Knowing how to negotiate with new home builders depends on which new home builders you are dealing with. Each home builder or contractor has a different way of doing business, and each company has a different structure and procedure. There is no need to be nervous about negotiations, but don’t sign the contract until your attorney has looked it over. In this way, you can have time to think about what you want, and make sure that your best interests are being represented in the contract.
If a homebuilder or their employees make you uncomfortable, choose another homebuilder. There are many homebuilders who want work. Why deal with people you do not trust. Search for Registered Home Builders on your local Home Builder’s Association Website. It is a fast and easy way to find reputable local home builders. Research all the homebuilders, on line, within your community, and by polling realtors, loan officers, and other professionals in building related fields. There should be dozens of builders capable of building your home.
Research on home building techniques and materials is also important in order to communicate intelligently with a real home builder or contractor. Know about the different grades of plywood, and other lumber, and the various types of insulation. For more information on home building, download our 98 page book and read the many articles on this site. Also watch some YouTube videos on the various types of construction, until you feel confident.
Dealing with a registered homebuilder, or other long time member of the Home Builders Association is completely different than working with a huge homebuilding corporation. Visiting a registered homebuilder is a real treat. A working understanding of home construction, your home planning journal and good communication skills, are all you need when you visit the local registered homebuilder. Talk to him about energy efficiency and various materials. When you’ve finished discussing what you want, ask him for a quote and a sample contract. Inquire about his warranty as well. Tell him that you want to think about it, and you will get back to him.
Collect bids from Several Registered Home Builders, and then choose one to build your home. If you wish to negotiate further with your chosen builder before signing the contract, express your desire as a difference between what you want and what you can afford. Explain what you want, and allow him to pre-qualify you, if he hasn’t already. Let him know about any extenuating circumstances. If you are uncomfortable with a 30 year mortgage, which you should be, and want to buy your home on a 15 year mortgage then say so. Then simply ask, “How can we build a house with this, this and this, but not necessarily that and that, and come out for less?” Any Registered Home Builder should be able to adjust your building plans, to your budget needs and still create a nice home for you.
Registered Home builders are professionals and should be treated like any other professional. Just as you might tell your doctor you can’t afford to be hospitalized, so what is the second best option, simply tell your home builder, your financial situation, and your desire for a home, and allow him to tweak your home for a lower cost.
Dealing with sales people could be a totally different situation. These are not the people who will be responsible for building your home. Generally they are not construction experts, though they may know a little about how each one of their models is constructed. Their area of expertise is in selling upgrades. They create a major desire for various upgrades, usually by showing a model home with all the upgrades. Meanwhile the price quoted is for a home with no upgrades, and upgrades are generally overpriced for what they actually cost. The homebuilders make their profit off upgrades.
Many people feel that they need to bring their own realtor to meet with these salesmen. This is definitely a good idea if you feel unsure of the situation, but more importantly, never sign anything unless your attorney looks it over first. Use the cooling off period to think over their offer. Consider carefully before you choose a builder, and get several estimates from local builders as well before making up your mind.
Don’t sign a contract on the first meeting, or before examining it closely and having your attorney read it as well. If you aren’t comfortable with the deal you are getting, let them know you are ready to find another builder, if they won’t accept the deal on your terms. The willingness to go elsewhere is key to negotiation. For more information on how to negotiate with new home builders, read our other articles on the site, and download our free 98 page book.