Buying a house of your own and becoming a bona fide homeowner is considered one of the pillars of the American Dream. When going to buy new construction, you should know that there are pros and cons to that kind of purchase. Naturally, you have the opportunity to mold the home to your liking and upgrade it whichever way you want. However, you cannot allow your expenses to skyrocket if you are dealing with a limited budget, as most first-time homebuyers are. Luckily, there is always the option of negotiating with your chosen builder to see if they can add some upgrades during the construction process.
How To Negotiate
Living in areas with mild climates means that you can essentially buy a home under construction whenever you want — at any moment during the year. Even so, you will find that the market slows down significantly come winter, putting you in a more advantageous position compared to the builders. If you intend to negotiate upgrades on new construction homes, this is the moment to buy yourself a house. The builders will be more focused on your specific home because they have fewer other constructions to think about. You will also have more room to haggle regarding the price, giving you more money to spend on upgrades.
If you manage to find a builder ready to negotiate, you don’t have to ask them to perform the upgrades themselves. For instance, you can try to get them to cover all of the closing expenses during the purchase. This isn’t too high of a cost for the builder, but it can mean a world of difference for your upgrade budget.
Of course, no builder will agree to perform upgrades that put them at a disadvantage or hurt their bottom line. If they think they can sell the home to someone else that won’t try to negotiate upgrades, they will definitely do so. Considering that, think about picking a cheaper lot for your home-to-be. Lowering the costs on that end will allow the builders to spend more on upgrades.
Often enough, if the market is in your favor, you may discover that builders are dealing with a surplus of new constructions that have already been finished. In that scenario, they will be much more willing to negotiate. In a buyer’s market, the builders don’t expect to sell to someone else the next day if you reject their offer. When builders need to give you an incentive to buy, they’ll probably be willing to perform a couple of upgrades.
What Upgrades To Ask For
This depends on how handy you are, and whether you are prepared to remodel yourself later on. If that is the case, you can focus on the big picture while negotiating with the builders and do the smaller stuff yourself when you move in.
You could ask for cabinet upgrades. Deeper or taller cabinets can be costly to purchase and install yourself, but all of us could use the extra space. Plus, if you want to resell the home down the line, a lot of practical storage space will increase its worth on the market.
Speaking of space, you can get the builders to provide you with more room altogether, especially upstairs. Generally, the foundation and the roof are the most costly aspects during construction. For builders, adding the appropriate upstairs framing isn’t that much of an expense. Having an additional bath or a simple room above your garage is never a bad idea. The same is true for extra plumbing in general; if you decide to make an additional kitchen or bath somewhere down the line, ask builders to finish the plumbing in potential areas now. Even if you don’t decide to complete this future project, this can raise your home’s value for prospective buyers.
Ceiling fans are another cheap upgrade for builders. These can be a neat complementary addition to an HVAC system, making it more optimal and less costly. Again, this is another feature other homebuyers will appreciate as much as you.
If you feel like you have the leverage needed to negotiate, don’t ask for cosmetic upgrades that you could cheaply replace later on. Instead, focus on something more permanent. Besides the potential upgrades we’ve described above, flooring and tiles are also something to think about.
For those who intend on negotiating upgrades on new construction homes seriously, having a real estate agent by your side is essential. It’s even better if you can write down a list of the upgrades that you are after. An agent will have more market knowledge and authority to negotiate with builders, recognizing inflated expenses at once and focusing on a fair deal. Visit the showroom of your developers with your agent, if they have one. That’s the best way to learn what kind of offer you can hope for quickly.
Bear in mind that only your real estate agent will be working in your best interests. And if builders don’t have to pay a seller’s commission, this might be an incentive for them to agree to some upgrades they wouldn’t have otherwise.
Your success in this endeavor will mostly depend on the state of the market. If builders are facing high demand, they are not likely to negotiate on anything. Hitting their sales quota is their main priority. The only thing you can hope for in a seller’s market is negotiating about a home that has been constructed, but the buyers walked away unexpectedly. Remember, you have the most leverage at the moment when the home has been finished because the day the construction is complete, the builders begin losing money if they haven’t sold it.
In the end, it is important to know when you are in a position to begin negotiating upgrades on new construction homes, as well as for which upgrades to ask. Don’t go into this with unrealistically high expectations. In this specific type of negotiation, the construction company usually has more sway, but if you play your cards right, you may be able to pull off a couple of wins.
Samantha Robins is an author and journalist, specializing in topics related to real estate agencies, and occasionally writing for moving companies such as Best Cross Country Movers