As many home buyers are already well-aware, the real estate market has been on an upswing as of late. Despite
this encouraging development, the housing inventory remains rather tight, which can greatly impede buyers when searching for the homes of their dreams. In this respect, new home construction can be quite appealing,as obtaining a newly-constructed property allows owners greater input into the way a home is designed and built.
All over the country new homes are being built every day, which provides many great opportunities for investment. While this may benefit some buyers, purchasing newly-built properties may not fit into the lifestyle of every potential homeowner. When considering the purchase of a new construction, keeping the following five items in mind can help determine whether this option will work best for you.
1. Early Buyers Are Often Privy to Better Prices
Creating positive buzz can be vastly important to many builders. Getting a number of homes contracted quickly
will serve to entice future buyers, as this can signal overall satisfaction with the builder’s ability to create a quality dwelling. As a result, early buyers can take advantage of a builder’s enthusiasm during the negotiation process. Because builders will be seeking methods to boost sales, they may be willing to offer reduced prices on the purchase of new construction.
However, there are some draw backs to buying early. In the event that sales are less than expected, buyers can stand to lose quite a bit of money in the process. Turning away from an inked deal can also result in losing one’s down payment, which can be financially catastrophic for many. When purchasing early, buyers can help lessen risk by doing research on both the builder, as well as the area where a home will be located.
2. New Construction Isn’t Always Included in Listings
Another thing to consider when on the market for new construction is that these properties may not be listed using traditional methods. Previously-owned homes are usually included among local real estate listings, which affords buyers a convenient method of undertaking property searches. This is not always the case with new construction. Many builders are not members of the area Multiple Listing Service, therefore they may not be included in these searches.
Instead, builders often choose to advertise new homes using alternate methods, such as billboards and online postings. A good agent will help buyers best pinpoint prospective new homes, which is essential to having a rich selection of properties to choose from.
3. Upgrades Can Take the Place of Discounts
Reputation is very important with home builders. That’s why many builders are reluctant to offer actual discounts on the price of a new home. These discounts are included in the public record once a deal has been struck, which may then lead to future buyers expecting to the same sort of discounts when buying homes.
Of course, that doesn’t mean a builder won’t work with you when it comes to price. By offering upgrades at a reduced price, builders can meet the financial needs of buyers without influencing future sales. In some cases, buyers may be privy to greater savings through upgrades than they would by receiving a decreased sale price. This also allows buyers to acquire great features in their new homes that would otherwise be too expensive to afford.
4. Lack of Emotional Attachment to a Home Means a Better Deal
A home is a place where children are raised and memories are created. As a result, original owners may price their homes at higher rate due to the emotional attachment to these spaces. In many cases owners may be reluctant to leave a cherished place, and this reluctance can become quite evident during the negotiation process. Emotional attachment can also influence selection of a new buyer. Owners may opt for a buyer they feel more in tune with, despite pertinent financial details.
None of these considerations are a factor when buying a home from the builder directly. Builders are most concerned with the bottom line, which can result in a fairer process for the buyer in question. Provided you meet the relevant financial criteria, a builder will be willing to work with you when it comes to negotiations. Contending with cold hard figures can often be far easier than dealing with an owner retaining an emotional attachment to a particular property.
5. A New Home May Not Be Built Upon Sale
Another important consideration when purchasing a newly-built home is the fact that it may not be completed when contracts are signed. In this case, builders will make use of model homes, which can give potential buyers an idea of what to expect when their specific home is complete. While model homes can offer a glimpse of things like floor plans and certain features, buyers must still request the specifics of their home in writing. This is essential to ensuring you know exactly what you are getting with your future home, while also affording a realistic perspective on total costs.
Even with these protections in place, pricing can fluctuate greatly during the building process. As mentioned above, early buyers will often get the best deals for new home construction because builders will be most eager to sell. Conversely, those buying during the second or third phase may be looking at higher prices. In general, once a builder has been established, future buyers can expect price increases starting at 10% and going up from there. Market fluctuations can also have an impact, especially when the length of construction can take years to complete.
New Construction Can Offer a Great Opportunity to First-Time Buyers
While new home construction may not be right for everyone, many first-time buyers are excited by the prospect of being the initial owners of a brand new home. For instance, owners of a newly-constructed home will have little to worry about when it comes to maintenance. Additionally, purchasing new properties affords buyers a greater say in the overall look and feel of their homes, which can be an exhilarating experience.
No matter which option you choose, it’s important to go into a sale completely aware of all pertinent details. Doing so will ensure that buyers are fully prepared for owning a newly-built home, while also guaranteeing the ultimate satisfaction in their living situation.