowledgeable about the local market can help you in the negotiation process as you’ll better understand how the house’s listing price aligns with current demand, helping you justify your negotiations.
4. Research builders prior to negotiations
Exploring local builders before you choose a reputable one helps you gather crucial information on quotes and comparative negotiation terms, which can be useful in the negotiation process. We once again recommend using an agent experienced in new construction homes since they can often secure more concessions.
Know what you can negotiate
While builders may not budge much on base price, you can often negotiate other perks, including:
- Upgrades like flooring, countertops, or appliances
- Closing cost assistance
- Lot premiums
- Flexible move-in timelines
- Home warranties or extended coverage
Builders often prefer offering incentives over lowering the price because it protects the value of other homes in the community. Just make sure you’re knowledgeable about the home, builder, local market, and work with an agent, before negotiating these terms.
5. Time your offer
Offering during a slower season, end-of-quarter or fiscal year deadlines, or if the builder has several unsold and uncompleted homes can give you a significant advantage when negotiating.
6 Negotiate on already built homes
If you aren’t interested in customization, builders are typically more willing to negotiate on already built homes, because they are costing the builder money every day they sit empty. Another plus is you won’t have to wait to move in.
7. Get it all in writing
Builder reps may promise perks verbally, but they don’t count unless they’re in your contract. Double-check all incentives, upgrades, and timelines are documented.
FAQs about negotiating new construction home prices
How much should you negotiate on a new construction home?
You’re likely to have a better outcome negotiating other perks like updates, closing cost assistance, or home warranties. If you do want to negotiate listing price, 1-5% off is typical, but we recommend working with an experienced agent on price negotiations.
Can you negotiate on spec homes?
Yes, you can negotiate on both spec and move-in-ready homes, but you’re likely to have more negotiation success with move-in-ready homes. If you’re looking to customize your home, consider negotiating updates with the builder on a spec home.
How do I know I’m getting a good deal with a new construction home?
Working with an agent can help ensure you’re getting a good deal along with understanding the local market, builder, comparables, and the home itself.