I recently attended a new build walkthrough with a buyer, and something immediately stood out—across the street, five brand-new, move-in-ready homes awaited their first owners. Even more “available” signs were visible in the neighborhood. For many buyers, today’s high interest rates might seem like a barrier to homeownership, but what if I told you that locking in a permanent interest rate in the 4%-range is achievable? It’s not a dream! In fact, there are builders offering lower interest rates for new home buyers and new construction through incentives and financing programs that could make your homeownership journey far more affordable.
Builders Offering Lower Interest Rates and Why New Construction Could Be the Smart Move in 2024
Builder Incentives:
In a market where selling quickly is key, builders offer significant savings for buyers. This often comes in the form of flex cash for upgrades or closing costs, or rate buy-downs, reducing your mortgage interest rate for the entire loan term. In today’s high-rate environment, these incentives are an excellent way to mitigate long-term costs.
Special Financing Options:
Working with a builder’s preferred lender could give you access to exclusive financing deals, including reduced closing costs or locked-in rates for a specified time. These offers lower your monthly payments and make the cost of owning a new home more manageable.
Customization Options:
One of the best features of buying a new construction home is the ability to personalize it. From choosing floor plans and finishes to opting for luxury upgrades like a gourmet kitchen, you can customize the home to fit your style and needs.
Energy Efficiency:
New homes are designed with the latest in energy-saving technologies. This includes enhanced insulation, energy-efficient appliances, and smart home systems that reduce your monthly energy bills, giving you additional long-term savings.
Move-In Ready:
Many newly built homes are already completed and sitting on the market, meaning you can move in within a few weeks, perfect for those who don’t want to wait through a lengthy construction process.
How Builders Offering Lower Interest Rates in a High-Rate Market
Builders today have more flexibility with pricing and financing compared to sellers of existing homes. Builders can offer rate buy-downs or other attractive financing options that lower your interest rate, sometimes significantly. These incentives are often unavailable for resale homes and give new construction buyers an edge in today’s market.
Why Should You Consider Buying a New Build Home in Arvada or Denver?
Affordability
Builders are motivated to sell their inventory, so they frequently offer discounts, lower interest rates, and incentives like free upgrades or reduced closing costs. These savings can make a new build even more affordable than buying an existing home.
Move-In Ready Options
Many new construction homes are fully built and ready for immediate occupancy. You could move into your new home in just a few weeks.
High-Quality Construction
New homes are built to modern standards with improved materials and updated systems like plumbing, insulation, and electrical wiring, saving you potential repair costs in the future.
How to Negotiate with Builders to Get the Best Deals
Purchasing a new construction home often comes with the misconception that the price is set in stone, but that’s not necessarily the case. Builders, like sellers of existing homes, are motivated to sell and may offer more flexibility than you realize. The key is knowing what to negotiate and how to approach the conversation strategically. Here’s a guide to help you get the best deal when buying a new construction home.
1. Understand the Builder’s Motivation
Before entering negotiations, it’s essential to understand the builder’s current situation and priorities. Home builders offering low interest rates are often under pressure to sell homes quickly, especially toward the end of a month or fiscal quarter or when they have several completed homes sitting unsold. They may also offer more incentives in slower housing markets or during periods of high interest rates to maintain sales momentum.
- Tip: Research the builder’s sales history and the inventory in the development. If several homes are still available in a completed or nearly completed community, builders may be more willing to negotiate.
2. Negotiate on Price, but Focus on Value-Added Incentives
While negotiating on the base price of a new home may seem like the obvious choice, builders are often more willing to offer incentives that add value without lowering the price. This can help protect the perceived value of other homes in the development. Focus on negotiating perks like:
- Closing cost assistance: Builders may offer to cover part or all of your closing costs, saving you thousands of dollars upfront.
- Interest rate buy-downs: Builders often have special financing options with their preferred lenders, which can include lower interest rates or the option to buy down your interest rate, resulting in long-term savings.
- Upgrades and customization: Builders may offer free upgrades like higher-end appliances, flooring, countertops, or additional features like a finished basement or outdoor landscaping. These upgrades can significantly increase the value of your home without an additional out-of-pocket cost to you.
- Extended warranties or maintenance packages: Negotiating for extended warranties on structural elements or mechanical systems can provide peace of mind and protect you from unexpected repair costs after move-in.
3. Leverage Multiple Offers
If you’re considering homes from multiple builders or developments, let them know you’re exploring other options. Builders may be more inclined to negotiate if they know they have competition for your business.
- Tip: Be respectful when mentioning other options—your goal is to open the door to a better deal, not to start a bidding war.
4. Work with the Builder’s Preferred Lender
Builders often partner with preferred lenders to offer special financing options, which can lead to more favorable mortgage terms and lower costs for you. These lenders are incentivized to keep the builder’s pipeline moving, so they may offer better rates, lower closing costs, or easier approval processes. Negotiating additional perks with the preferred lender is also possible.
