New construction refers to site preparation for, and construction of, entirely new structures and/or significant extensions to existing structures whether or not the site was previously occupied. In other words a new construction home is one that has not been previously occupied. Typically, the seller of a new construction home is the builder.
Buying a New Construction Home
It can take several months to search real estate listings, and eventually settle on buying a new construction home. The properties in average price range would all need significant updates and renovation to get them looking at how customers wanted, and when they have already spent a huge amount on the purchase price, it is hard to find another extra funds for customization and add-ons.
However, deciding to build a new construction home is the easiest part of the whole process.
When buying a new construction, you need to be deliberate about asking the right questions and advocating for yourself. The more you can understand about what to expect before getting started, the better prepared you can be for getting through the process with your sanity intact.
In the following paragraphs, we will share the Army of Builders team’s experience with working on new construction projects and will speak about what it means to buy a new construction, as well as what the cons and pros are of going through this route.
Multiple Listing Service
New homes may not be listed in your local Multiple Listing Service (MLS). Unlike a regular seller who lists their 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? Regularly, it may mean the home builder is not 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 paper, or with billboards. So if you are interested in newly built homes, work with your agent to make sure you have identified all the possibilities or Contact Army Of Builders for more detailed information and consultation.
Construction and Sales Process
New homes are often sold before they’re built. A builder will generally get financing lined up and map out both a construction and a sales process. This means they’ll try to sell as many homes as possible before they’re 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 one, simply because the real estate market has appreciated.
Is the project you are interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder maybe a little more willing to negotiate with you, not so much on price but on upgrades. If they reduce the price on your home and the sale closes, then that sale price becomes public record. But if they offered you an upgrade package (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.