5 Things To Know About New Construction
If you are a home buyer shopping for a home today, in any market and at any price point, you’re likely to come across new construction homes for sale. Sellers are both large national builders and smaller local developers. Some homes are in a subdivision, while others are one-off, custom homes.
But is a new-construction home the right path for you? Here are five factors you should keep in mind.
New homes may not be listed in your local MLS
Unlike a regular used home seller who lists their home with a local real estate agent, home builders often have their own sales employees working for them on site. They do this to have more control and to keep costs under control. What does this mean for buyers?
Smaller home builders like to advertise online, in the paper or with billboards. So if you’re interested in newly built homes, work with your agent to make sure you’ve identified all the possibilities. Ask your real estate agent if they work with home builders. You will be surprised how many agents lack the expertise to sell you a new construction home. Find an agent that works with new home builders. It makes a world of difference!
Spec homes are often your route to a great buy.
A lot of builders in Northwest Indiana build out spec homes or model homes and allow buyers to go in and review floor plans, fixtures and finishes while the homes are under construction. Depending on the state, builders need to go through some of the approval process before they can actually start signing contracts. You’ll likely have to put down a deposit, from a few thousand dollars to 10 percent of the purchase price.
If the first five spec homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase as popularity grows.
Although the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than the first, simply because the real estate market has appreciated. As many of you know, the popular kid get most of the attention. As a neighborhood becomes more popular, invariably, people are willing to pay more to be in that popular neighborhood.
First buyers may get the best discounts
A home builder, especially early in the sales process of a new neighborhood, wants to get a few homes under contract quickly. If the builder can announce they have 5 homes under contract in a few months, the project can seem more desirable to future buyers. Also, builders like to go back to their lenders with positive news about the project and their investment.
Builders don’t have a personal attachment to the home
A typical seller has lived in their home for many years, and raised their family or built memories there. The seller may unconsciously price the home too high because they’re not ready to emotionally detach from it. They may want to know more about you, or what your plans are for the property.
With a home builder, it’s just a numbers game. They’re focused more on the bottom line than sentiment. They want to make sure you’re qualified and can get a loan. They set the prices based on their inventory, their costs and there may be a little room for negotiations.
Discounts may be available in the form of upgrades
Is the project you’re interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder may be a little more willing to negotiate with you — not so much on price, but on upgrades. What could amount to thousands of dollars in upgrades could end up being a better deal than simply getting a price reduction.
For many first-time buyers, new construction could be a great idea. Keep in mind that profits for home builders are not huge. Smaller home builders, if they are good, survive on building good, quality homes, over and over again.
Please read a couple of the articles below and/or send to a friend who might be in the market for a new home. These articles are very helpful and contain important information you will want to know.