Key takeaways
- Builders are cautious about cutting the listing price because one discounted sale can affect appraisals and pricing in that neighborhood.
- Builders are more willing to offer closing-cost assistance, mortgage-rate buydowns or upgrades to lower upfront and monthly costs.
- Seller concessions are capped by loan financing rules, which is why upgrades may deliver more value.
Negotiating the price of a new home with a spec builder can feel very different from working with a custom home builder — and for buyers, that difference matters. Spec builders construct a home without a buyer lined up, selecting the floor plans, finishes and features ahead of time.
Once the dwelling is completed or near completion, that’s when it goes up for sale — often marketed as a “quick move-in.” That setup limits a buyer’s ability to change major design elements, though some personalization may be possible depending on the construction stage.
But there’s a trade-off. According to Ryan Hinricher, chief executive and founder of Sunworth Homes, builders carry the full cost of that already-built inventory, and that pressure grows the longer homes sit unsold.
In today's market, the urgency to move inventory is heightened. "We are willing to negotiate more so than say in the 2021 post-COVID environment when there were more buyers than houses,” Hinricher told Homes.com News. But “now there's more houses than buyers in the general market.”
How spec homes are priced
Spec home prices are set with future appraisals in mind.
Hinricher said spec builders typically avoid cutting the base price because a discounted sale can directly affect appraisals for nearby homes they are trying to sell. Appraisers rely on comparable sales, or “comps,” of recent, similar sales in the same area to determine value.
“It's critical to maintain comps if you can,” Hinricher told Homes.com News, adding that price reductions are often seen as a “last resort” and used only after incentives fail to generate buyer appetite.
Instead, builders are more willing to offer closing cost assistance, interest rate buydowns — when the builder up-fronts the cost to lower the rate on the mortgage loan — or include upgrades, since those concessions don’t ripple through comps the same way price cuts do.
If a home sits for more than 30 days without traffic, Hinricher said he may make a modest price reduction, often in the low thousands, but stressed that buyer “activity being the driver,” not time alone, fueling pricing decisions.
He added that a completed spec home becomes expensive to carry roughly 90 days after receiving a certificate of occupancy, which increases the pressure for builders to move inventory.
Where buyers have leverage
Buyers often have more room to negotiate concessions that lower upfront or monthly costs.
According to Hinricher, the most common request he’s seeing from buyers is help with closing costs, typically 2% to 4% of the purchase price. Some buyers start the conversation by asking for about $10,000 in concessions, often with the goal of using those credits to ease their financing costs as mortgage rates remain elevated.
Beyond cash credits, builders may also be willing to include upgrades such as appliances, window treatments, garage door openers, fencing, or even landscaping. In some cases, that can mean a sodded yard instead of seeded grass. Those features can improve affordability and livability without altering the home’s listing price.
Where buyers generally have less leverage is on major design changes or deep discounts early in the listing process. Builders may be able to tweak finishes or add practical upgrades, but moving walls or making structural changes are off the table once the home is near completion. However, builders can be more flexible when buyers come in with firm financing and a clear timeline.
“We are willing to negotiate, especially if they’re strong buyers with a clear game plan in terms of how they’re financing… and the timeline is important as well,” Hinricher said.
Financing rules that could be overlooked
It’s worth noting that financing guidelines limit concessions. For conventional loans, seller concessions are capped at 6%, which can make upgrades a more favorable workaround than cash credits.
That limit helps explain why builders may steer buyers toward closing-cost assistance or toward home features rather than simply increasing the credits. Once a buyer reaches the maximum allowed concession for conventional loans, additional cash incentives can’t be applied.
Hinricher said buyers often use credits to fund mortgage rate buydowns. “We are generally, if we're contributing, say, $5,000, that might buy the mortgage rate down half a point, but it's buying it down for a typical 30-year term as opposed to some of the teaser- type loans that are happening.”
Under most conventional mortgage rules, credits generally can’t be used for down payment assistance, and any unused portion is forfeited at closing. Remember, these limits vary depending on the loan type.
Because of those restrictions, upgrades sometimes could be a viable option and deliver practical value. Items like appliances, fencing or window treatments don’t count toward your concession limits and can reduce out-of-pocket costs buyers would otherwise face after moving in.