Hi All,
Im a first home buyer and very poor in negotiations. While discussing with builders they often ask my budget. Some of the advice I have got is to not divulge this info. I would greatly appreciate some tips and experiences of dear Ozbargainers on how they deal with such situations, esp while buying a house?
Stick to fixed price standard designs from a project home builder.
very poor in negotiations
Start improving today. I read and watched many videos and attended courses on negotiation when I was younger - that's the value I place on it. A fun but serious introduction is Secrets of Power Negotiating by Roger Dawson. Eventually you might get to the Getting to Yes approaches, etc.
I think it is a fair question. They want to qualify you as part of the sales process and maybe move you to a higher bracket. If you do some research beforehand it can help. You can go to builder's display homes and get prices. Eg, Plantation homes, Metricon etc. They usually have basic, mid and high range options. This info and brochures etc can then help you with quotes from smaller builders, if needed.
Yes that's something I did.
If a client doesn't disclose their budget I immediately lose interest in them and consider them non genuine tyre kickers. Budget is a way of establishing if we are even remotely the correct builder for you. Some builders only so jobs worth X amount and others will quickly take your figure and divide it by the M2 of the home to see if your budget is even remotely in the same category as your expectations/wants.
I agree with you that it does help the builder estimate. I'm just worried that If I tell them how much I can afford, they would just quote me that and it would not be the best price. Of course, a good builder would not do that, but I'm just a newbie so not sure who is who. From my side Im happy to let them know. Just don't want to be taken advantage of.
Yup, same with car sales, so I walk them towards the $130,000 car until they tell me no 😂 then the real truth comes out.
But it is fkn annoying when people don't just come out with it
Good tip, I will ensure I wait until after I test drive the $130k car before disclosing my $25k budget..
I hear you. You may find you need the services of an architect and a building estimator to get a range price before you get quotes.
Then you will have to negotiate. Builders like doing different things and hate doing some things. Eg they might hate slopes, scaffolding, working in winter, working in summer, working in your suburb etc and charge you more.
Working in your suburb could be a negative to their costing if they know that your 'x' requirement will take extra day(s) and they live an hr each way from the job site.
I have found that its useful to do your research and find out what you can get for your budget then lowball it just a bit, so I would say something like I've seen that I can get [specs] for around [90% of budget] and see how they respond. With the specs I wouldn't provide too much details, just the really high level to give them a bit of wriggle room to accommodate.
I generally find that people won't flat out refuse it unless the budget you stated was unrealistic. If 90% of your budget was reasonable then people will generally give you a more detailed estimate and point out where you can skim a bit to meet the budget. I like to then negotiate the remaining 10% of the budget on points that are important and for me I generally ask what the price point for the next level specs would be to see if its worth paying extra.
To be honest though, I haven't experienced talking to builders so the advice above is pretty generic, but I have found the technique to be useful while looking for an engagement ring.
Well looking for a builder is not the same as buying cars. Generally it is very difficult to compare apples with apples. So, after a few meetings and display home visits you will know what structure you want in the house, and want are the inclusions. Once you know, you just rock up with your plans, speak with the builders narrow down a few who can match your requirements. The ask them to do a proper quote. Let them know that they are shortlisted, and see which gives you the best value. Although, cheap isn’t necessarily the best, neither is an expensive price. Maybe if any friends could help. Usually, if you go back to a builder second time and you have the information they need, they will know that they are in serious contention. Building is also about relationships, make sure the you get along well. If you have any lack of interest in the initial stages move on.
probably it would help if you specify your budget in range rather than specific number?
for example rather than saying your budget is 800K, say your budget is between 700-900K.
Simples.