While sheer supply and demand is making it tough to negotiate much beyond what a builder is offering, understanding how to navigate the process may help buyers time their purchase appropriately and save some money wherever they can.

It may seem difficult — if not nearly impossible — to save money on new construction, given the current climate of rapidly rising prices and shrinking inventory.

That said, if you have some business savvy and make it a priority to be in the know, it’s possible to score a deal and avoid overpaying on certain things when it comes to buying a new home. Here are seven ways agents can help make that happen for buyers.

1. Agent interest lists

As an agent, you have to stay in the know about the inventory that’s about to hit the market as well as properties that just arrived on the market. Your customers are pinged instantly when a new listing that fits their needs appears, and this allows both of you to monitor your options. In short, when the right property hits the market, they’ll be ready. 

With new construction, you need to be in the know before the builder opens a new community for sale to the public. Agent interest lists are a great way to know what neighborhoods are launching before word gets out to the general public. You’ll get a glimpse into floor plans, available lots and pricing. You’ll also have the site agent’s contact information.

Connect with every internet sales agent for the builders in your area. Introduce yourself, and ask them to add you to their distribution lists for not only any new communities, but also lists of their available inventory for sale.

This will allow you to stay on top of what is happening for both new and existing communities. Builders don’t list every home for sale in the MLS, and they certainly don’t list what’s available to be built from scratch. 

Find out from the internet sales agent who the actual site agents are for the communities in the areas your buyers are interested in. Ask if you can contact them directly or if you should go through the internet sales agent to coordinate appointments and obtain information.

Every builder works a bit differently. Site agents are frequently tied up with appointments and may not be able to respond as quickly. In any case, you should have the site agent’s contact information in your phone and at the ready. 

Make sure that you regularly touch base and find out what the latest offerings are and what may be coming up for sale — like new spec homes starting to be built in very early stages, new lot releases and any potential lots or homes that may be coming back on the market.

There is always a possibility of fall-through properties with a builder, where a buyer might have signed a contract and submitted a deposit, but wasn’t able to move forward due to a job situation, relocation, a change in circumstances or some other reason. 

Those homes may never be advertised, especially if the builder has a list of people waiting for something to come back on the market. As an agent, you want to be one of the first to know in case that happens.

With so many neighborhoods selling before a sales model is even built, it’s more important than ever to be on the frontlines of what is happening with new construction in your marketplace and know who to contact to quickly run down needed information.

2. The early bird gets the worm

A significant part of the savings with new construction typically happens at the beginning of selling a new neighborhood — as in, being one of the first buyers to write a contract. Prices are their lowest on lots and floor plans the minute the builder kicks off sales, and they only have one way to go from there — up.  

The best deals are the first deals, and indecisiveness can and will cost the buyer money and perhaps their choice of lot and floor plan if there are restrictions on how many homes of a particular model can be built around each other on a street or particular section of one (so that every home is not the same). 

Are the customers hoping for that elusive cul-de-sac lot with a spectacular view or that highly coveted lot with no one next door or across from them? They better be ready to jump out of a parachute or be available to come in on Zoom, Skype or whatever videoconferencing app everyone can use to make it happen. 

Waiting a few days may change the entire scenario. The “we aren’t quite ready yet, but we can check it out next time we’re in town in a few weeks” response may result in a huge price increase on both lots and the base prices of the homes. Not to mention, by that time, the home they want might not be available at all. 

Help your buyers avoid the “should have, could have, would have” syndrome by coaching them on the importance of acting immediately. Prices can change in a matter of days, and site agents often don’t know when a price increase may be coming from their management. The same lot and homesite that the buyer was pondering over the weekend might suddenly cost $20,000 more a few days later.

3. Options, incentives and closing costs — oh my!

It can be easy to become overwhelmed with hearing various promotions being bantered about — for example: the builder is currently offering x amount that you can use to reduce the price or toward options and upgrades, and a certain amount toward closing costs if you use one of their preferred lenders.

Offerings wax and wane based on supply and demand, and if the pace of sales is brisk, the builder will likely pull back on incentives and raise prices at the same time. 

Builders may offer more generous incentives at the start of a new community, in an effort to get some signed contracts. However, they have the ability to quickly raise prices. So, it’s possible that the $25,000 incentive the builder was offering when your buyers visited a week ago may no longer be available now.

With respect to closing costs, if you use the builder’s preferred lender, you will typically be able to save some cash out of pocket toward closing costs that you otherwise would have to come up with.  

Keep in mind that the interest rate may be slightly higher when using a builder’s preferred lender versus financing with your clients’ bank of choice, but they will save more out-of-pocket costs in the short term.  

Homebuyers have to weigh the difference in the mortgage payments between the builder and an outside lender compared to saving on closing costs, and see how long it would take them to recoup the out-of-pocket costs.