- Tip: Even if you plan to shop around for the best mortgage, get a quote from the builder’s preferred lender first to use as a comparison. You may be able to negotiate better terms with an outside lender using the builder’s offer as leverage.
5. Timing is Key
When you buy can have a significant impact on your ability to negotiate. Builders often offer their best deals at specific times:
- End of the month, quarter, or year: Builders are often motivated to meet sales quotas and will be more likely to offer discounts and incentives toward the end of these periods.
- Completion stage: If the home is already built or nearing completion, the builder may be more motivated to sell it quickly to avoid holding onto inventory and paying carrying costs. This is especially true for homes that have been sitting on the market for several weeks or months.
6. Get Everything in Writing
During the negotiation process, it’s important to have everything clearly documented. Builders might verbally offer discounts, upgrades, or special incentives, but these need to be in the contract to be enforceable. Once you’ve agreed on the terms, make sure the sales contract reflects every detail, including any upgrades, closing cost assistance, or financing incentives.
- Tip: Don’t hesitate to ask your real estate agent or attorney to review the contract to ensure that all promises are documented accurately.
7. Be Willing to Walk Away
One of the most powerful negotiation tools is the willingness to walk away. Builders know that buyers have choices, and if they feel that a deal is slipping through their fingers, they may sweeten the offer. If you feel like you’re not getting a fair deal, it’s okay to step back and explore other options.
- Tip: Politely let the builder know you’re considering other properties and would be open to finalizing the deal if certain incentives or price adjustments are made.
8. Ask for a Home Inspection
Even though new construction homes come with warranties and are built to the latest codes and standards, it’s still a good idea to have an independent home inspection. If the inspection reveals issues, you may be able to negotiate for additional repairs or upgrades before closing.
- Tip: Always review the builder’s warranty and be aware of what’s covered and for how long. You may be able to negotiate an extended warranty for certain items, such as appliances or structural elements.
9. Consider the Long-Term Value
When negotiating with builders, don’t just think about the immediate savings—consider the long-term value of what you’re getting. Upgrades to finishes or energy-efficient features may increase the home’s resale value, saving you money down the line. Likewise, a lower interest rate or a fixed-rate mortgage will have a lasting impact on your monthly payments.
10. Work with a Realtor
Even though you’re buying directly from a builder, having a real estate agent on your side can be a huge advantage. Experienced agents know how builders operate, understand market trends, and can guide you through the negotiation process. They may also be aware of builders offering low interest rates and incentives that aren’t advertised to the public, giving you an additional bargaining chip.
- Tip: Realtors also ensure that you’re not being pressured into a deal that doesn’t make financial sense, and they will help you review and understand the sales contract thoroughly.
Key Takeaways:
- Know the builder’s motivation: Timing your negotiations with the builder’s fiscal goals can help you score better deals.
- Focus on value-added incentives: Ask for closing cost assistance, interest rate buy-downs, and free upgrades instead of just lowering the price.
- Leverage competition: Let builders know you’re considering other homes, but stay respectful to encourage a better offer.
- Use the builder’s preferred lender: Builder-lender partnerships can result in lower interest rates and reduced closing costs.
- Get everything in writing: Ensure all negotiated terms are documented in your contract to avoid any misunderstandings later.
- Work with a Realtor: An experienced agent will know how to negotiate effectively and uncover hidden builder incentives.
Negotiating with builders can be more flexible than you might expect, and with the right approach, you can secure significant savings and added value. Whether it’s closing cost assistance, rate buy-downs, or free upgrades, there’s plenty of room to negotiate in the new construction market. If you’re looking for guidance on your next home purchase in Arvada or the Denver Metro area, Lauryn Dempsey is here to help you negotiate the best deal for those builders offering lower interest rates!
Frequently Asked Questions (FAQ)
How do builders offer lower interest rates on new homes compared to resale homes?
Builders work closely with preferred lenders to purchase rate buy-downs or special fixed-rate financing options in bulk and may even have their affiliated mortgage company. These are exclusive incentives that resale homebuyers typically don’t have access to.
Is it more expensive to buy a new build than a resale home?
Not necessarily. Going with builders with low interest rates, incentives, special financing, and savings on energy efficiency and repair costs, a new build can be more affordable in the long run.
Can I customize a move-in-ready home?
While move-in-ready homes are usually completed, some builders allow for pre-purchase upgrades or minor customizations. It depends on the builder’s policies.
Are new construction homes more energy-efficient?
Yes! New builds often come with the latest energy-saving technology, from smart thermostats to highly insulated windows and walls, leading to lower utility bills.
If you’re considering buying a home in Arvada or the Denver Metro area, now is the time to explore your options with new construction homes. With the right guidance, you could secure an attractive new home with low interest rate and affordable home. Contact us in Lauryn Dempsey or The Dempsey Group for expert advice and insights into the local market!
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