5 Things About New Home Constructions That You Should Know
It’s no secret that the real estate market has picked during the past few years. But even with the improved success, prospective homeowners still find it a challenge to find the perfect home. This stems from a shortage of homes due to the increased demand.
As such, a significant percentage of them go the extra mile and consider building new homes from scratch. Home builders and construction companies, small or large, are taking up the practice and building new homes for new clients. But is constructing a new house the right thing to do? And if so, what the basics of new constructions should everyone be aware of?
New homes are often sold before construction ends or even starts
As a general rule, builders tend to have a well laid plan for the construction, sales and financing plan. To effectively implement them, efforts have been made to sell as many homes as possible before construction starts. Sales are achieved by building model homes and having potential buyers review all details of the house, including plans, finishes and fixtures while the houses are still under construction. Depending on the locality, permits for various aspects of the construction process have to be obtained before any contracts can be signed.
Most of the time, homeowners get to familiarize with the look and feel of their new home. If you are considering a new home construction, you will need to pay a deposit, which is usually a small percentage of the total purchase price.
However, you need to realize that not all homes in a given community will be available at a go. As construction happens in phases, so does selling. Builders opt for this so as to allow them to gauge the market. It helps them to identify market trends, as well as areas that can be improved upon. As a result, sales cycles can last for years and prices for different phases will differ.
Discounts can be given in the form of upgrades
It’s not uncommon to find prospective homeowners interested in houses whose sales cycles are almost over. In such cases, builders are kind enough to negotiate. And this does not refer to negotiations on price, but rather a few upgrades. This is because discounted prices tend to become public notice, which is not what builders want. Offering upgrades like installing hardwood floors instead of carpets garner more clients and sales more effectively. In addition, they are not as easy to trace as price discounts.
The first buyers often get the best discounts
For the sake of giving their project a good start, builders will often try to garner as many buyers as possible at the earliest stages. And what better way than to give incredible discounts to the first buyers? Enticing techniques can include announcing that a few homes will be available in a few weeks.
Another reason for giving good discounts to first buyers is that builders have to give investors and lenders the good news about their construction project. This is impossible if there are no buyers purchasing homes right from the start of the project.
For potential buyers, this means that there’s plenty of room to negotiate prices during the early stages of the sales process. This however comes with a risk. As one of the first buyers, you make a commitment. If at any point during construction should you change your mind about the property, there’s a good chance that you will lose all or part of the down payment.
New homes are often not listed in the local MLS
Regular sellers often list homes for sale with local real estate agents. This is however not the case with new constructions. For the purpose of controlling and saving on costs, builders will often hire employees to market both the construction on-site and off-site. So what does this imply for homebuyers? This implies that the property you are looking is probably not listed on the local MLS, and as such it may not turn up in your agent’s search results. Builders will often advertise new constructions in newspapers, online or billboards.
Builders have no emotional or personal attachments with the new home
Usually, resellers are people who have lived in a house for a long period of time with their families. For them, these houses hold memories that are dear to them as well as their loved ones. As a result, many issues arise during the selling process ranging from uncertainties to questions on the part of the reseller and the buyer. At the end of the day, it’s less about the money and more about what the next owner will do with the house.
On the other hand, it’s about how much money can be made from a new home by builders. There’s less sentiment and more of a numbers game. The price is based on the inventory, but a little room for negotiation is given. To get more information on custom homes in Los Angeles, do give us a call today!