If readily available in your desired market and financially harmonious with your budget, the decision to buy a new construction home almost seems like a no-brainer, right?
After all, that new car smell really pales in comparison to that new home smell, and pre-owned goods aren’t everyone’s cup of tea. It’s important to understand, however, that just because it has that new home smell, there are still things you need to look out for to make sure you’re making a sound investment.
Here are five things to keep in mind if you’re considering purchasing a new construction:
The model home isn’t standard design for many builders.
Understand all your financing options.
Asking questions is important.
Your timeline might affect your options.
Having your new home inspected is still a good idea.(Video) Matchbox Twenty - If You're Gone (Official Video)
1. The model home isn’t standard design for many builders.
When you’re shopping newly constructed properties, chances are you’ll tour a model home at some point. These homes basically function as interactive showrooms that are gorgeously outfitted with the more premium upgrades a builder has to offer. Their purpose is to demonstrate the customization a builder offers by allowing buyers to experience the full design potential of a home.
Before you get too lost in a model home’s beautiful design, it’s imperative to remember one thing: model home configurations aren’t usually reflected in base sales prices. That’s because most base prices are based on the homes featuring “builder grade” options, aka less premium materials and finishes.
Luckily, the design options of a model home are typically very flexible. Much like buying a new car, you can decide which upgrades you want to add to the base configuration and which you don’t. Unlike buying a new car, where the value decreases the moment you leave the lot, adding premium elements to your home’s design can actually increase its value. Just be sure to consult your budget before making any final decisions.
2. Understand all your financing options.
In addition to offering a home that’s custom built for you, many builders also have representatives on-site who can assist you with every step of the process, including the crucial step of finding a lender.
“One of the most important steps on the road to purchasing a home is to complete a pre-qualification,” says Josh Andrade, a Lennar New Home Consultant based in Dallas-Fort Worth, TX. “Your budget and purchasing power will determine your time frame, areas you will be looking at, and starting price point.”
Top homebuilders often have a network of reputable lenders to whom they can refer you. Take time to understand the different loan options that are available to customers who purchase a new home, such as conventional, FHA, Jumbo, and VA loans. And don’t hesitate to speak to multiple lenders. In a 2018 study, Freddie Mac found that borrowers could save an average of $3,000 over the life of a loan by getting five rate quotes.
“Most new construction pricing is not calculated by square feet but by what is inside the home,” Josh adds. “Sometimes people underestimate their readiness to purchase a home and believe that they are a few years out from their dream home when in reality they could be ready now and take advantage of the current market.”
3. Asking questions is important.
You won’t actually be able to see the finished product until, well, it’s finished. So it’s important that you ask questions along the way. This keeps the dialogue between you and builder open and the process transparent. Lapses in communication can lead to misunderstanding which can lead to misaligned expectations.
“What I would recommend is not only doing your research about the location and homebuilder, but also feeling comfortable with the salesperson and asking to meet the superintendent,” says Tom Watkins, New Home Counselor at Mattamy Homes in Phoenix, AZ. “Walking job sites before buying is important, as a clean job site is a sign of a superintendent who cares and is dialed in!”
Mistakes happen on all homes, but much less with superintendents who walk their homes regularly and communicate well with the trade partners and their customers. —Tom Watkins, Mattamy Homes
Asking questions about the builder’s past work, financing, and scheduling plans is fair and actually quite common as well. Doing so will not only help you better manage your expectations around the process, costs and timelines, but it will also help put your mind at ease as you wait for your dream home to come to fruition.
To give you a sense of where to start, here are a few common questions to ask your builder:
What are the builder’s other projects?
What percentage of the units/properties/plots have sold so far?(Video) How to sell your home easily as soon as you're ready.
Who is your point of contact during the build?
Which features are included and which are upgrades?
What happens if there’s a delay in the schedule?
How often will you be able to view the home during construction?
Don’t be afraid to do a little research on your own time. You can search for reviews of the builder online or even do a drive-by of any of their previous projects to get a sense of their reputation and the quality of their work.
