Is New For You?
Looking for new construction? Five things to consider before you buy.
The real estate market and new home construction has picked up all over the country. Lots are disappearing fast and claiming premium prices, as well as construction prices being on the rise. We’ve personally seen prices on identical new homes go up 20-percent in the last six months.
What does this mean to you, as a Buyer? We can’t predict the future but home-builders are buying up land, drawing up plans and new construction is on-the-rise. Is new for you? We can’t predict that either but here are some things to keep in mind.
1. That new place may not be in the Multiple Listing Service (MLS)
Being a bit different from the traditional seller represented by an agent, a homebuilder often has their own employees on-site doing the selling. This gives them a little more control and can cut some costs. How does this effect you? It could mean the builder isn’t an MLS member and you’re more apt to locate their homes through a website, newspaper ad, billboard or exclusive agent. So, if you’re looking for new, make sure you check everywhere and let us, or your agent know.
2. Many New Homes Never Make the Market Because They Are Pre-Sold
Typically, builders get financing lined-up and put a timeline together for sales. They’ll try and sell as many homes as possible before they’re even built. Model homes are part of this timeline and allow buyers to go in and review the floor plan and other finishes so they can make custom choices. These models allow you to get a feel for what your new home will look like. You’ll put down a deposit and the process starts. You may have a grace period to back-out should you change your mind before materials are ordered—make sure you know how long that period lasts.
If you’re building in a new community, be aware that the sales cycle could take years. There are communities in Omaha that were sidetracked during the recession. Only now are they phasing new construction back. If the first few homes do well you could see increases in price as the market continues to appreciate.
3. Avoid Paying for Memories
In existing homes, many Sellers have lived there for a long time, the current average is 11 years. With that time comes an emotional attachment to the property, for instance, they raised their family there. Consequentially, they may price the home too high because they really aren’t ready to move. Or, if there’s more than one offer on a house the Seller may inquire about the prospective Buyers and make a non-financial decision on who would make a better family for their home.
With a home builder this isn’t the case. Sales tend to slow after Labor Day and they’re more focused on their bank statement than they are sentiment. If your buying power qualifies you to purchase the home the price will most likely be based on their remaining inventory and not whether junior took his or her first steps in the backyard.
4. Free Upgrades
If the Builder is nearing the end of the sales cycle and most of the homes are already sold they are looking to move on to the next project. This means they’ll be a little more willing to work with you and you could score big on upgrades like hardwood floors or high-end appliances. They aren’t as likely to come down in price, however, because the final sale price is public record and they will not want to risk their reputation in any given category because that price can be tracked back to them, while the upgrades often are not.
5. The Early Bird Gets The Worm
Early in the process Builders want to get as many new homes under contract as soon as possible. For you, the Buyer, this means you may be ("may-be" see #4) able to negotiate the price down early in the sales process. However, with this reward, comes some risk. As an early Buyer, you are committed to the project. If sales don’t manifest and the builder goes under you could lose your down payment.
For first-time Buyers new construction can be a great idea. If you’re already used to paying rent and having your landlord handle all the maintenance you can rest-assured that a new home will be practically maintenance-free and more-often-than-not covered by some warranties.
The biggest trade-off here is you may not see a mature tree for miles. Oh, and don’t forget about all the choices you will have to make; carpet, window treatments, tile, paint, fixtures—if decisions aren't your thing, maybe it’s best to buy existing.
Found your dream home and you're ready to buy? Need to sell your home beforehand? Don't worry, we're here to help. Contact us here or call 402.639.8558 today.
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