Thinking of purchasing a new construction property? Here are six things that you should know about new construction before you consider putting down a deposit.
1. Some properties may not be listed on the MLS. Depending on the scale of development, developers may have their own in-house sales employees so the developers can have more control and cut costs. On smaller developments, they still tend to use real estate agents.
2. New construction properties are often sold before they’re built. A developer wants to sell as many units or properties before completion. A seasoned developer will generally have mapped out the construction and sales process. That said, if you’re one of the first buyers on the project, you’ll most likely be able to reserve the property at a lower price than those who purchased toward the end or after completion.
Additionally, if the developer provides different options on the finishes, it will typically be to the people that put reservations down early on, before they start making the big orders. When you go back and think about it, it’s a risk-reward situation.
3. Developers don’t have a personal attachment to the home. What do you think a developer’s main goal is? You guessed it—to make money. They want to sell the inventory and move onto the next project. What they’re really looking for are well-qualified buyers, and they set their prices based on inventory and how well the project is selling. That’s why they don’t release all the units at once, especially on larger developments.
4. Post-construction properties have more room for negotiation. If you’re thinking of purchasing before construction, then there’s probably little-to-no wiggle room in the price. However, after the property is completed, you may have more room to negotiate. Find out who the developer of the property is and what their reputation is like. Not all of them are trying to put one over on you, but there are some out there who decided to try to cut a few corners by using cheaper materials and disguising their work.
5. You should learn the history of the developer. They could just be a contractor who got a good deal on the property and just might be trying to flip it to make a quick buck. These people aren’t really developers; they’re not hiring a team to put the owner in a beneficial situation.
6. Be sure to work with an agent that will represent your interests. Because of certain shady tactics like I mentioned above, it’s really important to make sure that you work with an agent who has your best interests at heart. Your agent should be familiar with new construction, be able to negotiate, and have past experience working with the developer’s team.
Hopefully, this information puts buying new construction properties into a new perspective for you. If you have any questions or need representation in your own new construction venture, don’t hesitate to reach out to me. I look forward to hearing from you soon!