There are two major types of homes you can buy – resale and new construction. Each comes with its own benefits, expectations, and conditions for the purchase process, and deciding between the two should rest solely on the buyer’s needs and wants. One of the major differences between buying a resale home or buying a new construction home is the negotiation process. Before making an offer on a new construction home, a buyer should have a clear understanding of this, because their own expectations can affect the final sale price.
Before the recession, amazing things were happening in the real estate market. Were they all good? No. Otherwise, the recession probably wouldn’t have happened. What’s really important is to note that the deep plummet the market took during the recession caused a lot of changes and sometimes buyer expectations are still stuck pre-recession when there was a lot more equity and profit to work with.
When the recession occurred, a lot of builders, craftsman, and carpenters either went out of business or were forced to cut their workforce and projects. As the real estate market recovered, new jobs and projects were slowly added, but much of the workforce had already moved on to other careers. This put a cramp in their ability to meet demand as markets started to heat up. To sell homes, they had to greatly cut their prices and their profits, which reduced the income they could invest in new projects. This slowed new construction starts and the recovery of the real estate market.
While the new construction market continues to improve, builders are still taking a strict approach to how they price and sell homes. This is why there is little room to negotiate on the purchase price of a new construction home. They have a specific value per cost of materials assigned for every feature included in the home, and they rarely stray from it. However, this does not mean there aren’t any deals.
Depending on the stage of construction the home is in, changes may be able to be made to the materials and fixtures used in the home, as well as the included features. Opting for a slightly different floor plan, countertop, chandelier, etc. could lower the price of the home while still providing the buyer with the benefits of a brand new home. The builder’s sales rep will be able to provide an explanation of all available options.
Builders also sometimes provide buyer incentives. These are usually contingent upon changes in material costs, profits, and their partners. The incentives may include paying closing costs if a preferred lender is used, providing free upgrades on specific inventory homes, giving gift cards to home stores, paying HOA dues, etc. Some incentives are provided long-term, others are part of monthly promotions. Realtors are usually notified of promotions by the builders, so make sure you ask yours if they know of any current deals.
If you’re interested in buying a home in the Wilmington area, give us a call at (910) 202-2546 or send us a message through our Contact page. We’d be happy to discuss your options. We handle both resale and new construction purchases.