The Builder Sent You A Counteroffer… Now what?
You’ve done some negotiating with the salesperson, and you’ve made an offer for the home of your dreams! You shake hands with the salesperson and leave the meeting feeling great, filled with the hopeful anticipation that the builder will accept your offer and you can purchase the home. Instead of congratulating you on your new home, the builder sends you a counteroffer!
Your heart goes from flying high to dropping back down to earth with a thud! You’ve got to spend more to get the home.
If you’ve prepared properly for the negotiating, you should be ready for the counter offer. Your initial offer was probably (deliberately) a little low. And when you submitted it, you knew that the builder would do one of three things. They could accept your offer, reject it, or they could counter it with an offer of their own. In most cases, what you’ll get back from a builder is a counteroffer. A seasoned salesperson will make a counteroffer sound like a real victory for you and your negotiating skills, and in most cases, it is. Many people don’t negotiate at all with a builder, so you’re probably already getting a better deal than most home buyers! The salesperson will not want to discuss the particulars of the counteroffer over the phone, hoping rather, that you’ll come into the model home to discuss it. Most new home deals are finalized at this meeting, so the salesperson will do all they can to get you to come to the model to discuss it. The more prepared you are for this meeting, the better. At this point, you have a few options. You can tell the builder that your initial offer is your final offer, and if they’re not willing to accept it, you’ll find another home. “Playing hardball” like this may get you the home, but it rarely works. Builders want to sell homes as much as you want to buy them, but they won’t lose money on a home just to sell it. More often than not, unless the counteroffer was very close to your offer, or there are extraordinary circumstances in the industry creating an unusually hot buyer’s market, the builder will walk away from the deal, and you lose the home of your dreams. This is the main reason that we recommend that you give yourself a little wiggle room on your initial offer. When your first offer is actually your last offer, you’ve really limited your options for success.
A second option is to tell the builder you’ll need to think about it before you decide what to do. Politely letting the builder know that you’re disappointed and are going to need to think about it for a while will keep the deal-candle burning, but may work in your favor in the long run. Doing this basically lets the builder know you’re still in the game, but you’re not sure if this is the home for you. Letting the builder know that you’ll think about the counteroffer and give them a call back when you’ve decided if you still want to discuss the deal will certainly make the builder sharpen their pencil and may encourage the salesperson to re-approach the deal with their sales manager. In many cases, you may get a call back from the salesperson before you reach out to them. If they do call, there may be a better deal in it for you. Listen to their offer because it’s probably the very best they can do. If you like it, move ahead with the deal. This tactic will keep some of the bargaining power and control of the future negotiations on your side of the table, but to complete the deal, you’ll need to meet in person with the salesperson.
Finally, you can come in for a meeting with the salesperson. If you come in for the meeting, there is a good chance that you’ll end up writing a deal with the salesperson. You may not realize it, but this meeting is where most of the new home sales the salesperson will complete will occur. If you agree to come in and discuss a counteroffer, the salesperson will believe that you're coming in to finish the sale. You may be comfortable with the counteroffer and ready to buy the home. If so, great! This will be the meeting where you’ll probably finalize the deal on your new home. If you’ve given yourself a little “wiggle room” in your initial offer, the counteroffer may fall within your optimal price range, and you can get the deal done.
Well-crafted counteroffers will have two parts, price, and upgrades. While the goal of the builder may be to get you to spend a little more or get a little less in your home, the real goal is to come to a price that works for both you, the builder, and the rest of neighborhood (a builder won’t accept an offer that may bring down property values or make it harder for the next buyer to get a loan for their new home). To achieve this end, a builder will either ask you to come up on your price, accept the home with fewer upgrades, or a combination of both. If you’ve done your new home homework, you’ll have a complete understanding of what your real “final price” is (the price the fits comfortably into your budget) and which options you can and can not do without. Your final negotiation with the salesperson may not involve price as much as it will involve removing some of the “non-essential” upgrades you’ve chosen. If you don’t need the pounded copper sink in the upstairs bathroom, remove it from the upgrade list you’ve compiled and see what that does to the price of the home. Having this knowledge and a polite and professional attitude and an eager willingness to discuss options, upgrades, and money with the new home salesperson will not only get you the home of your dreams and a great price.