Save big on new construction: secrets your buyers should know
Purchasing new construction is usually more complicated and intimidating than buying a resale home. It is important with a new-home purchase that you, as a buyer hire a real estate agent to represent you in this process.
As you all noticed, there are a lot of new construction subdivisions and projects are going on in Greater Kelowna Area. Sometimes buyers ask me if they can use a real estate agent when they are purchasing new construction. The answer is yes.
In general, builders’ model homes are staffed by agents or unsilenced sales representatives 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.
Keep in mind that most builders will require that the real estate agent accompany and register the buyer on their first visit to the builder’s model home or community.
The best time to buy.
A lot of the national builders are publicly traded companies. They need to meet sales goals and answer to the shareholders of that company. For that reason, toward the end of a quarter, builders tend to be more aggressive with their incentives in order to meet these sales goals.
The December holiday season is another great time to buy. Most of the country is out shopping and traveling to see family. Very few people shop for homes this time of the year. For that reason, ’tis the season to find some great incentives to purchase a new home.
Builder list prices.
Surprise — builders don’t like to reduce their prices. If they do, it sets a precedence for future home sales. Builders are more likely to pay for closing costs or offer design center incentives than to drop their prices.
Builders are not like regular sellers. 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.
What does that mean practically? It means that every day a builder has a home that is sitting for sale on the market, they are losing money. Look for builder inventory homes that have been on the market for 45 days or more. These are the homes in which you as, a buyer, might be able to get a good deal.
Side note: Some new-home buyers think that if they do not use an agent for their purchase, the builder will reduce the price of the home by the amount of the commission. For the most part, this cannot be further from the reality. Builders do not want to reduce their prices because it sets the comparison price for future home sales in that neighborhood. Builders instead add the commissions paid to a buyer’s agent into the marketing budgets of the homes. If a buyer goes to a new-home builder without a real estate agent, either the builder’s agent or the builder will pocket that money.
“What you see what you get”
Often the model home is a high-end version of the standard home. It is the builder’s showcase home and a way for the builder to show off many of the stellar upgrades it can offer. The builder hopes a buyer will like these upgrades and ultimately add them to the purchase of the 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 any additional options will cost. Each builder will have their own set of standard items that come with a house. A standard item for one builder might be an upgrade for another.
Purchase the builder’s model home.
Purchasing the builder’s model home can be an excellent deal. Remember, these homes are the showcase homes for the builder. The builders have packed great upgrades and features into the model. Typically, when the community is almost complete, the builder will put the model home up for sale. Be on the lookout for them.
Technically, these model homes are new homes because no one has ever lived in them. These homes have served as an office and have had hundreds of prospective buyers walk through and view them.
The one downside of buying the model home is that the buyer generally does not get to pick the floor coverings, the color of the paint on the walls, the kitchen cabinets, appliances or any fixtures. In many ways, it is like buying a professionally designed resale home.
These gently used model homes are typically a pretty good deal. These homes tend to sell for market value and have the showcased upgrades.
Lake Okanagan Realty Ltd.
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Material for content was used from http://www.inman.com/ by Jeff Gould