If you are looking to buy a new-build home, you want something fresh, unique, and perfect. You've probably gone through countless checklists to ensure nothing misses in your plans. And when it comes to price, seldom would consider negotiating what the builder quotes. After all, new builds are not like existing homes. The price depends on the cost of materials, and it would seem pointless to negotiate, right?
Dead wrong! It turns out that you can negotiate the prices of new-build homes. By understanding the strings to pull, anyone can get an excellent deal on a new-build home. Read on and learn how to weave your way into the best deals on new-build homes. But first, a quick look at the real estate trends.
A Glance at US Homes Prices and Trends
As 2022 comes to a close, there has been a slight dip in mortgage rates which is good. However, according to Freddie Mac, the rates are still significantly higher than January levels. The rate for a 30-year and 15-year fixed mortgage is still 3.23 and 3.29 points higher than at the beginning of the year.
As a result, aspiring homeowners are less enthusiastic about buying, and due to the threat of recession, homeowners are reluctant to sell. Industry players are staring at a slowed market in the coming year.
The situation is not different regarding other aspects of homeownership. For instance, home insurance rates have also been rising. According to zebra.com, there has been a double-digit percentage rise in the cost of home insurance premiums.
Cues that could help cut down home insurance premiums, and the general cost of owning a home, would be handy. Read on and see how you can land an excellent deal on your new build.
Do Your Research - Compare the Prices
They say that comparison is the thief of joy. But in this case, going the extra mile to learn about the market could save you thousands of dollars. Compare the price of your preferred home to new-build houses in the area. Check the future premium. Also, weigh the current price per square foot to the resale value.
All this information will help build your confidence when negotiating with the builder. If the price of similar properties is thousands of dollars less, you have grounds for a significant discount.
Consider Buying Off-plan
Builders require some financing to get projects going before getting financial support from lenders. This provides a perfect opportunity for buyers willing to buy off-plan to secure excellent deals from the builder. Besides, builders base prices for off-plan homes on the present value, not the future value.
Of course, there are dangers and risks of buying off-plan. But with guidance from an experienced realtor, your chances of finding and settling on an excellent deal are high.
Take Advantage of Incentives from Builders
Builders often form partnerships with vendors, lenders, and suppliers to make their projects more competitive. They offer aspiring homeowners incentives if they opt to work with one (or more) of their partner vendors.
For instance, a builder may partner with a lender and offer discounted mortgage fees. They could also partner with furnishers, interior designers, and other vendors to offer great incentives.
Inquire from the property developer if they have incentives, and check out the impact they would have on the overall deal.
Buy the Model Home
One of the reasons why new-build homes often have a hefty price tag is they are brand new and custom. The labels, 'brand new,' and 'customized' work pretty much the same on all products. Whether you want to buy a car, an electronic gadget, or any product, you will pay a premium price because it is brand new and unique.
If you could creatively remove the tags brand new and unique from a new build home, the price would significantly drop.
The model home is a new-build house that would neither match the description brand new nor be customized. Since builders used it as their model - for marketing purposes - they may want to sell it quickly and offer it at a significantly discounted price. Plus, since the home was the model piece, you will get better upgrades and high-quality finishes.
Double-check the Upgrades
If you have already identified a builder and property, you can still pull some strings and squeeze a great deal. The builder would likely base the price on standard finishing. If you have requested specific upgrades, like high-end floors, the cost of the home could rise sharply.
Consider options like cutting down on the upgrades. You could also consider enlisting the services of a different contractor who offers the same at a much lower cost.
Pitch Your Price at the Opportune Time
If you are still weighing between various properties, you can try timing the purchase to squeeze out the best deal. For instance, you can pitch your proposal when the builder has sold everything but one last (often not preferred) property. The builder could have already broken even and wants to move their equipment to a new site.
But this calls for plenty of tact and experience. So, work with an experienced realtor to help you pounce just at the right time.
The price of new-build homes could be intimidating. However, by observing the tips above and learning how to negotiate, you can significantly lower the buying price. But remember, builders often have a bottom-line price that they need to get for the property. Therefore, work with an experienced realtor who understands the market and can help you get the best deal.