Friday, October 15

How Does Buying a Newly Constructed Home Work?

New homes are good news for the housing market, and even better for new buyers. In the U.S. at the current time, experts largely agree that we are living though a “seller’s market”, meaning that demand at the moment is slightly exceeding supply. But this does not mean that there are no new-builds on the market for first time and experienced home buyers alike. For example, CityHome Collective in Salt Lake City has many new developments in sought-after locations, and as the construction industry picks up following the pandemic, the supply of such homes is estimated to rise. We may be in a seller’s market for now, but not for ever.

If you find yourself in a position to purchase one of these newly constructed homes, you may be wondering just how buying a home that has had no previous owner works. Indeed, that is the most fundamental difference between buying a home from previous owners and buying a home direct from a developer. Purchases of this kind actually make up the minority of new home transactions, and most people are far less familiar with transactions of this kind than they are with the far more common method of purchasing from a home’s previous owners.

Indeed, buying a newly constructed home is in many ways a different ball game, but there are other ways in which it is business as usual. So how does it work? Do you still need representation? Can you negotiate the price to the same extent? In other words, how does buying a newly constructed home work?

The Different Types of Newly Built Homes

There are actually two different kinds of newly built homes that you can potentially purchase on the market today.

Custom/Semi-custom

This is by far the most expensive method, but it also allows you a great deal of creative control. Purchasing a custom-built home is a matter of buying the plot of land, hiring a builder and architect, and thereby having a say in every aspect of the construction.

Semi-custom naturally affords you less choice and usually involves buying from a developer working in a specific area but before the house is actually constructed. There is some leeway, but choices are more restricted.

Spec or Production

This is by far the most common situation, and it involves finding an existing but brand-new home on the market and then purchasing it from a developer. There is little room for customization here, but of course you can pick and choose which home to buy.

Do You Need a Real Estate Brokers?

Yes. When purchasing a new-build you still require representation. A buyer’s agent is still essential to ensuring that all your home-owning demands and preferences are met. They typically have an in-depth knowledge of the market for newly constructed homes across the area and can ensure that you are not paying over the odds. A buyer’s agent can also advise you on all the additional concerns such as the quality of the neighborhood, picking the right lot within a complex, and pushing for the modifications that are very often possible with new homes.

Is There Still Room for Negotiation?

Going with a legitimate real estate agent will also help you make the right offer for the home, as this is something that will still apply for a newly constructed property. The condition of the home, of course, can be expected not to be an issue, and so negotiation on these grounds is limited, but you can still make a competitive offer for a new home. The price is not static.