4 Tips For Negotiating New Home Pricing & Upgrades With Your Builder

Buying new construction?

Regardless of your stage in the home buying process, you’ll want to get the best price possible on your new construction house.

You’ve got more leverage than you think – if you know how to use it.

What drives new home pricing?

Builders price homes based on:

• Location and land cost

• Home size and layout

• Material and labor costs

• Market conditions and demand

• Impact fees and overhead

Unlike resale homes, builders aren’t emotionally invested. But they do care about profit margins and setting pricing precedent.

What should you ask before you negotiate?

• Are there current buyer incentives or builder discounts?

• What’s included in the base price – and what’s considered an upgrade?

• Can I review an itemized price sheet?

• Are any spec or model homes available for sale?

• What lender incentives are tied to using the builder’s preferred lender?

How do interest rates affect negotiations?

Rising interest rates can slow demand, giving you more room to negotiate – especially on spec homes. But in a high-demand market, your wiggle room shrinks. Builders may still hold firm on pricing even if rates are climbing.

What’s the average cost of upgrades?

Expect to spend 10–25% of the base price on upgrades. Cabinets, countertops, flooring, and lighting add up fast. Always get quotes in writing – and ask which upgrades bring the best resale value.

Tip 1: Get creative with what you ask for

Builders rarely drop the base price – but they’ll often cover:

• Closing costs

• Lot premiums

• Free or discounted upgrades (think flooring, cabinets, appliances)

Ask about every line item and look for flex. You might find a less expensive lot or discounted finish package that fits your budget.

Tip 2: Consider a model or spec home

Model homes are fully upgraded and often priced to sell. You’ll sacrifice customization, but gain:

• Built-in upgrades

• Quicker move-in

• Negotiation leverage (especially if the builder needs to clear inventory)

Also ask about spec homes – move-in ready builds that may come with incentives if they've been on the market a while.

Tip 3: Shop beyond the builder’s lender

As you think about financing your new home, consider the right lender. Builders often offer incentives to use their lender, like rate buydowns or closing cost coverage. Still:

• Compare multiple lenders

• Get a loan estimate from your bank or credit union

• Don’t assume the builder’s lender offers the best deal

Choosing the right lender can save you thousands over the life of the loan.

Tip 4: Know when to walk away

Stick to your budget and timeline. Be ready to walk if:

• The pricing doesn’t align

• Incentives are weak

• The home doesn’t check the key boxes

Homes that sit on the market for 45+ days often come with room to negotiate – either in price or upgrades.

Bottom line:

Negotiating new construction isn’t just about the sticker price. Smart buyers look at upgrades, financing terms, and builder incentives to get more house for their money.