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Negotiating with New Construction Home Builders in Tucson, Marana, Sahuarita, Oro Valley AZ
Negotiating in real estate is where the “rubber meets the road.” Anyone can find a home they like, but it comes down to negotiating the best deal for yourself and saving the maximum money possible. In Tucson Arizona (AZ), when negotiating real estate prices with Tucson home builders (including the surrounding areas of Marana, Oro Valley, Sahuarita, and Catalina AZ) here are a few tips to assist you in getting the best deal possible.
Just to give you an honest idea what you’re up against when negotiating, the odds are heavily stacked against you receiving the maximum possible incentive or lowest price possible. Builders’ sales representatives are licensed real estate agents who work solely for the builder employing them. They know the current market conditions extremely well and are very knowledgeable about all other builders in their immediate area, as well as what resale homes are selling for and the average time on market in that particular area. Also, in many cases the builder’s sales agents have negotiated and sold in excess of a hundred homes over the years and are very experienced at getting you to pay a higher price for a home than you would otherwise do. Builders train their agents to do just that, and also train their agents extensively to ensure they are tough negotiators and know how to make the builder additional money by not giving out the lowest price. The builder’s sales agent will make you feel that the deal on the table is a very good one even if it is just marginal and the builder has previously gone and would now go lower. Several large new home builders in the Tucson area actually pay large bonuses to agents who can sell homes while withholding incentives, netting the builder additional profit. This can make up a nice sum at the end of the year for the sales agent who is a master negotiator. All of this is, of course, legal and just looked at as making (or in this case saving) their company (New Home Builder) additional money. Believe me, I know first hand how the builders work. I personally sold for one of the largest home builders in America for years, and was always one of the top producers in the company. So with the deck heavily stacked against you, what can/should you do?
Every new home negotiation is different and no two deals are exactly alike. So even if someone you know got a “Special Deal” on their home in a subdivision, there is no way to know for certain how good or low that “Special Deal” was. (This is a favorite of the new home sales agent: just tell the buyer they got the lowest or best price ever on their deal even when it’s not true at all.) Here are some tips to help you with your negotiations with builders.
The most obvious and simple tip is to select a Realtor who is very familiar with the new home industry and has a relationship with the builders. Some Realtors even specialize in new construction or at least sell a high amount of it every year so they are very familiar with it. In Tucson Arizona (AZ) that will be your #1 weapon to get the best deal. Many people think “I’ll get a better deal if I do the negotiations myself.” I laugh when I hear that and that’s what the builders want you to think. In the state of Arizona, every builder (at least any builder building more than a few homes a year) signs a Builder Broker Agreement with the real estate community (Real Estate Agents and Brokers). The agreement states that agents will be paid by the builder at no cost to the buyer. (Yes, you read that right. They pay your agent to protect your interest.) They also agree to offer a “single price policy” which means that whether you have an agent or not, the best price on that home is the best price. The only catch to this is that YOU MUST BRING YOUR REALTOR WITH YOU ON YOUR FIRST VISIT EVER TO THE BUILDER’S SITE (Community), otherwise you void your right to have the builder pay the agent. If you later choose to use a Realtor, you will have to pay them out of your own pocket. If you did nothing else right, having a tough negotiating Realtor who knows the new home builder’s negotiation practices would be an ace in the hole for you. And even better, the builder will pay the commission to them. It’s like gambling with the house’s money. It’s really a no lose for you the buyer. A good negotiating Realtor will save you thousands and keep you from paying way too much for a home just because a builder’s sales agent said it was a good deal. That’s the best tip I can give prospective buyers wanting to get a great deal in their new construction home in Tucson,Arizona (AZ) but here are a few more.
Other than selecting a Realtor with expertise in negotiating with new home builders in Tucson Arizona (AZ), the next tip I would give is to call around all the builders in the area you’re thinking of buying in, get an idea of prices, lot sizes, incentives, etc., write everything down and keep good notes. Then in a couple days do it again and try to talk to a different builder’s agent. Many times you will be amazed at how the prices of lots or sometimes homes, or especially incentives have changed. Why is this? Well, many times things — especially incentives — change from day to day, but also remember sometimes builder’s agents get those bonuses and a strong builder’s agent who is a good negotiator might not feel the need to give as much away upfront over the phone. This alone will also get you a feeling for the market that you’re thinking of buying in, and you should start to get a better idea of the overall average deals that are present in the area.
Once you call around you should also see that the best deals and larger incentives are offered on the builder’s finished or close to finished spec, or sometimes called inventory homes. These are homes that are done and have no buyer as of yet. Track these homes. The longer they sit on the market the more inclined a builder will be to just get rid of them and get the number off their books. On those homes, starting out with a lowball (not too low — you need the builder to know you’re serious) offer can be very rewarding because sometimes the builder is just in the mood or need to sell the home. If the builder does not keep closing homes and gets too many spec homes sitting around, it looks bad. It can also cause a builder to go bankrupt since all their money is sitting in the homes and they, just simply put, get over-leveraged. These spec (or inventory homes) may not have every feature and amenity that you want, but that’s OK because many times the builders basically sell it super cheap just to move it. After you move in, with the money you saved, you can have those features installed and still have big savings when negotiated properly. Just having that open mind will many times save you tons since other buyers took a look and couldn’t see past the little stuff that kept them from locking up the best deal in the neighborhood. Also, if a builder is unwilling to offer what other builders in the area are offering, bring in the paperwork that shows exactly what the other builder is willing to do to sell one of their homes. When a builder and their sales agent see on paper what the other builder is willing to do to earn your business, they may be much more willing to make a deal on one of their own homes right then and there. Builders and their agents typically talk weekly to see what the others are offering and where they stand in comparison. So for the most part all the builders know what the others are offering. Now having said that, every once in a while one builder lies to the others to try to move a bunch of their homes quickly without the others catching on. If this happens to you, get it all documented and see what the other builders will do to earn the business. What you should not try is to just make up a number. Builders most times will investigate, and once they find out you’re just trying to bluff them into giving you a unbelievable price, they will be even more difficult to negotiate with because at that point they know you want what they have more then the other builders and know it’s much more likely you will buy their home because you’re emotionally attached and just trying to trick them into parting with thousands of dollars. Just to drive the point home, 99% of the time all the builders will know what the others are doing or having to do to sell homes. Hopefully these tips help you in your new home negotiations. If you would like any additional help feel free to contact me via email. You may use the contact form on this blog (click contact), send email to moliver@sellingtucsonrealestate.com, or phone (520) 247-4134.
October 6th, 2007 at 7:25 pm
Thank you for sharing!