We are an Ala Carte Builder and Don't Negotiate
A couple of weeks ago, I was contacted by a young couple who are looking to buy their first home in Franklin TN. They had been looking into new construction and decided they needed a buyer's agent to assist them through the process. They Googled the neighborhood and my name popped up so they gave me a call.
I have experience working with several of the new construction builders in Franklin TN so I happily agreed to meet with them. Unfortunately, they had already visited one particular builder several times and had even put a deposit down to hold a lot. Decision time was fast approaching and they needed to make a choice but didn't feel they had all the information. I commended these buyers for seeking the assistance of a buyer's agent prior to signing a contract.
I prepared the competitive market analysis (CMA) to discuss an appropriate price. As we looked at the options they wanted in the home, it became clear this builder did not include anything in their base price. Not only was everything considered an upgrade, they also socked you with an incredible price to make the change. It is almost as if the builder is discouraging upgrades.
These first-time home buyers ended up with $50K in upgrades to get a home they felt would be comparable to homes in the surrounding neighborhoods. That was a lot of money considering the home was really a starter home with 2,200 square feet. Based on the recent sales, nothing was selling at the price we were looking at.
I asked how many other Franklin TN new construction neighborhoods they had considered. None. I told them I felt we needed to visit some other communities with similar-sized homes so they would have a better understanding of exactly what they would get for the price. They were open to that and we scheduled an appointment to go look at other new construction homes.
We spent a long day out on Saturday. These first-time home buyers were surprised at how many of the features that were considered upgrades with their builder were standard with other builders. They now had lots of information and had a decision to make. They could clearly see the first builder was gouging them. I told them to think over their options and we would meet later in the week.
We did just that last night. After careful consideration, they decided to move forward with the first builder. Primarily, due to the location. We, once again, looked at the comparable sales and came up with an offer price based upon these sales. I contacted the on-site agent today to discuss the opportunity to sit down and make an offer.
She said, "What do you mean by "make an offer"?" Uh-oh, that wasn't a good sign. I explained that we had looked at the comparable sales and based upon those, we would be offering the median per square foot price. Her response, "We are an ala carte builder and don't negotiate. If your buyer wants to control his costs, he needs to remove some of the upgrades."
I was shocked. Most Franklin TN builders are willing to negotiate the purchase price. They don't want to sell lower than their advertised base price but you can usually get them to throw in upgrades at no additional cost. This isn't just a small local builder. This is a builder with national recognition. The problem here is this particular builder offers absolutely nothing in their base home price. While other builders are now offering some very nice upgrades in standard features.
For example, the base cabinetry for this builder is oak cabinets (only two color options). Other builders at a similar price point are offering maple cabinets with a large selection of colors. This builder offers laminate flooring in the baths and laundry room while other builders offer ceramic tile standard.
This builder paints the entire interior of the house off-white. If the buyer wants a different color, he pays $1,800 to get something other than off-white but he doesn't even get to pick the color. It's slightly darker than the off-white and is used in the entire community. In other words, all the houses in this neighborhood are one of two colors. The list goes on and on.
I contacted my buyer. He was appalled. His primary concern...if this builder is this difficult during the negotiations, how difficult are they going to be to work with during the building phase. He would clearly be overpaying to purchase this home; something he is unprepared to do. He decided to take a pass on this builder.
Franklin TN new construction home sales are on the rise. Many of the builders are easy to work with and offer lots of standard features now. Don't buy a home without the assistance of an experienced buyer's agent. It costs you nothing because the seller pays their fee and it could save you tens of thousands of dollars. I have saved buyers between 5 to 16% during new construction negotiations.
Don't wait until you fall in love with a new construction home. The builder will see they've got you hooked and will be much more difficult to deal with during negotiations. Use a buyer's agent from the beginning and you'll get much better results.
Oh and by the way, not all buyer's agents are created equal. Make sure your buyer's agent goes with you to see new construction and prepares a CMA. After all, they are getting paid to represent your financial interests. Make them work for their commission.
If you run into a builder that says, "We are an ala carte builder and don't negotiate", you may want to keep looking. Believe me, there are lots of new construction builders in Franklin who are easy to work with and will negotiate on the price. The key is using a buyer's agent to help you navigate the process.
Thirty percent of our business is assisting new construction home buyers with their purchase. Call Tammie White of Franklin Homes Realty LLC at (615) 495-0752 for all your real estate needs.
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