I’m sharing five important tips to know when buying a new construction home.
The new construction home buying process is a different process than going out and to look at an array of homes, picking an existing house, and writing an offer on it.
We’ve been looking at the data from Zillow from 2019 about who is buying new construction homes, how old they are, and so on. In 2019, 73% of homebuyers were employed, 16% were retired, and 11% were unemployed or students. Nearly half of those buying new homes were parents. Another interesting figure is income: 17% made less than $50,000, 31% made $50,000 to $99,000, and 53% earned over $100,000.
No matter where you are in the country, the following five tips will save you an enormous amount of headache in the new home construction process!
1. (Most) new homes may not be listed in the MLS. You need to call a great agent and ask about new properties that are not yet listed on the MLS. You could be missing out on some wonderful homes otherwise.
2. New homes are often sold before they’re built. Home buying is not the same as walking into Walmart and saying, “I need to see the baseball bats.” Sometimes you need to buy something that doesn’t yet exist. 90% of new construction homes are sold before they’re built.
3. The first buyers usually get the best discounts. In our Sunwood Homes, for example, we have an excellent incentive right now where you can get a free iron door if you work with our preferred lender. When builders launch a new subdivision, they load up incentives to get people to want to move there. Over time the area is popular so they do not need to offer them anymore. If you can do it, it pays to be first.
4. Builders do not have a personal attachment to the home. You may wonder why they won’t negotiate with you, but generally, the price advertised is the price; there is very rarely a ‘make an offer’ option. Their list price is based on the actual cost of materials and labor, plus market value of the land, plus reasonable markup for profit. This is business for them, so they’re running by numbers and spreadsheets. And often very thin margins.
5. Some of the best discounts can be in upgrades. Check with the builder, find out what kind of incentives are being offered.
You need to work with an exceptional agent who can show you all the best neighborhoods, and we can do that for you. If you have questions about the home buying process, new construction, the financing process, or anything else concerning real estate, please reach out to us. We would love to help you. Have a happy 2020!
Jeremy Larkin & The Larkin Group