4. Your timeline might affect your options.
While a model home might not technically be considered a new construction in some cases, purchasing one would still mean you’re the first person to live in it. That’s right, depending on the status of a development project, you might be able to snag a model home (premium upgrades and all) for a deal. Once a certain percentage of units in a development have been sold, the builder is likely to want to offload the model home as every day it sits vacant on the market, the builder loses money. It’s a great option for buyers in a time crunch as it means you get a fresh new home that’s turnkey ready.
Speaking of timelines, building a home from the ground up can be an excellent option for buyers who are looking to buy but aren’t in a hurry. Factors ranging from weather conditions at the build site to delays with building materials all affect the timeline of completing a custom built home. Typically, the average new construction takes anywhere from 7 months to just under a year to complete. This could be great news if you’re only 5 months into a 12-month rental agreement. You can break ground on a new home without breaking your lease agreement. Who doesn’t love a win-win?
Speaking of a winning situation, Opendoor actually offers flexible closing dates (up to 9 months) and a late move out grace period of up to 2 days for Opendoor customers who buy a new build and sell through our homebuilder trade-in service.
5. Having your new home inspected is still a good idea.
It may come as a surprise to many buyers, but even new constructions can have structural issues. Hey, mistakes happen. This is why it’s always a good idea to have any home you purchase inspected by a licensed professional before closing.
“The homebuilder will handle city and county inspections, and typically employs their own third party quality control company,” says John DiCristo, Keller Williams Ballantyne Area REALTOR® who specializes in new construction. “That does not replace a licensed inspector though, who will perform an inspection before drywall covers up any mistakes, and a final inspection checking all finishes and mechanicals.”
Just as they would with a previously-owned home, the home inspector is there to verify that the property is safe and up to code. If any of the work done is not up to par, the inspector will include it in his report and suggest a remedy. You’ll then have the opportunity to bring your concerns to the builder and negotiate a fix.
Whether you want to be the first to leave you mark on a home or simply want to personalize your personal space, there are countless reasons you might decide to purchase a new construction. Regardless of those reasons, the fact remains that the homebuying process can be a bit tricky. That means it’s important to be as diligent and thorough when buying a shiny new home as you would when buying one that’s “gently used”.
Affiliation Disclosure: Please be advised that a member of Opendoor’s board of directors is also a member of Lennar Corporation’s board of directors. Because of this relationship, transactions with Lennar may provide Opendoor a financial or other benefit. You are NOT required to transact with Lennar as a condition of working with Opendoor. THERE ARE FREQUENTLY OTHER PROVIDERS AVAILABLE WITH SIMILAR SERVICES. YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATES FOR THESE SERVICES.
How accurate are Opendoor preliminary offers? ›
Opendoor's preliminary offer is usually 2-5% higher than the company's final offer, so it's good to think of your preliminary offer as an estimate. That's because the "instant" cash offer is an estimate based on information you provide Opendoor about your home's size, age, and features.Does Opendoor do a final walkthrough? ›
One of the advantages of selling to Opendoor is you don't have to worry about a buyer qualifying for financing; you get the certainty of a competitive, all-cash offer. The final walk-through typically occurs 24 hours before closing.How do you stand out at an open house? ›
Tell a short story about yourself, or ask the agent about their family or how they got started in the real estate business. Make a genuine effort to get to know them in the short period of time you spend at the home. Agents are people too, and people remember those who make an effort.How do you get a higher offer on Opendoor? ›
- Providing Opendoor with receipts for renovations and repairs. Proof of improvements you've made to your home increase the chance that Opendoor will raise its offer.
- Requesting offers from other iBuyers in your area. ...
- Getting a comparative market analysis (CMA) done on your home.
