In today’s hot housing market, the short supply of existing homes means that your clients may be losing out in bidding wars. The new construction home market offers your buyers a chance to find a house they’ll love without engaging in mortal combat. Here’s how to help your clients seize the opportunities new construction homes offer.
Be able to compare new versus resale homes
Prepare to educate your clients about what they can expect with both new construction and resale homes.
New construction homes
- All components, including such vital ones as the roof and foundation, will be brand new. The house itself will be under warranty for one year, after which the warranty will be tiered for different home systems in successive years. Appliances and heating and air conditioning (HVAC) will have manufacturer’s warranties.
- Depending on how far along in the construction process your clients sign a contract, they may be able to select flooring, countertops, tile, appliance packages and more.
- The latest in energy-efficient HVAC systems can make new construction homes cheaper to operate.
- New construction homebuyers can choose their lot location within the development as well as their exterior design. The house will come with a basic landscape package.
- New neighborhoods often have pools and amenity centers. It’s likely the development will have a homeowners association, so explain what that means and the cost of dues.
- The builder probably will not negotiate price, but incentive packages may offer upgraded design features.
- Existing homes may be ready for move-in more quickly. Closings may be possible in a month or even less.
- Neighborhoods may have more charm because of the lack of construction traffic and the more established “feel.” Lots may be larger and trees and landscape more mature.
- Almost everything will have some amount of wear and tear, so repairs may await. The kitchen, baths and flooring may need renovation. The home must be inspected early in the purchase process to allow time for repairs the buyer or mortgage company may want before closing.
Explain differences in the purchase transaction
With both existing homes and new construction, the purchase begins with a sales contract, but there are key differences.
With new construction, there will be an addendum to the sales agreement that spells out the buyer’s choices as to flooring, kitchen counters, cabinets and more. Be prepared to explain this addendum to your buyer.
As with a resale home, the new construction buyer will pay money down. The wait until closing will be longer because the home will have to be completed. Although the home is new, it will be important to have an inspection before closing to ensure that no construction details were overlooked that affect function and code requirements.
With rising prices for materials, many builders are including price escalation clauses in new construction contracts that give them room to recoup cost increases up to a maximum amount. Scrutinize these clauses carefully and explain them clearly to your clients.
New construction builders often have preferred lenders and title companies that may offer reduced closing costs.
Learn about new home communities
Visit as many as 10 new home communities in your market and get a good working knowledge of each. Connect with a sales manager or salesperson to establish an ongoing relationship. Map the locations of these communities around the market so you can introduce them to buyers looking in each area.
This preparation will help you explain new versus resale home opportunities, compare one new home development to another, and match new construction communities and their builders with your clients’ needs.