Whether to buy an existing home or have one built is yet another decision to make during the home buying process. Since this is a new home from a new home builder has some advantages over a buying a presale. The new construction advantages include home warranties, lower building insurance, sales incentives (ranging from upgraded kitchens to bathrooms) and closing costs (most (if not all) of the closing costs are included if the builder’s approved lender is used). If you decide to go with new construction, a real estate agent can be a powerful advocate in your corner as you negotiate upgrades, a move-in date and other terms with the home builder.
Below are some basic pointers to prepare you for the journey ahead.
Selecting a builder
Shopping for a large production or custom home builder can be a daunting task. Start by defining what architectural styles appeal to you and then seek out the builders in your area who offer those styles. Due diligence is essential. Unlike most builders, Lennar offer a home that has everything included. What does that mean for the buyer? In the case of upgrades, it is simply a matter of over pricing them above what you could get done from an individual subcontractor. I’m not saying that Lennar does not offer upgrades, but most of the “typical” upgrades in the modern home as “granite” countertops are included. Whereas, a lot of builder charge higher prices at their “design centers”. This is just something to think about when deciding on purchasing a home.
The builder representative and your real estate agent
A builder representative’s ultimate goal is to sell you a home. His or her role is to provide a wide range of information to help you in your decision-making, from building restrictions, roads and easements to inspections, warranties, rebates and upgrades. A real estate agent knowledgeable in new home construction will be able to help you wade through all the data and point out the downsides and upsides of each line item. Your agent also can look out for your interests in reviewing the builder’s contract, which often contains more legal jargon than consumer friendly language.
It’s all about timing
Market conditions greatly dictate a builder’s incentive to make a deal you cannot refuse. When a builder has inventory on his hands, his carrying costs start adding up. When this happens, a builder might be more amenable to strike a favorable deal, whether it’s throwing in upgrades or taking a bit off the asking price. A real estate agent can help you know when market conditions are right for these benefits. Also, watch for builder close-out sales. Builders promote these special events when a new subdivision is near completion but empty inventory still remains. While there are always exceptions, most builders require a deposit when a purchase agreement is signed. They also require that the buyer pay for any upgrades prior to closing. If you back out prior to closing, unless the agreement states otherwise, you will lose that money. Make sure you understand every detail in the builder’s contract before signing it.
Home prices are still very affordable in the Tampa Bay Market. This is especially true for “Spec” (speculation) homes, which are often the best places to get the best deals. These homes are built by builders without an intended purchaser in mind (Hence the builder is speculating that they will find a builder to buy the home). For example, I have client that just purchased a new 3,210 square foot, five-bedroom, three-bath, three-car garage home for about $260,000 (a reduction of almost $20,000), or $81 per square foot. This home was purchased with a VA loan, which was 100% financed with a fixed interest rate of 3.75% with a payment of only $1,455 per month (including principal, interest, homeowner’s insurance, property taxes, and CDD fees totaling $262 per month). The only additionally fee that is not escrowed would be a quarterly HOA of $184.
Thinking of buying or selling real estate?
You should consider using a realtor. If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida 33511). As a life long resident of Central Florida, I can help you find the right property for you whether it is in Lakeland or as far south as Sarasota. The Keller Williams offices of ”Suburban Tampa” include the offices in Brandon, Plant City, Fishhawk Ranch, and our newest office in Valrico. My email address email@example.com, or call me at 813.205.9280. If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.