Posted by: irene | November 25, 2009

New Builds – Understanding the basics

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Specs? Upgrades? Base prices? Custom? Elevations?

Options? Premiums? Do I buy my land?

Can I build this plan on my land?

What is a resale? Why do you have to accompany me?

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Last question first:  We have to accompany you on your first visit to a builder’s site or you waive your right to representation by a Buyer’s Agent.  Our services are at no cost to you, and you will pay the same for the home with us, as you will without us.     We are Realtorsâ working as Buyer’s Agents; our business is protecting your interests as you buy a home, if it is yet to be built or well lived in.

Because of the rapid growth in this area, land prices have shot up.  It is far more economical for a builder to purchase a large parcel and build a half dozen sets of plans over and over again, than it is to build one set of plans on a buyer’s own lot.  The utilization of work crews and contractors year round is far more efficient and the savings are passed on.  There are 3 or 4 different front designs for each set of plans, called   “Elevations” that are offered for each set of plans, this creates “ neighborhood” with no two homes looking alike next to each other.  These are the plans shown on our newhomes.com website.   Once you select a plan that you like, your next step will be to choose a lot on which to build it. The land price of a “standard lot” is included in the “base price” of the plan.   There will be some lots that are larger than others, some will have the yards facing different directions. The larger lots, or lots that the builder thinks are nicer than others, will have a “premium” added to the price, that premium will vary from $500 to more than  $100,000 if it is up on a mountain side, next to a wash, or a golf course or perhaps fronting a lake.

For a price, most of the builders will build their plans anywhere.  The price, however, will be far more than building on his land, with his crews right there.

After you have chosen your basic home plan, the elevation, and the lot location you will be able to visit the “design center” for the builder.   They have a wonderland of things you have never given a second thought to!  You will be asked if you prefer a single panel, a double panel, or even a six panel door in the home.  What kind of doorknobs do you like? How many extra electric outlets do you require? Where do you want the cable outlets?  How about ceiling fans? Flooring?  Kitchen and bathroom cabinets? Countertops? What kind of stair-rails? Stove? Fireplace? Pool?   All of   these are “options”.   As you change the items from those that the builder has included in the “base price”, you will increase the final price of your home.  For example vinyl flooring in kitchens and bathrooms is “standard” for most builders.  As soon as you want ceramic tile in those areas you have selected an “upgrade” or “option” that could raise your “base price” several thousand dollars.  The list goes on.

What is a “spec” home?  Because many buyers do not have the 6-10 months it takes to build from plans, a builder will build several of his most popular floor plans. The Builder will have to select the elevations, doorknobs and flooring, etc. He adds the price of these ”upgrades” to his “base price” and puts the home up for sale. These homes are built on the speculation that someone will purchase them, hence “spec” homes.  They are also referred to as “inventory” homes since they exist in the builder’s inventory.

The builder has sales!  Mostly at the end of the tax year.  These sales are recognized by the offering of large “Builder Incentives”!   The builder wants more sales activity so they offer a $5,000 to $25,000 “incentive” if you use their lender and buy their home!   The reason for using their lender is that it is probably a company partially owned by their corporation. They will be able to get that loan closed when they says it will be closed, and problems solved quickly, their main concern is selling that home and their employees will do everything to see that accomplished.  The rates are competitive, but the incentives they offer make it impossible for even your best friend who may be a loan officer, to compete.

Once a home has been bought and   lived in, it becomes a “resale”.  Most resales are found in the “Multiple Listing System” or “ MLS “ of the Realtor Associations.  At the time of “close out” of a neighborhood, when a builder is ready to pack up and move on to the next site, they will often list the completed unsold inventory homes with their Realtor as resales, although they have never been lived in.

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