Buying a new house may be the largest purchase you will make in your lifetime. It is both exciting and nerve-wracking, looking around for the perfect house and the best community to live in. You want to secure the best property, but unwilling to pay too much. If you can, you will want to save money for hooking up utilities and decorating.
If you have already decided on a property, the next step is negotiating house prices with your builder. Take heed. No builder will voluntarily sell below the asking price. They want to make sure they will realize a profit and establish a baseline for their properties for future buyers. You must have a few tricks up your sleeves to get the best price possible for your house.
Factors that Influence a Home’s Value
Negotiating house prices is expected of you as a buyer, but be careful of lowballing. You may end up insulting the builder. A home’s value is influenced by several factors. It is important that you understand these determinants so you can make better offers for your target property. You will save yourself and your builder valuable time if you go in with the right price list in mind.
Size of Home
This is critical when you want to learn how to negotiate a new home for the best price with the builder. Home value is estimated in price per square foot. Bigger homes naturally have more floor area, hence a bit pricier. Price per square foot varies, so a $100 per square foot may be a bargain or not depending on the home you are buying. Usable spaces also matter. Bedroom and bathroom spaces are highly valued, so if a home has more, expect to pay more.
The location of your dream property impacts its overall value. Price may be dependent on how close the house is to school, work, public transit, shopping, and recreational centers. This is why some neighborhoods command steep prices while others several miles away do not. Pickering is a prime location for residential homes in Ontario. If you are looking for a new home builder in the Greater Toronto Area, give Paradise Development a call.
Improvements add value to your home, but this varies on the market you are in and the type of upgrades done. With projects like adding a pool or wood floors, value increases are higher for more expensive homes. Meanwhile, adding a full bathroom or remodeling a kitchen tend to have bigger increase for the average- or below-average-priced homes. Older homes, in particular, benefit from having updated features.
Local Market and the Economy
This is another important aspect when learning how to negotiate with builders. You have to know what kind of market your target property is in. Homes in a seller’s market tend to sell quickly because there are a lot of buyers competing for fewer homes. If this is the case, you will have more trouble negotiating for the price you want due to competition. The broader economy may also impact home sales, forcing sellers to increase or lower their asking price.
5 Tips for Negotiating a House Purchase
Once you have found the home you want to buy, it is time to put your bargaining skills to good use. You must learn how to negotiate with builders before signing that contract. At the end of the day, it is your tenacity and creativity that will secure you the best price. Here are some tips on how to haggle for the right price without going overboard.
1. Quick Response is Key
The first tip on how to negotiate with builders is simple – never delay your responses to counteroffers. Your builder may think you are not serious about buying the property and begin looking for other buyers. You are also giving your competition, if there is any, to step in and start a bidding war. Bidding wars are your number one nemesis. It will only ratchet up the possible sales price of your target home as other potential buyers make their offers.
2. Do Not Bypass Your Agent
Always communicate your requests and concerns through your real estate agent. This is critical when negotiating house prices. It is simply unethical and unprofessional to directly contact a builder and bypass your agent. You hired your agent for a purpose – let them do what are good at. Use their expertise and save yourself from problems later on. The two of you must present a united front to the builder all the time to avoid misunderstandings.
3. Be Frank with the Builder
Being frank with what you want is another important tip on how to negotiate with the builder on price. Let us face it, it is the builder who will dictate the terms on which they sell their properties. You have little say in the matter, particularly on the price, if the builder does not wish to negotiate with you. While they may be set on their standards, it will not hurt for you to ask for concessions or upgrades. You just have to be clear about what you want.
4. Check the Comparables
If you want to know if you are paying too much for a property, check the comparables. Ask for the sales prices of similar homes in the neighborhood that have been recently taken off the market. To get a more accurate estimate, look for homes with features the same as your target property and located in the same subdivision. Send your agent to talk with other agents and ask for the details. Playing dirty is part of the challenge on how to negotiate with the builder on price.
5. Be Realistic
If you have a set budget and unwilling to pay more, do not stress. Stick to your guns and be willing to walk away. This should be number one on the basic tips on how to negotiate a new home price with the builder. Eventually, you will find the perfect home, in the right location, with pricing within your range. You just have to be patient with your search and set reasonable expectations.