Can you negotiate the price with home construction companies?

Hello Ralph,


In my opinion, you are mixing things up a bit there. As a car dealer - regardless of the brand - you can sometimes offer big discounts. On the one hand, because the prices from the factory are already calculated so that a discount is possible, because, depending on the size of the dealer, different equity prices have been agreed, because the manufacturer subsidizes the car or a campaign, because company cars are already cheaper due to the dealer’s tax reduction, because every dealer fears re-imports but is not allowed to refuse maintenance, and ... and ... and; I know this because I have worked in this business for many years, and I have a customer who still works as a salesperson for a premium brand today. And by the way, the exclusive ones in this industry are very sparing with discounts. It looks quite different with the Asian competition; after all, they want a big piece of the pie in Europe and therefore subsidize their products up to the pain threshold. The latter then forces the local dealers to grant more discounts – an unfortunate spiral which, in my opinion, cannot continue to work like this for long.

Translated, this means that where you receive a discount, it was previously included or the discount from other providers is small and then mostly in the form of an “on top.”

Kind regards

Well, the topic is not that simple! Company cars are used cars, so I’ll leave them out for now. New cars are not “calculated” in such a way that you must give a discount. A dealer has a trade margin he has to manage with (like a construction contractor). The margin for car dealers is generally around 1-1.5%. Because the manufacturers dictate everything – showroom space, tiles, lighting, etc.

But it doesn’t matter, the details don’t belong here anyway. The fact is that nobody pays the “list price” anywhere. Whether TVs (at BlödiMarkt), cars, furniture, etc., no one pays the list price. Sure, the “stingy is cool” mentality has done a lot of damage, but it also showed that we don’t always have to pay the full price because haggling is not common in Western Europe.

We see it in the electricity market—there has been a lot of change because customers have become more price-conscious.

But getting a good price has nothing to do with buying something cheap. Because buying cheap becomes very expensive in the long run. Poor quality, botched jobs are just some examples.

So, getting a discount that allows both sides to make a living—this is the goal. Not cheap!! A fair price. This is how I explain my prices to my customers, because I’m also not the cheapest seller! I don’t sell cars based on the price either, because then I don’t make money that I need for building my house.


Ralph

So I would find it much worse if I basically had to push down the price when building a house just to get the normal price. But with cars it has to be really different, because the car is the same at every dealer! The house is different with every provider! And with cars there are reimports, with houses the "Polen Haus" (there was once a thread about this here) but who would want that? And do you haggle at ALDI? They have the correct price from the start so that both sides have room to breathe.

Hello Ralph, Assuming the fictitious house price is TEUR 250 (to avoid misunderstandings: this fictitious price is meant to exactly correspond to/contain what you have in mind), what do you think would be a fair discount then? Best regards

Yeah, that's a good question, which I can't answer that easily. I think it also depends on how the offer is presented. The gut feeling that you're not being taken for a ride plays a very big role in buying a house and buying a car, I think. And the "cranks" who come to me and want to convince me that I have to negotiate at least 15%, preferably under 20%, I just let them go, I don't make the effort for that. Because nobody wants to work for free and salespeople don't do their job just to shuffle money around, right? Ralph

Just briefly from our experience: We discussed a floor plan and desired equipment with a total of 7 providers. After adjusting the offers (for example, incidental construction costs were sometimes already included), there remained a price difference of about 23% between the cheapest and the most expensive provider. Discounts could only be negotiated with the expensive providers, where almost 15% was actually offered.

So we visited many companies and also obtained many quotes. The companies constantly call and ask what the quantity is now. If you then say that the quote is a bit over budget, many give another 2-3%. The absolute highlight was when someone called and I said that we had decided on a competitor. He asked if we had already signed, and I said NO, but almost. He said I should check my emails again in the evening, he was improving his offer. In the evening I checked the emails, and the offer was there. He suddenly gave 9%. And that with a first offer price of 223,500 EUR. I just thought, I can only fool myself. If they made offers like that from the beginning, maybe more people would build with them, but we still went with our favorite and will sign next week. Just so you know what kind of leeway some house companies have. We are now building with a local company, where we received a LOCAL PRICE.

So at the beginning we were oscillating between prefabricated house and solid house. We then had offers made by two well-known prefabricated house providers, which were almost identical with the same equipment. When they realized that our tendency was rather towards wet construction, one company offered us a kitchen voucher of €10,000 and the other company offered a price reduction of €7,000. We are currently building with our developer, who, without much negotiation, came down €8,500 from the original price plus better doors and €3.50 more per m³ for tiles and parquet. I do think that some quote higher prices because they know that most people want to negotiate afterwards.