Terry Caliendo

ON April 9, 2015

Learning to negotiate with a builder on a newly built home in Las Vegas


My wife and I signed to buy a house 12 hours ago and I’m wide awake at 3:30am tossing and turning not with buyers remorse but with negotiators remorse.

I say that because I learned a ton doing this transaction that I wish I had known before our negotiation yesterday, and though I got a pretty good deal, I could have squeezed out a little more, if I had just known what I know now.

negotiate-with-homebuilderI was lying awake wondering why I, someone who makes a living on the internet, didn’t do more research on negotiating an new construction from a builder.  Why didn’t I just type a quick google search: “How to negotiate with a builder on a new home”.

Part of it was my ego.  I’ve done some successful negotiating when buying cars.  My last car I bought for $2k under the invoice price.

With our (now) high-energy 2 year old romping around and needing more space, my wife and I have been toiling for months over moving into a bigger home.  Actually she has been fighting for a bigger home, I have been fighting to save money and stay in our current house for a while longer.

So we started looking at houses.  We were all over the map, looking at both new and existing homes.   We were trying to decide if we should upgrade to get a few more square feet, or start planting some major roots and get into a house that we’d be in for the next 20 years.

Not wanting to pay 6% commission on our current house, and then another 6 percent on our “middle” house in a 5-7 years to get into our “forever” home, we decided to lean towards buying the house that would last us for the next 20 years.

This process was not as easy as that last paragraph glosses over.  It was months of heated debates and emotional turmoil between us.

We live in Summerlin, Las Vegas, which is one of the higher end “master planned” neighborhoods in the Valley.  Determined to get us into a new house, my wife found the “perfect” home, just up the street, but it was priced way higher than I wanted to spend.  I felt we would be “house poor” and I like the security of our current situation, knowing that if something comes out of the woodwork, we could handle it with ease (this is HUGE for me).

Because my wife was so emotional about the house I knew we couldn’t get a good deal on it.  So after more heated discussions and the creation of a spreadsheet that would show how not only would our monthly expenses increase with the mortgage/interest payments, but our utilities and costs would increase as well (another blog article I need to write).

My wife agreed it was too much house. And that’s when she started looking at “middle” houses that we could get into for the next 5-7 years, before transition again to the bigger final level.  But my argument was that we shouldn’t waste 6% to get into a middle house and then another 6% to transition to our forever home.  At the prices we are talking we would be paying $18k to sell our current house and then another $27k in 5-7 years.  That’s a RIDICULOUS amount of money.

So in the background, without getting my wife involved, just to see what I could do and to learn a little about the industry I sent an email to the sales person of the “perfect” house just up the street with a basic offer.

My offer was significantly lower than their asking price and I asked for closing costs and functional inclusions that aren’t always included like a Fridge, Washer/Dryer, and window treatments.

I didn’t get very far with that but through a few more communications, I learned that the builder doesn’t want to come down on the sales price of the home, but they would do things to help alleviate some of my expenses, like paying off the SIDS/LIDS (expenses that are part of being in a “Master Planned” community) and including 1 year of the HOA dues.

I never really got much further in that negotiation, because in my mind it still wasn’t enough.

So I went and looked at some “middle” transition homes with my wife and I hated them all.  We’d be paying $18k in commissions (our house is worth about $280-$300k), plus half the closing costs (another $5k), just to get an extra bedroom and a little extra yard space.  Ugh.

More heated debates ensued.

Finally, continuing to try and be creative, about a week ago, Ali, my wife, came home with an informational packet from a builder on her new “perfect” home, but it was in a new area, outside our coveted Summerlin community.

She absolutely loved the home and wanted me to see it.

I agreed and we took a drive.

It was a beautiful home. Large and spacious with a giant backyard (relatively speaking for higher end properties in safe areas of Las Vegas).

The kicker for my wife was a row of established pine trees in the back yard that create privacy and reminded her of her childhood where she would play in the trees backyard of her grandparents house as a young child.

But this house was even higher priced than the last “perfect” house.

More heated debates ensued.

We decided not to buy a house, but to stay in our current house.

But being the curious person that I am, not telling my wife, I sent an email to the sales person at the site with an intial offer just to see what would happen.

My next article will be about how I negotiated with the builder to get the good deal I was looking and how you can do better when purchasing a new home from a builder in today's Las Vegas real estate market.

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