New Home Tips, Tricks and Interiors
Negotiating Extras for New Build Homes: Getting More for Your Money
This has been split into the headings below:
OUTLINE
NEGOTIATING HIGH MARGIN ITEMS
BUNDLING YOUR REQUESTS
OTHER WAYS OF REDUCING THE COST
OTHER RELATED COSTS TO NEGOTIATE
NEGOTIATING STRATAGIES FOR FEES AND DUTIES
OUTLINE
When purchasing a new build home, the list price is just the beginning. With the right approach, you can often negotiate valuable extras or discounts. Here's how to get the most out of your new home purchase:
1. Timing is key: Builders are more likely to negotiate at month-end, quarter-end, or year-end when they're trying to meet sales targets and filing end of year profits.
2. Know the market: Research local house market trends. In a buyer's market, you'll have more leverage.
3. Focus on high-margin items: Builders often have more flexibility on upgrades like flooring or appliances than on the base price.
4. Bundle your requests: Ask for multiple upgrades together, which can seem more palatable to the builder than direct discounts.
5. Be prepared to walk away: Having alternative options strengthens your negotiating position.
6. Get it in writing: Ensure all agreed-upon extras are included in your contract. Lease double check the appliances and fitting is included too.
7. Consider financial incentives: Sometimes, builders may offer to cover closing costs or buy down your mortgage rate instead of physical upgrades.
Remember, negotiation is an art. Stay polite but firm, and always be ready to compromise.
NEGOTIATING HIGH MARGIN ITEMS
High-margin items in new build homes are upgrades or additions where builders have significant markup, giving them more room to negotiate. Here's how to approach this:
1. Identify high-margin items:
- Flooring upgrades (hardwood, luxury vinyl, high-end tiles)
- Kitchen upgrades (countertops, cabinets, appliances)
- Bathroom fixtures and finishes
- Lighting packages
- Smart home technology
- Landscaping and outdoor features
2. Research costs:
Get quotes from outside contractors for these upgrades. This gives you a baseline to understand the builder's markup and negotiate effectively.
3. Prioritize your requests:
Focus on upgrades that are costly or difficult to add after construction, like hardwood flooring or kitchen countertops.
4. Use your knowledge:
Ask for more than you think you might get this is your time to negotiate. You start high they start low and see what you get. You may be suprised!
5. Negotiate percentages:
Instead of asking for specific amounts off, try negotiating a percentage discount on upgrades. This can sometimes yield better results.but go first for full items.
BUNDLING YOUR REQUESTS
Bundling is an effective strategy that can make your requests more appealing to the builder. Here's how to do it effectively:
1. Create packages:
Group related upgrades together. For example, a "kitchen package" might include upgraded countertops, cabinets, and appliances.
2. Offer trade-offs:
When asking for multiple items, indicate you're willing to compromise. For instance: "If you can include the hardwood flooring and kitchen upgrades, I'd be willing to forgo the smart home package."
3. Tie bundles to price points:
Present your bundle as a condition of moving to a higher price point. For example: "If you can include these upgrades, I'd be willing to go with the larger floor plan."
4. Use the 'good, better, best' approach:
Present three bundle options to the builder - a basic one you'd accept, a middle option you'd prefer, and a 'reach' option. This gives the builder choices and often results in at least getting your preferred option.
5. Leverage bulk discounts:
Builders often get discounts for ordering in bulk. Use this to your advantage: "I know you're building multiple homes in this development. Surely you can get a better price on appliances if you're ordering for multiple units?"
6. Time your bundled requests:
Present your bundled requests early enough in the process for the builder to be able to adapt to requests but enough in that they will now be counting on the sale and will be reluctant to lose you, the buyer, in the negotiation process. This gives the builder time to consider and potentially come back with a counteroffer.
7. Be prepared to unbundle:
If the builder hesitates on your full bundle, be ready to prioritize. Ask which items in your bundle they're most willing to include.
Remember, the key to successful negotiation is to remain flexible and understanding of the builder's position while firmly advocating for your interests. By focusing on high-margin items and strategically bundling your requests, you increase your chances of getting valuable upgrades included in your new home
OTHER WAYS OF REDUCING THE COST
Negotiating Stamp Duty
While stamp duty itself is a non-negotiable government tax, there are several strategies to reduce its impact:
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1. Price Threshold Negotiations:
- Study the stamp duty thresholds carefully. In many jurisdictions, even a small reduction in purchase price can lead to significant stamp duty savings if it puts you in a lower tax bracket.
