How to Build a House
Step 5 – Contract Negotiations
Once the builder is selected the fun part begins with the contract negotiations between the builder and yourself. Remember that you are negotiating from a position of strength because you already are a pre-qualified buyer with your loan commitment! If negotiations make you uncomfortable, you may want to consider a realtor to represent you if you do not already have one.
Before you begin the negotiations come up with a list of items that are important to you and things you want to see in the contract. Your builder will have a similar list. During the process, there will be a lot of back and forth between the builder and yourself. Negotiation items include such things as price, included features, allowances, materials used in specific areas of the home, construction duration, payment terms, access to the site during construction and anything else that is important to you or your builder. Remember that you are negotiating from a position of strength and the only thing they can say is “no”.
One thing to consider as you are negotiating price is to make sure you completely understand every included feature that is in the builder’s price. Often people will not really understand the specific details about their proposed HVAC system, plumbing fixtures, windows and other items on the “Included Features” list. Ask for specifics, ask for pictures or samples, ask questions, ask for detailed explanations and do not agree to anything until you completely understand it. Remember, you only have one shot to negotiate the best deal possible.