With the recent slow down in new home construction, the old rules of dealing with a builder no longer apply. According to the National Association of Realtors, builders are not constructing as many speculative homes as was once the standard. Instead, many new home communities are awaiting the pre-sale.
As a buyer, you can make all of the choices with regards to colors, cabinet and flooring options, carpet selection, etc. These are some of the more compelling reasons to purchase a new home.
A recent article in the New York Times suggests the following Tips:
New Rules for Buying a Home Before It’s Built:
As the housing market has cooled, the developer’s mindset has changed. Rather than construct new developments quickly and wait for the buyers to flood in, more developers are relying on preconstruction sales to determine whether or not to break ground.Here’s some advice for any buyer contemplating a preconstruction purchase:
- Negotiate an exit strategy in your sales contract, especially as lead times for construction grow longer in some markets. For example, state that if the builder doesn’t break ground by a certain day, you can get out of the contract.
- If you’re deposit money is going to sit there for an extended period, ask the developer to pay interest.
- Get in writing what changes that can be made to the project once the sales contract is signed. Finishes and appliances might not be set in stone at the time you sign the deal.
- Try to find out the current state of the local market and gauge whether the developer is offering incentives to lure new buyers — which, though attractive to buyers in the short term, can put a downward pressure on prices.
Source: The New York Times, Amy Gunderson (04/04/07)
Here are a few tips that will make the experience much more rewarding:
Have a gameplan assembled for the sale of your existing home. Do not wait until the last minute to market your home. Existing inventories nationwide have increased causing the time necessary to sell your home to increase.
Hire a Realtor as your Buyers Broker. Most reputable builders will not discount the home price price because a buyer chooses not to have Buyers Representation. Why? Since most homes are sold through Realtor efforts, in essence, the builders would be biting the hand that feeds them. As a result, it is necessary for them to keep the cycle going. Since it costs a home buyer nothing, a Buyers Broker is a resource that is available to look out for your best interest. In Georgia and in many states, a Buyers Broker must be hired (through a contract) by the buyer.
Finally, ask what your Buyers Broker will do for you. In addition to my standard duties, I make it a point to check on the progress of the new home every two weeks and to provide feedback to my client. By taking digital pictures, I am able to show such progress as well as any concerns during the construction phase. By creating a list of options selected by the client, I make sure that they are provided exactly as specified.
As with any great buyers broker, it is my responsibility to assist the home buyers in the process and to understand my clients goals and objectives. From my perspective, new homes sell themselves. It is my job to make the process a great experience.
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