- Negotiating the sale price of a new-build home is perfectly acceptable. The worst that can happen is that the builder or developer says ‘no’.
- Any good negotiating strategy begins with research. Your ability to secure a discount will in large part come down to demand and supply.
- Even if you are unable to negotiate a lower purchase price, you may be able to get additional incentives, cash back or improved final specifications.
Owning a new-build home is a dream for many people. No one else has ever lived there. The bathroom and kitchen are brand new and the decoration is immaculate. The development will be modern – no run-down properties – and common areas such as gardens and pathways will be well maintained.
How to negotiate a house price: A comprehensive guide from ooba Home Loans
For many this dream comes true but, before it does, some shrewd negotiating is called for. Our guide is designed to help you create a negotiating strategy to help you secure your new dream home at the best price possible.
First rule of negotiating the purchase of a new-build…
… is that you CAN negotiate. The sale price is not fixed and you shouldn’t be made to feel uncomfortable for putting in an offer.
Before you start negotiating
Make sure that you are in the best position possible. The builder or developer is looking for certain, quick buyers. If you can offer them a fast sale you are more likely to get a good discount. If you require a bond, make sure you are pre-approved – a home loan comparison service such as ooba Home Loans can help you with this process – and have your deposit ready so the builder knows that, financially, you are good to go.
Make sure the seller knows you have other options
You may be led to believe that demand outstrips supply and that several other buyers have shown interest and are all willing to pay a higher price than you. Don’t fall for it.
Rather, make it known if you’ve seen other houses similar to this one but at a more reasonable price – you too have other options on the table.
Do your research before you negotiate
Obviously, the ability to negotiate a price will in large part come down to demand and supply. So, before your start, make sure you’ve done your research: How long has the development been for sale? How many houses have been sold? Are other builders or developers offering similar properties in the area?
If there is a lot of competition from another builder or developer, the development has been for sale for a long time, and/or very few homes have been sold, there should be a great opportunity to negotiate.
TIP: Even if you have a favoured development, enquire with another builder or developer to see what deal you can get and to test out your negotiating skills.
Try to obtain additional information
Is the builder or developer coming up to the financial year end? Builders or developers who have sales targets to hit or shareholders to keep happy are more likely to offer favourable discounts for purchases as they have to guarantee sales and generate income to fund the actual build. Also, you will often get good deals on the last plot or two in a development. The builder or developer is spending a lot of time and money maintaining the sales office and staff and so may offer discounts so they can close and move onto the next site.
Incentives (carpets, curtains), cash back (attorneys’ fees or bond registration fees) and final specification (higher-spec kitchen or white goods) are sometimes easier to negotiate than the final price if the builder is trying to maintain a standardised sale price. If your negotiation based on price doesn’t go to plan, see if they will pay removal costs or throw in carpets or a higher-spec kitchen.
If your offer is below the asking price the worst they can say is ‘no’
The negotiation doesn’t end there and you can always improve your offer. Remember this is a commercial situation for the builder or developer so they will entertain your subsequent offer. In comparison, when purchasing from a home owner you can cause a rift by making a cheeky offer, which might mean that a subsequent offer isn’t taken seriously, so in many ways it’s easier to negotiate with a builder or developer.
Stick to your guns
Negotiations can take days. Don’t panic and immediately increase your offer. Trust in your research. If demand is poor you stand a good chance of getting a discount. You can quickly get caught up in large sums of money. Getting R10,000 off a R650,000 purchase may seem negligible but how long does it take you to save R10,000? Wouldn’t that money be better spent on your home?
When you’re ready to make the offer, bear in mind that ooba Home Loans offers a range of tools that can make the home buying process easier. Start with their Bond Calculator, then use the ooba Home Loans Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.
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