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What to know about New Homes

1. New homes may not be listed in your local multiple-listing service

Unlike a regular seller who lists a home with a local real estate agent, homebuilders often have their own employees working for them on-site. They do this to have more control and to cut costs. 

What does this mean for you, a buyer? Mostly, it may mean the homebuilder isn’t a member of the local MLS. As a result, the homes may not show up in your agent’s MLS search. The builder may be more apt to advertise online, in the newspaper 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. 

2. New homes are often sold before they’re built

Builders will generally get financing lined up and map out a construction and a sales process. This means they’ll try to sell as many homes as possible, before the homes are even built. To accomplish this, they’ll build out 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 get through some of the approvals process before they can actually start signing contracts. 

For the most part, you can get a sense of what your new home would look and feel like and where it will be located in the community. Ready to move forward? You’ll likely have to put down a deposit, from a few thousand dollars to 10 percent of the purchase price. 

Be aware that even if there are 100 homes in the community, they won’t all be available at once. Homebuilders tend to release the homes in phases. If the first 10 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. Also, the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than phase No. 1, simply because the real estate market has appreciated. 

3. The first buyers may get the best discounts

A homebuilder, especially early in the sales process, wants to get a few homes under contract quickly. If builders can announce they have 10 homes under contract in a few weeks, 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. To do this, they need early buyers to sign contracts.

For buyers, this means there could be room to negotiate the price down early in the sales process. But with the reward, there is potential risk. By being an early buyer, you’re committed to the project. If for some reason sales don’t manifest or you don’t want to move ahead before the home is built, you risk losing your down payment. For example, right after the housing downtown, some buyers were stuck under contract on new homes where sales had stalled. 

4. Builders don’t have a personal or emotional attachment to the house

Typical sellers have lived in the home for many years, raised their family there or built memories there. So when it’s time to sell, the seller may experience all kinds of issues, questions and uncertainties, which can come out in the negotiation and purchase process. 

As a consequence, sellers 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. If given a choice between two buyers, the seller may pick one over the other for non-financial reasons.

With a homebuilder, it’s just a numbers game. Builders are focused more on spreadsheets than sentiment. They want to make sure you’re qualified and can get a loan. They set the prices based on their inventory, though there may be a little room for negotiations. 

5. Discounts may be available as 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. If the builder reduces the price on your home and the sale closes, then that sale price becomes public record. But if the builder offered you an upgrade package — such as hardwood floors instead of carpet or higher-end appliances — there isn’t any way to track that. 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. If you’re used to renting and relying on the landlord for mechanical fixes and general maintenance, you can almost be assured that your first few years in a new home will be maintenance-free.

 


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Posted In: EHR News

About The Author

Joseph Sabeh Jr.

Please let me introduce myself, I am Joseph Sabeh, Jr a full time licensed professional realtor. I have been with Executive Homes Realty for over 13 years and was trained by my late father and Broker, Joseph Sabeh. I recently incorporated the company and we moved the office to 43513 Mission Blvd just last summer. I could not have found a more honorable place to work. After earning my experience selling high end Ralph Lauren suits and studying business management in southern California, I decided to pursue my dream of selling real estate and working with my father. He had already had such an excellent reputation and established a niche market of high end clientele that catered to the very best. I wanted to become the consummate professional just like him and have strived to become just that being just a phone call or email away from getting back to my client’s immediate needs! Known by my clients for my tenacity, perseverance , and excellence in negotia- tion(Certified Negotiation Expert), I have always strived to meet my clients high demands and goals. As a result of my professionalism, I have achieved an extensive portfolio of referrals from past and present clients. I credit my current values from my upbringing of my parents and the credit is due to them without question. Their integrity, pride, and willingness to sacrifice for the better of my life and my sister’s always left a mark on me that one day I will pass on. Their desire to achieve a better life and live it to the fullest is one that some families dream of and I certainly am appreciative of all of the education and etiquette I have learned from them both. I have sold condos up to 3.2 million dollar homes and I am here for any and all of your future real estate needs and wishing you the very best experience in your future real estate endeavors with me.

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