When you buy a new home, you are not only investing in bricks and mortar, you are investing in a builder, subdivision, lot and floor plan.
Invest some time investigating by:
- Looking closely at the builder. Talk to others that have had homes built by the same builder both recently and in past years. Ask them whether they would purchase another home built by the same builder. Is there any resale track record with the builder’s products? Do their homes withstand the test of time, both in maintenance and appreciation? How long has the builder been in the new home business, and does the Better Business Bureau have any complaints on file regarding the builder?
- Extending your inquiry into the history and future projections for the subdivision. Have past promises been kept? What future commitments has the developer made to the individual home buyers, the homeowner’s association, the local municipality? How will these commitments change the character of the subdivision and neighborhood?
Builders are generally motivated to sell and rational in their approach to selling.
One of the advantages of buying from a builder is that, unlike existing home sellers, a builder has little if any emotional attachment to his “inventory”. Selling a home is a necessary part of their business.
There are several instances where you can greatly benefit from buying a new home from a builder.
They include:
- Consider buying in a “slow” or “down” market. Much like automobile dealers, builders sometimes find themselves with excess inventory. Under pressure from construction lenders, suppliers and subcontractors, a builder may want to keep his inventory moving and crews busy, even at the expense of reduced profits— and lower prices.
- Consider buying early-on in the development process. Not only are prices often lower, but lot selection is often much greater. Builders need the initial sales to gain credibility with construction lenders and future buyers. They are often willing to negotiate extensively in order to generate sales momentum at this stage.
- Consider buying the last home in the subdivision. Due to the way construction financing is structured, builders typically have a large cash investment in the last few units. This cash is sorely in need of reinvestment in the next subdivision the builder is moving on to. At this juncture, builders, much like relocating existing home owners, just “want to move on”.
- Consider buying the sales model, and if you wish, lease it back to the builder. Models typically have many upgrades, and superior craftsmanship. If a decorator furnished home is of interest to you, consider making an offer on the furnishings also.
