Purchasing a newly constructed home is more complicated than buying an existing home. Accordingly, it is often more important to hire a real estate agent with a new home purchase than it is with an existing home. That said, make sure that any agent you hire has experience with new construction, as builder contracts and the building process are different from what most real estate agents normally deal with.
In general, builders’ model homes are staffed by agents who work directly for and represent the builder. A buyer also needs to have a real estate agent who represents them and looks after their best interests. Here are some general new construction thoughts for you to consider.
1. Builder list prices
It should come as no surprise, but builders do not like to reduce their prices. If they do, it can set a precedence for future home sales. Instead, builders are more likely to pay for closing costs or offer design center incentives.
Builders are not like regular sellers as they are not emotionally attached to the property. They make decisions based on what is best for their bottom line. There is something known as the time value of money, which means that money available at the now is worth more than the same amount of money later. Look for builder inventory homes that have been on the market for 45 days or more. These are the homes in which a buyer might be able to get a good deal.
2. Understand the details.
Most builders will have lengthy and intimidating purchase agreements that cover all the pertinent details of the new-home purchase. Having a real estate agent, and potentially a real estate attorney, will help to ensure that you can become familiar with the material terms of the agreement.
3. Understand the upgrades.
Remember that a builder model home is generally not a good representation of what comes standard with the home. It is the builder’s showcase home and a way for the builder to show off many of the upgrades it can offer.
The builder hopes a buyer will like these upgrades and add them to the purchase of their home. In general, these upgrades have good profit margins for the builder. When touring the model home, find out exactly what options are standard, what options are available, and, of course, what additional options will cost.
4. Research the builder.
Not all builders are created equal. Ask your realtor to do some research for you or do your own homework. Get to know the builders, their reputation and what they offer. To get an understanding of the builder and what they offer, visit other communities the builder has built, try to speak with past buyers and look for online reviews.
Feel free to contact me with any questions or comments.