Tips and Traps When Negotiating Real Estate: Getting Negotiations Started

Negotiating with a Builder: Getting Negotiations Started

For most people, perhaps the hardest part of negotiating with a builder is getting the process started. Remember, the builder knows what you have in mind and, in most cases, has taken care to see that you are discouraged from negotiating.

Typically there are “set prices” for the various models, sort of like the way mayonnaise is priced on a grocery store shelf. And there are set prices for upgrades and options. In many cases, there are specific mortgage packages already in place that you are encouraged to use. For example, you may be told that if you want to pay all cash (get your own financing), the builder will be happy to sell to you. But, it will cost you more money in appraisal and lending fees, and it will be much easier simply to get the financing the builder already has in place.

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A builder may try to insist that you get a mortgage through its company as a condition of sale. You should resist such unethical tactics.

Further, the salesperson will often tell you that he or she is autho­rized to accept only full-price offers on the terms and conditions specifically written out. In other words, the implication is that nobody negotiates price, terms, and so on with builders.

When dealing with a builder, the method I use is to submit a pre­ pared offer. You can either do it directly yourself or through an agent. If you use an agent, however, be aware that the builder may not be willing to pay an agent’s fee and you may end up having to pay it yourself.

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If you submit it yourself, I suggest you write up an offer (using expert counsel such as an attorney or competent agent) and bring it into the builder’s sales office. The representative there should be a licensed real estate agent and should know the rules of the game. Accompany your offer by a reasonable deposit and tell the agent you would like to submit, it to the builder/owner.

The agent may be very pleasant and quickly agree to do so, telling you he or she will let you know as soon as possible. I suggest you state that you want to present it in person. After all, you should have some negotiating tricks up your sleeve after reading this book. Again, they may readily agree.

On the other hand, the salesperson may stonewall you. I once had a salesperson say the builder absolutely would refuse to consider any offer that was not accompanied by a $10,000 cashier’s check. The agent refused to let me speak to the builder and refused to accept my offer. 1 was able, however, to get the name of the builder (it was blazoned in huge letters on a sign outside) and I called direct. I spoke first to a secretary, explaining I had a cash offer (down payment plus financing on my end, cash to the builder) and then was connected directly to the builder, who invited me in. We eventually did not make a deal, but it wasn’t because I couldn’t speak to the builder/owner or because he insisted on a ridiculous sort of deposit.

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Beware of salespeople who are officious. Normally real estate agents will go out of their way to be helpful and courteous. But I have encountered a few salespeople at ™ builders’ offices who seem to have an attitude prob­lem. It’s as though they feel they’re going out of their way to work with you. If you encounter those people, I suggest you try an end run as explained above.