Buying a new construction home can sound like a dream, with top-of-the-line features and your ideal layout. The price tag, however, can sometimes put it out of reach. The good news is that there’s often room to negotiate — it just looks different than negotiating with a traditional seller.
In this Redfin article, we’ll cover what you can negotiate when buying a new home and strategies to get the best deal. Whether you’re looking at a new-build in Raleigh, NC, or a home in Sacramento, CA, here’s what you can expect during new construction negotiations.
Key takeaways
Negotiating the base price on a new construction home can be more difficult.
You’re more likely to be able to negotiate upgrades, warranties, and concessions.
You’ll have more leverage if the home is already built or the builder needs to close fast.
Can you negotiate on 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.
However, some builders may be receptive to negotiation, so it doesn’t hurt to try. There are some things to keep in mind to help you get the best deal on a new construction home.
How to negotiate the price of a new construction home
While builders may not budge much on base price, you can often negotiate other perks. Let’s take a look at some of your options.
Consider negotiating concessions, fees, or HOA costs
One way to negotiate on a new construction home is by asking for the builder to pay for certain fees or concessions. Sometimes your builder has a preferred lender who offers incentives to prospective buyers, such as closing cost assistance, lower interest rates, or paid home inspections. It’s always a good idea to shop around before committing to a lender to make sure you’re getting the best deal.
The builder may also agree to cover HOA costs for a specified amount of time as an incentive for you to buy the property. This can help reduce initial costs without affecting the purchase price. Keep in mind that you’ll eventually need to pay for these HOA fees, so you’ll want to make sure that they fit into your budget.
Negotiate the home’s layout and upgraded features
Buying a new construction home can give you more freedom to design a home that meets your needs. While you may not be able to negotiate the purchase price, you can negotiate a better layout or for upgraded features.
If the home building process has not begun, you can ask about changing the floorplan to accommodate your needs. It’s unlikely that the builder will agree to any major structural changes if the home is already built.
Asking for upgraded features or top-of-the-line appliances is another way to get a better deal without changing the purchase price. Some features to consider include better appliances, high-quality countertops, lighting packages, and smart home systems. These features can be easier to swap out or add to the home if it’s already built or close to completion.
Ask for a better warranty
Many new construction properties already offer a “builder’s warranty” as part of the home purchase. These warranties typically have one-year coverage for structural and flooring issues, and two-year coverage for electrical, plumbing, and HVAC systems. You can see if the builder is willing to extend the warranty’s coverage or if they can include additional items, such as appliances, in the policy.
Determine if negotiating the base price is possible
In most cases, builders are going to be hesitant to negotiate the price of a new build, especially if the homes were recently listed. Reducing the price of one home could cause other buyers to try to negotiate a lower price. However, there are a few times when negotiating the price down may work.
If there are only a few homes left for sale, or only the model home is available, the builder may agree to a lower price in order to sell the remaining properties. Likewise, if the builder is not seeing any of the new homes sell, they may consider reducing the price to get the homes off the market.
What can be more difficult to negotiate on a new home?
While there are several things you can negotiate, there are some things that may be more difficult to negotiate. Let’s take a look at them:
Lot price
Typically, if all the lots in a new community are the same quality, it’s going to be difficult to negotiate the price down. Some lots have a premium fee if they’re in a more desirable location, so it’s unlikely that you’ll be able to reduce this cost.
Earlier move-in date
You may be able to push out your move-in date, but it’s unlikely that you’ll be able to speed it up. Builders are typically working on a tight timeline to begin with, especially if they’re in the process of building a planned unit development. Sometimes these timelines may even be pushed out due to a lack of building supplies, backorders, or construction challenges.
Base or purchase price
Other than a few exceptions, it’s unlikely that the builder will agree to lowering the purchase price by much. Due to a variety of factors, such as building costs, it’s more likely that the home could cost more than what you initially expect.
Some builders include an escalation clause that allows them to increase the price if building material costs increase. However, a good real estate agent can help you navigate this and prevent an unrealistic escalation clause.
Major structural changes if the home is already built
As mentioned above, it’s unlikely that a builder will be willing to make major layout or structural changes after the home has been built. You may have better luck asking for these changes before the home building process has begun or is in the early stages.
5 tips to help with negotiations on a new build
Work with a local real estate agent who has experience with new construction homes. They’ll know builder pricing strategies, contract terms, and timelines for negotiating.
Research the home and recent sales of comparable new construction homes in the area. Look at the price per square foot, builder reputation and inventory, sales pace, and contract details to determine if the listing price is fair.
Research builders before making an offer. Look into their reputation, standard contract terms, upgrade pricing, and build timelines.
Negotiate on already built homes. If the builder has several unsold or uncompleted homes on the market, they may be willing to negotiate on price.
Get any agreed-upon negotiations 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
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 can include custom builds, move-in-ready spec homes, and homes in new residential developments.
How much should you negotiate on a new construction home?
If you want to negotiate the listing price, 1 to 5% off can be a good starting point. You’re likely to have a better outcome negotiating other perks like updates, closing cost assistance, or home warranties.
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 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 experienced agent can help ensure you’re getting a good deal on a new construction home. Learning about the local market, builders, comparable properties, and the home itself can make you more confident that you’re getting the best price.
