How to Negotiate With a New Home Builder

July 1, 2007

This is a common search phrase on Google and other search engines, and one that makes me cringe to see.  It tells me that there is a buyer at a serious disadvantage in negotiations. Why a disadvantage? Well, it’s pretty simple, really- in any negotiation, the purchasing party must be willing to walk away from the table.  Often, you’ve already searched 50 homes in 50 different areas of town.  You are possibly weary of going back out to see another 50, or your significant other is totally in love with the home in question, and walking away would put a serious dent in his or her smile.  Not being able to walk away, or having a builder sales agent who only has the builder’s interest in mind (knowing how much you actually love the house) puts you in a position of not being taken absolutely seriously when giving your terms. After all, they’ve already seen your hand.

You can overcome this-  a lot can be argued as to whether you need a Realtor or not, but the main purpose of having a Realtor completely makes the above irrelevant.  How?  Because you, the buyer can love the house to death, but the sales agent knows the Realtor is a walking, talking thorn in the builder’s side. The builder’s sales agent knows by experience that the Realtor can provide an option to the buyer that will more than likely make this particular home last on the hot list.  Having a real estate advocate places a buffer between you and the builder, allowing you to love the house, but removing the “heart of the matter” from the negotiation.  It simply all boils down to your agent and the builder, and who is more willing to walk…

Having personally worked with over 30 builders and countless sales agents, I’ve experienced all of this first hand.  My clients understand going in that your personal feelings have nothing to do with a builder’s bottom line.  A good Realtor can turn your love of the home into buying power, but their firm hand turns the conversation into something all parties can live with.

If you’re trying to negotiate with a builder on your own, there is no advice anyone can give you. Simply put, the odds are against you in really getting (or knowing you are getting) a winning deal.  You would need the type of experience I have in knowing all builders, all products, and having immediate options that remove the fear of losing the home.

Bill Cosby once did an entire episode of his show on how to handle a car dealership which began with how he dressed poorly to shield his wealth and was silent when looking at the cars as to not telegraph his excitement over a particular vehicle.  But what Bill failed to mention was that sales people such as builder associates are actually trained to watch every movement of your body, including your eyes.  They know by your sudden willingness to negotiate one house over four others and mentally comparing them can actually calculate what you obviously like over competing homes in inventory.  There is really no way to pokerface a deal on your home.  So, I guess the only practical advice I can give you is to allow yourself a buffer.  See the home only with your advocate- then the sales agent only sees what your agent wants them to see…

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Hen Pecked by Benn, Single Pointe CEO | Filed Under Austin Real Estate Blog, Buying, First Time Buyers, New Construction 

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