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3 Secrets to Negotiating with a New Home Builder

Everyone is looking for a great deal. Whether you are buying a new car, clothes shopping or building a new home, you want to be sure you get the right product at the best price.

If you are in the market to buy a new home in Utah (or anywhere for that matter), there are some recommendations we would make to help you get the best price during the negotiation phase. These recommendations come from watching the results of countless offers come in and get accepted or rejected. So, if you love negotiating, willing to put in a little work and have realistic expectations, you can definitely get a great deal on your new home.

Realistic Offers

The days of low-ball offers are coming to a close. Most housing markets throughout the country are beginning to rebound (Utah real estate is no exception) and demand is increasing. This means that buyers need to be more realistic about the offers they present to sellers.

Contrary to public opinion, submitting a low-ball offer typically does not result in a price reduction. You need to display to the builder or seller that you are serious before they will even consider the offer. How do you show you are serious? Submit a realistic offer – builders follow the housing prices in their market – they know what a home can and will sell for. Offering substantially less than the market value will not yield any results for you and will only make a seller less likely to work with you later.  This does not mean you can’t submit an offer lower than the asking price, we see many offers accepted at lower prices – but we almost never see a drastically lower offer accepted – even though many (too many) are submitted. Home builders have worked with enough buyers to know who is serious and who are just “tire kickers”.

When preparing your offer, either on your own or with a Realtor, put some time into determining a fair and realistic offer and you will be surprised how open a builder will be to accept it.

What’s in the Contract

When evaluating an offer – sellers consider more than just the offer price. Home builders are no different, while price is definitely the main aspect in the decision process, here are some of the other important factors to consider when preparing you real estate purchase contract (REPC):

  • Type of funding:  There is an opportunity cost to accepting an offer and placing a home under contract. What if the financing falls through? What is the time it will take to close the home? These are important considerations that every builder has when reviewing your purchase offer. If you have a weak financing plan (i.e high likelihood it will not be approved) or a very long closing period, you may have less room to negotiate on price. Conversely, if you are fortunate enough to offer cash or a large down payment, a seller may be more inclined to work with you on price. Take advantage of the Utah Home Builder Hub’s lending programs and  incentives to work with them and they will be more confident accepting your offer.
  • Concessions:  If you are wanting to negotiate the price, then you may want to limit the amount of seller concessions you request in your offer. Concessions are a set dollar amount or percentage of the purchase price that the seller agrees to contribute to the buyer, towards closing costs. However, if you are needing concessions to help cover these closing costs, you need to recognize that they are effectively already a reduction in price agreed upon by the seller.
  • Dates:  There are many dates and time frames in a real estate purchase contract. You need to set realistic times for these that both allow you adequate time to perform your due diligence and will satisfy the seller. Asking for a month to perform the home inspection may not be a wise idea, or setting a closing date several months beyond what your mortgage broker recommends may hurt your offer’s strength. Keeping these dates quick and realistic will help you submit a much stronger offer.
  • Addendums:  Keep the offer clean and simple. The more addendums and custom requests you include the more complicated and therefore frustrated a seller becomes. Unless it is necessary, try to keep the number of small requests to a minimum. This will give you more ability when negotiating on the larger points – price, concessions.

Preferred Lender

By financing your newly built home through the HUB’s lending partner, you will find that you will be saving thousands. It’s important for us at the HUB to make sure that our lending partner is a portfolio lender.  Having this, it allows our lending partner to offer loan programs that include NO MONEY DOWN plus multiple loan options with NO MONTHLY MORTGAGE INSURANCE.

The HUB’s lending partner has, by far, the most aggressive lending programs for new construction. Our lending partner is all about saving you time and money, proving that there is no better source for financing your new home than through the HUB.

Regardless of what profession you work in, we have a loan for you; Physicians, Lawyers, Firefighters, Military, Police Officers, Teachers and Real Estate Agents.  Even borrowers that are self employed can find a home loan that suits their needs through the HUB.

The HUB’s incentive is separate from the builder’s incentive, to take full advantage of the total incentives make the HUB your first contact for information on how to SAVE.

     ZERO DOWN  with our Sponsored Builders!!! To find out more about the HUBS builders incentives contact us directly.

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Thanks to J.Thomas blog for their contribution to this post