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Sales Considerations for New Construction

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

Helping a buyer purchase a home is one of the prime responsibilities of an agent. When a buyer wants to purchase a new home, there are special considerations that must be made. Learn what new home construction is and how it works.

What is New Home Construction?

Your friend, Isaac, is looking for a home in another state. He mentions that he has looked at five houses, but none have the features he wants. You suggest he consider building a home.

New home construction is a home or group of homes that are built and have not been lived in yet. A buyer may purchase a home after it is complete or he or she may choose to build a home and select the features, amenities, colors, etc. of that home.

Isaac is excited by this prospect. You suggest he find an area he likes in his town and see what new developments are available. After researching, Isaac finds an area that is just being built. He stops in to see a model home, which is a sample of the floor plan the builder is offering. Isaac loves the layout and decides to buy a home from the builder that is designed to his needs.

Builders' Expectations

When a buyer builds a new home, the construction company must work with the buyer to try to meet the homeowner's needs. Likewise, the builder may have requirements in building the home.

The builder may offer custom homes where each property is unique in the floor plan, layout, and construction. These homes are quite expensive but are built to the exact specifications created by the architect at the request of the buyers.

A more common type of new construction is spec homes where the builder has only a few floor plans that can be slightly altered depending on the buyer's needs. For instance, Isaac wants a covered patio in the backyard, a finished basement, and a specific type of lighting fixtures. These types of changes are typically available in a spec home. However, if Isaac wanted to change the layout of the entire first floor, the builder may not accommodate major changes to the existing architectural plans.

Spec homes are common in new home developments as they are fast to build, require less planning, and provide a uniform look to the neighborhood. Unfortunately, they can also look cookie-cutter, turning off some potential buyers.

The homeowners can usually pick the paint colors, carpet options, and other basic factors from a selection the builder offers, if the home has not yet been built. If the home is completed but not yet sold, the new buyer will likely have to pay for changes to the existing options, even though the house is still brand new.

In the event that the development is going into a raw piece of land, the developer will be responsible for grating and preparing the land for construction. This includes adding curb and gutter and running power, water and electric lines. Getting building licenses and passing city inspections are also the responsibility of the builder.

Reality of New Construction

After signing the contract to have a home built, Isaac is learning that there are some pros and cons to this way of doing things. The pros include the flexibility of picking his lot, choosing his floor plans, and customizing his home based on options offered from the builder.

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