Price Negotiation Customers

John Rymer:

All customers want a good value when purchasing a home. Yet some customers are overly fixated with negotiating a price. It is not unusual for these customers spend more time working on a special deal than in choosing the floor plan or homesite. How do you deal with a customer who wants to over-negotiate price? Is it possible keep control of the process and still keep a positive attitude with your customer?

Jeff Kaizer

National Builder in Florida

Annual Sales - $8.3 million; 41 Units

In today's market, there are many people who want to negotiate on price, negotiate on terms and even negotiate on possession or features. And while I know many of these people like to negotiate, they also like to work with a company that has what I call "Reverent Power," meaning consistency and fairness with all their customers. The company I work for has a non-negotiation policy; a one tier price for everyone. While that may seem harsh on the surface, I'm able to show my customers the benefits of this program. Our discount is built in on the front end rather than the back end.

Appraisers will value your home based on the lowest level of random discounting and that can mean trouble for buyers in the mortgage process. One tier pricing also helps a builder's customer satisfaction because everyone knows what their neighbor paid for their home. Secret price concessions always have a way of coming back to hurt the builder once customers move in and begin comparing prices.

Mary Singleton

National Builder in California

Annual Sales - 75 units; $15 million

Customers that want to negotiate with you on the price have to be enlightened to the fact that they are looking at the best value in the marketplace. To present your case for value, you have to be knowledgeable about what else is out there in the marketplace. If you are priced well, you will be able to show value and quit negotiating. Builders who like to negotiate typically like to mark things up so they can discount for customers who like to think they are getting a good deal. I just show them the facts.

Jerry Gumbin

National Builder in Texas

Annual Sales - 62 Units; $11 million.

I think it is very normal for people to want to over negotiate price. Many times they are simply looking for conformation that they are getting the best value in the marketplace. When dealing with these customers I don't think it's only about price. You need to show everything that goes into the value equation: the quality of the home, the materials that go into it, the workmanship, the number of satisfied customers and the number of years your builder has been in business, the warranty that customers receive with our homes as well as the community features.

When I first got into new home sales, I was concerned that I would lose customers over price discounts. What I found is that once I establish the value of our homes, customers are just testing the price and really are not interested in going elsewhere.