What (and how hard) can I REALLY bargain when buying a new home through a builder?

Question

I am about to buy a brand new home in the state of Texas. It should be ready in about 12 months. The home is being bought through a builder and therefore I have a few floor plan options (I can add or remove a bedroom or two, add a game room, etc.), as well as design options (fire place, floors, kitchen cabinets, etc.).

Buying a used home has the obvious advantage of being able to bargain and haggle the seller for a better price. With new builds it doesn't seem to be the case as much, but since this is my first time buying a new build I'd like to ask what typically I can expect to be able to bargain in the United States.

So far what I have is:

• A 7% incentive off the base price towards improvements/add-ons.
• A potential discount on closing costs if I go with the seller's lender.
• I was able to shop for different lots in the community in order to find a lot with cheaper lot premium (technically not really a bargain, just shopping).

Is it customary (or even possible) to bargain for things like base price, design choices, the lot premium, etc.? What else can I try to negotiate before making a formal offer?

Answer 1

Having purchased two such homes, I have limited experience with new developments though I have some secondary awareness because friends have done so as well.

In the beginning, the builders were inflexible on the price of the home but they were willing to bend on upgrades, charging only for the additional cost of better appliances, carpet, tile, etc. without markup or additional labor charges. Early home prices were low, relatively speaking because they wanted to get bodies in quickly. The craftsmanship of the early homes was also on the higher end because a happy resident is the best advertising available - and it's free.

Thinking outside of the box can also save you a few bucks. In my previous homes, I floored the crawl space with plywood for additional storage. With my current new home, I decided to let them do it. By mutual agreement, they used large plywood scraps from the roofs, at no charge. It made no difference to me if the floor was 3x4 pieces, etc. instead of 4x8's. That saved $400 to $500 in materials as well as my avoiding my sweat equity. Another freebie ($300 value) was a tiled bench seat at the end of the walk in shower (I only paid for the nominal cost of the additional tiles).

Closer to the end, the builder offered more upgrade incentives because he was trying to sell the last dozen or so units to be able to tie up the project and move onto the next one. These were pretty much offsetting because base prices for the homes had risen for two years. One area of significant savings was on the highest premium lots which for the most part were near the last to be sold. Discounts of as much as $8k were given but that's more of a gamble because you have no idea what lots will remain available at the end of construction.

As a general rule, do not have the builder do improvements not involved in the Certificate of Occupancy. For example, because of my exterior hot tub, for safety reasons I am required to have a 5 foot gated fence around it. The builder's fee would have been 50% more than the going rate (the builder marks up the private contractor's fee). The same held true for the higher end screen door and screening in the exterior entranceway, driveway improvements (deco paint or tiles), etc.

The short answer? You can attempt to negotiate a better price on your upgrades or additional improvements. The worst that they can say is no.

Answer 2

I have a house bought new that is now 11 years old. I am unhappy with the durability of certain systems (you may find my question about a roof leak on money.se). Ask for a builder's warranty longer than 1 year; potentially a third party warranty if the builder has not been in business for decades.

Answer 3

I like the idea of bargaining for upgrades.

For instance, upgrade to plywood flooring and roof-decking from OSB. But ask for 1x6 lumber instead of plywood and the builder will probably stagger away laughing. Of course both plywood and OSB have glues in them.

Ground-source-heat-pump and stainless-steel roof-covering are two more upgrade ideas. Poured concrete basement walls instead of concrete block walls is another upgrade.

Also, solid-wood kitchen cabinets would be an upgrade over OSB cabinets. And consider solid-wood sliding closet doors. In fact look at all the doors. Look at the plumbing fixtures and the sinks. Look at the bathroom tile and the tub. Decide on hardwood flooring or carpet.