When dealing with a builder, your buyers should take all the incentives they can and avoid a delay in making a decision. Otherwise, the price will not only increase, but there might not be any incentives to take advantage of.

4. Managing the bling

When it comes to options and upgrades, this is where a buyer can easily tip the final purchase price far beyond where they intended to be. If at all possible, preview the design center ahead of time to get an overview and understanding of the different levels of finishes and features before the actual appointment. 

A design appointment is usually only a couple of hours (or may be accomplished in a couple of meetings), but buyers are typically under a time crunch to decide a lot of critical finishes and color schemes for their home in a short timespan. It can be very easy to succumb to the pressure of the moment and pick things that are unnecessary extras and push you over your allotted budget.

Certain items are better off being done through the builder, and some items are best accomplished outside of the builder. At the time of the contract, it makes sense to commit to spending money on cabinetry and countertops, as well as structural upgrades such as extending a covered lanai under the roofline or adding some extra square footage in the garage.

Depending on the kind of flooring you are interested in, going with tile in the kitchen through the builder may make sense. However, having carpet put down in the living, dining and bedrooms may be a better option if you want to splurge on wood floors, luxury vinyl plank or other flooring of choice and want to be able to shop outside of builder options to find a material and installer that best suit your budget.  

There is typically a significant markup on certain kinds of flooring with builders — especially when it comes to wood floors — and you may find better pricing outside of the builder’s design center. 

That said, there’s usually some hassle involved in getting this done after closing instead of just being able to move right in, so your buyers have to determine if that’s doable for their situation and timeline.

For items like tile backsplash, crown molding, built-ins, custom window treatments such as plantation shutters, shades, gutters, fencing and front door glass inserts, going through vendors of your choosing after closing will likely be cost-effective. 

Ditto for light fixtures. Go with the basic ones offered, and do your shopping for preferred styles on your own after closing. The same thing goes for having the builder add a paver patio, firepit or summer kitchen.  

Also, there is always a bit of a markup when it comes to adding a pool through a builder. However, you are often doing that for the convenience of having it handled during the construction process versus having your yard ripped up after closing and trying to oversee it all yourself, which can often be a huge mess. 

There can be such a thing as too much icing on a cake, and the same applies to putting upgrades into a home. This is where an agent versed in new construction can aptly guide buyers as to how best to spend their money and what to spend it on.

5. Timing

Although the real estate market has not slowed down, under more normal post-pandemic circumstances, there are typically busier and slower times in each market. Determine when those are, and try to time a customer’s purchase around a slower time if possible.

Typically, the end of the year has always been a more opportune time to buy new construction — particularly inventory homes — as builders are more motivated to clear existing inventory off their plates to free up capital to build new homes.  

If a builder is a publicly traded company, they are often more motivated when their end of quarter or calendar year approaches, as there may be certain sales quotas they have to hit within each region. Deals are often sweetened during these times, however the choices of available homes and lots may be limited.

6. Leftovers

Every new neighborhood has a few leftover lots that are typically some of the last to go. If they haven’t been sold to a buyer to build a home, they will usually spec them out. The house may be gorgeous and highly sought-after model, but the lot may be a challenge in some way to work with. 

It could be on a busy corner with heavy traffic in and out of the neighborhood. It may lack privacy or have no views. It might also be small with little outdoor space to do anything with — like, adding a pool, a patio area, a firepit or a summer kitchen. 

If your buyers can see past those things, you may be able to negotiate a better deal on something like this versus a lot that may be more conforming and in extremely limited supply in the neighborhood.

In other words, the builder may bend over backwards to sweeten the deal, reduce the asking price and include more options and incentives to get this property off his or her plate.

7. Title and closing fees/choice of services

It may be possible to negotiate for buyers to choose the closing and/or title insurance provider if they aren’t using the builder’s preferred lender.

That said, this can be tough to do. Builders typically tie the incentives they offer with the condition of using their own closing and title services. While they may let buyers choose their own, it will likely negate closing costs being paid on their behalf, which could cost them more money in the end.  

Depending on what is customary in your local real estate market, there could be some closing costs that are typically paid by a seller on a resale that a buyer has to pick up on new construction, but a builder closing cost incentive helps offset them. 

Even with a cash purchase, a builder may offer to cover some closing costs which are tied to the use of their closing and title services. As an agent, you could check with closing providers you regularly use to get some competitive quotes. Give those the builder’s closing and title vendors to see if they will match the fees you present. By doing so, you may be able to help save on closing fees, owner’s title insurance as well as a survey.

While sheer supply and demand is making it tough to negotiate much beyond what a builder is offering, understanding how to navigate the process may help buyers time their purchase appropriately and save some money wherever they can.

Cara Ameer is a broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. You can follow her on Facebook or Twitter.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Will you attend ICLV virtually or in-person? The agenda is packed with stellar speakers and sessions.Learn More×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription