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What To Do When Builders Won’t Budge

I have had several clients interested in new construction developments in recent months. Their beef? The builders are standing firm on their prices. “But it’s a buyer’s market!” they tell me. “Everything is negotiable.”

And I completely agree—everything is negotiable. You just have to know what things to negotiate on. And price may not be one of them. Builders will very rarely reduce their prices large amounts off the asking price, for several reasons. One being they have the funds and backing to hold onto them until they get the price they want. Their cost of holding each month is not the same as an individual homeowner. They are much less desperate than a person who has to get out of their home immediately.

Another reason is if they negotiate and reduce your purchase price, that lower price will reduce the appraised values on subsequent home sales. Meaning, if they reduce for one, they are going to be expected to reduce for all.

A better negotiating tactic in my opinion is to get all of the extras. Ask for a fridge. A home warranty. $10k in closing costs. The hardwood floors and built-in cabinet upgrades. And ask for all of them at no extra cost. You may not get everything you ask for, but you will likely get some. And at the end of the day, it probably makes more financial sense to get your closing costs paid, or to get a brand new fridge, rather than have a few thousand taken off the purchase price. Over the life of a 30-year mortgage, you probably wouldn’t notice the reduction in the price anyway. But you would certainly notice $10,000 coming out of your pocket for closing costs.

I try to encourage my buyers to look at communities that began construction in the heyday of Atlanta real estate several years ago. Many of these communities halted building in the late 2000s due to that pesky real-estate/economic crash. So what may have begun as a community priced in the $400k-$500k range is now a $250k-$350k community. But the quality of product you get is so much better. The finishes/materials/look of the home and the community is that of one in a much higher price range. The floors are better wood. The appliances are higher grade. They have crown moldings, nicer tile in the bathrooms, etc. If a buyer was to look at similarly priced community built in the last year, the quality of product would be distinctively noticeable. The carpets would be cheaper. Hardwood becomes laminate. And natural stone tile is traded out for ceramic.

So while yes, it is still a buyer’s market, that doesn’t mean that every seller is willing to negotiate tens of thousands of dollars off a purchase price. Builders don’t have to, and they often won’t. The key to negotiating with a builder is know what really is and isn’t negotiable.

Keep in mind that while the on-site agents may seem very friendly to you, they represent the builder and are out to get the highest price with the best terms for them. Do yourself a favor and get an agent—preferably me!