Navigating New Construction Home Contracts

Jul 18, 2024

When dealing with new construction home contracts, there are several nuances and potential negotiation points that real estate agents and clients should be aware of. Based on the experiences shared by various Bramlett agents, here are some key takeaways and strategies to effectively navigate these contracts.

Key Takeaways

1. Negotiation Points: While negotiating new construction contracts, agents have had success with price reductions, incentives, and earnest money adjustments, though altering the contract terms themselves is typically challenging.
2. Builder Flexibility: Builders may be more willing to negotiate when market conditions are slow or when they have a higher inventory, making it a good time to seek better deals and concessions.
3. Inspections and Closing: It is crucial to conduct third-party inspections before the final walk-through and ensure all agreed-upon work is completed before closing to avoid future hassles.

Negotiable Aspects in New Construction Deals

1. Price: This is often the most flexible term. While some builders are firm, many are open to negotiation, especially if they are looking to move inventory quickly.
2. Incentives and Concessions: These can include closing cost contributions, upgrades, or other financial incentives that make the deal more attractive to buyers.
3. Earnest Money: Sometimes, the amount of earnest money can be negotiated, providing the buyer a bit more flexibility.
4. Closing Dates and Contingencies: Some builders may allow negotiations on closing dates or include contingencies such as the sale of the buyer’s current home.

Effective Strategies for Home Buyers

1. Proactive Negotiation: Always ask and push for better terms, even if the likelihood of success seems low. Builders may be more accommodating than expected, especially in a competitive market.
2. Builder Contract Expectations: Prepare for the reality that builder contracts are often non-negotiable on many fronts. Understand the limitations and know the importance of thorough inspections and having all agreed-upon work completed before closing.
3. Use Market Conditions to Your Advantage: Leverage current market conditions to negotiate better deals. If builders are desperate to sell, they may be more flexible with negotiations.
4. Stay Firm on Incomplete Work: Avoid closing on homes with pending work. Ensure everything is completed to satisfaction before the final settlement.
5. Phase Inspections: Phase inspections should be completed throughout the construction process. This can help identify issues early and ensure they are addressed before they become larger problems.

Key Insights from Bramlett Real Estate Professionals

• Lindsey Pearlstein-Smith notes that homes contingent on the sale of another property can offer more leeway due to the extended timelines involved in new constructions.
• Jean Marie Holm suggests that builders are more likely to negotiate on inventory homes than on those yet to be built. Walking away can sometimes bring the builder back to the negotiating table with better offers.
• Heather Powell recommends conducting a third-party inspection before the final walk-through to ensure all issues are addressed before closing.
• Lynn Wise mentions leveraging the lender to communicate necessities for loan approval can sometimes influence builders to cover additional closing costs.

Conclusion

Navigating new construction contracts can be challenging, but with the right strategies, real estate agents can secure better deals for their clients. Understanding common negotiables, setting clear expectations, and ensuring thorough inspections help agents handle these contracts confidently. Sharing insights and experiences prepares agents and their clients for the unique aspects of buying new construction homes.