- Example: If the threshold is £500,000, and the home is priced at £505,000, negotiating just £5,001 off could save you thousands in stamp duty.
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2. Builder-Paid Stamp Duty:
- Some builders offer to pay stamp duty as an incentive, especially on higher-value properties or in slower markets.
- Approach: "I've noticed that [Competitor Builder] is offering to pay stamp duty on their properties. Would you be willing to match this offer?"
3. Stamp Duty Cashback:
- If the builder won't pay the stamp duty directly, negotiate for a cashback equivalent to the stamp duty amount.
- This can be more attractive to builders as it doesn't affect the official sale price.
4. Timing-Based Stamp Duty Deals:
- Some jurisdictions occasionally offer stamp duty holidays or reductions. Time your purchase to coincide with these if possible.
- Ask the builder: "If we complete the purchase before [date], can you guarantee we'll benefit if a stamp duty holiday is announced?"
​Negotiating Legal Fees
Legal fees can be a significant expense. Here's how to negotiate them effectively:
1. Builder-Recommended Solicitors:
- Builders often have partnerships with specific law firms. While you're not obligated to use them, these firms may offer competitive rates.
- Ask: "If I use your recommended solicitor, what discount can you offer on the legal fees?"
2. Fee Contributions:
- Request that the builder covers a portion of your legal fees.
- Approach: "I've calculated that legal fees will cost around [amount]. Would you be willing to contribute 50% towards this?"
3. Fixed-Fee Arrangements:
- Some builders have arrangements for fixed-fee legal services. This can protect you from escalating costs.
- Ask: "Do you offer any fixed-fee legal packages for buyers?"
4. Bundled Legal Services:
- Negotiate for the builder to include legal fees as part of a larger incentive package.
- Example: "If you can include the legal fees along with [other incentive], I'm prepared to move forward immediately."
5. Early Commitment Discounts:
- Some builders offer discounts on legal fees for buyers who commit early in the development process.
- Inquiry: "If I reserve this plot today, can you offer any reductions on the legal fees?"
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emember, while the builder may not agree to all your requests, being informed and prepared to negotiate these often-overlooked costs can lead to significant savings in your new home purchase.
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OTHER RELATED COSTS TO NEGOTIATE
1. Survey Costs:
- Request that the builder provides a free structural survey or contributes to the cost.
- "Can you include a full structural survey as part of the purchase package?"
2. Mortgage Arrangement Fees:
- If the builder has a relationship with specific lenders, they might be able to negotiate reduced or waived arrangement fees.
- Ask: "Do you have any partnerships with mortgage lenders that could save me on arrangement fees?"
3. Land Registry Fees:
- While typically smaller than other fees, you can still ask the builder to cover these.
- "Would you be willing to cover the Land Registry fees as part of our agreement?"
4. Local Authority Searches:
- These are necessary searches that incur a cost. Ask if the builder will cover these.
- "Can you include the cost of local authority searches in the purchase price?"
Negotiation Strategies for Fees and Duties:
1. Itemize All Costs:
- Create a comprehensive list of all fees and duties. This gives you a clear picture of what to negotiate.
2. Prioritize:
- Rank the fees by size and negotiability. Focus on the larger, more flexible costs first.
3. Use Competitor Offers:
- Research what other builders are offering in terms of fee coverage and use this in your negotiations.
4. Timing is Key:
- These negotiations often have more flexibility at month-end or quarter-end when builders are keen to close deals.
5. Package Deal:
- Instead of negotiating each fee separately, propose a package deal where the builder covers a set amount towards all additional costs.
6. Get It in Writing:
- Ensure all agreements regarding fees and duties are clearly stated in your contract.
Remember, while the builder may not agree to all your requests, being informed and prepared to negotiate these often-overlooked costs can lead to significant savings in your new home purchase.
Disclaimer
These notes are provided for informational purposes only and should not be considered as professional advice. The content herein is based on personal interpretation and may not be comprehensive or entirely accurate. Readers are encouraged to:
1. Verify information from primary sources when necessary.
2. Consult with appropriate experts or professionals before making any decisions based on these notes.
3. Understand that opinions expressed are subject to change and may not reflect current circumstances.
The author(s) of these notes cannot be held responsible for any errors, omissions, or actions taken based on the information provided. Use of this information is at the reader's own risk.