A client was buying a new construction home and was trying to get a really good price on the home. She had a number of questions about the property. Below was our answer to her; this should give you a better idea of how we approach negotiations with builders: Note - "Jane" was the name of the sales agent for the builder.
Regarding #'s 4, 5, 6, 10 & 11: I am happy to get these answers for
you, however I suggest it's in your best interest to wait & see what
response the builder comes back to us with before asking these
questions. Right now we have minimal leverage on this deal and
asking a ton of questions will decrease our negotiating position. I
understand, however, it's important for you to have these answers
before you counter back, so I suggest once Jane responds we can
decide which questions to ask her and how exactly to proceed.
The best thing I can do is give you more leverage. In order to do
that, you need options. If you have your sights & heart set on
getting this particular property, you have very little leverage.
Your intimate knowledge of the community and neighbors makes it
obvious to Jane that this is by far your preferred community. I'm
going to do an MLS search and send you anything that might be
interesting to you so you can expand your search a bit. Helping you
find other viable options is the best thing I can do for you right
now to increase your bargaining position with this property. The
flipside is that she might sell it to somebody else. If you're truly
worried about that happening, we're going to have to bite the bullet
and negotiate on their terms. However, if you don't care if she
sells it to someone else, you'll have more power.
The minority of my value to you is in convincing Jane she has to
sell this property to you at a certain price. My powers of
persuasion are limited to my ability to ensure she knows our
position, tell her things like what we've discussed below, and then
help you find other options which are suitable. If the builder truly
wants to wait for the spring market or doesn't want to go below a
certain price, all the convincing in the world won't force him to
sell. Yes I can give Jane arguments as to why one property isn't
worth more than another, etc. But at the end of the day, they simply
may not care as much as you do about those discrepancies if they
think they can sell for a higher price. And only giving it a bit of
time will tell if they're bluffing or they're not. If you had
multiple properties you were interested in, it would be much, much
easier for me to get you the kind of deal you're looking for. Right
now we're pigeon-holed into 1 bargaining position. So I propose to
you to pick one of 3 approaches you'd like me to take:
Approach #1: You don't care if you lose out on this deal to someone
else. We negotiate hard & make strong demands, including the things
you've listed below. If they just sit on the contract, you move on
to another property. This approach gets you the best price but the
lowest odds of getting the property
Approach #2: You would prefer this property over others, but you
want some concessions from the builder. With this approach we don't
make extraneous demands and just focus on the price. If it doesn't
have certain closets or hardwood, or they demand Arlington MBH, etc.,
we forego those demands to try & extract as much price value as
possible.
Approach #3: You decide you'll be very regretful if you don't get
this property. In this scenario you have to play to their demands
with minimal hard-ball negotiation, but you get the security of
knowing you have the unit. This approach would entail maybe one more
cycle of counter offers, or maybe you accepting their counter offer
if it were satisfactory enough to you.
The less you care about any specific property, the more power &
control you have over the terms of its sale. Right now I feel like
you're trying to exude option #1 but you truly feel option #3. So, I
really need to know how you're feeling so I can take the right
approach for you.