According to their website, Opendoor will use that information to make you a preliminary offer within minutes. If you want a more accurate offer, you can send pictures or conduct a video walk-through of your home. If you choose to accept their offer, Opendoor will schedule an inspection.What credit score does Opendoor use? ›
At Opendoor Home Loans, our goal is to make the financing process easier, more certain and more affordable. Depending on your financial situation and your home's value, we have options that require only a 620 credit score and as little as 3% equity.Why do Realtors not like Opendoor? ›
Opendoor can sometimes price homes below market, which some sellers may not realize if they are unfamiliar with the housing market. They may also not know how to negotiate repair costs and spend far more than they would if they had listed their home with a traditional Real Estate Agent.Can you negotiate Opendoor final offer? ›
Yes, Opendoor will negotiate offers. Our counteroffers do come by email and we will negotiate by email and/or phone until an agreement is reached.Can Opendoor back out of contract? ›
You'll know how much you'll have to spend on your next house, and you get to set the closing date. There's also no obligation–you can cancel your contract at any time before closing at no cost. Learn more about our pricing and how selling to Opendoor works.Should you play music during an open house? ›
“Having some soft, soothing music playing at an open house does help with the sale,” says Michelle Galli, a listing agent with Century 21 M&M in Los Banos, CA. “It gives the prospect a calm, relaxing feeling … so they can picture themselves in the home in serenity.”
Does it matter what you wear to an open house? ›
Wear a Comfortable + Appropriate Outfit
It's not a fashion show so leave the Armani suit and Jimmy Choos at home. That said, a tank top and Daisy Dukes are inappropriate. Keep it reasonable. Plus, you're going to do a lot of walking through rooms and up and down stairs so wear comfortable clothes and shoes.
An open house restricts viewings of your property to a few hours on a single day. It's an alternative to individual appointments stretching over several weeks or months. It may be that anyone can drop in during that time slot or an estate agent will book back-to-back appointments.Do home sellers always pick the highest offer? ›
But do sellers always accept the highest offer? The short answer is no. While the offer price is certainly one of the main things the seller will look at, it's not the only thing that matters. Savvy sellers (and sellers with smart Realtors) know that they need to consider the entire offer, not just the price.Can you ask what the highest offer is on a house? ›
Asking for a highest and best offer might push the buyer closer to your target sales price, because it shows there's real interest in the property. In negotiations, buyers won't typically start with their highest offer with the goal of leaving a little wiggle room.How does Opendoor late checkout work? ›
You'll need to move out (along with all your belongings) by 11:59 PM the day before your close of escrow date. If you've opted into our Late Checkout program, you'll need to move out (along with all your belongings) by 5:00 PM on the last day of occupancy you selected in your Late Checkout agreement.How long do you have to move after selling to Opendoor? ›
We offer a Late Checkout program that allows you to stay in the home for up to 17 days after you close.Which is better Zillow or Opendoor? ›
Remember: Zillow is optimized around home buyers, while Opendoor is optimized around home sellers. The bottom line: With similar conversion rates, neither company has built a better mousetrap, but Zillow's mousetrap is exponentially larger.Is it better to use a realtor or Opendoor? ›
If you want to get the most money for your home and have it marketed to the right buyers, you need to hire a traditional real estate agent. Opendoor is only a good option if you need to unload your property super-fast and you're willing to sell it for much lower than the fair market value.Is Opendoor a Chinese company? ›
Opendoor Technologies Inc. San Francisco, California, U.S.Does Opendoor have hidden fees? ›
Transparent pricing, no hidden fees. Whether you're working with Opendoor to sell or buy a home, we'll help you understand the costs up front.
Is Opendoor shutting down? ›
The pandemic put many of our competitors out of business, and while we persevered, we ultimately have not been able to continue to finance our business and coliving projects. Faced with this stark reality, we have come to the difficult decision to shut down our operations.Is Opendoor laying off employees? ›
Opendoor is letting go of about 550 people, or 18% of the company, across all functions, its co-founder and CEO Eric Wu announced in a blog post today. The real estate technology company is one of many property technology (proptech) companies that have had to lay off workers in 2022.Is Opendoor owned by Zillow? ›
Zillow and Opendoor were once competitors in the iBuying space. Now they're teaming up. The companies said Thursday they've formed a multi-year partnership to essentially feed Zillow users to Opendoor's iBuying platform by allowing sellers on Zillow to request an offer from Opendoor to purchase their home.What happens if the buyers change their mind after having an offer accepted? ›
Backing out of an offer for a non-contingent reason means you risk losing your earnest money. Since you put that money down based on the promise that you would follow through with the contract, backing out for any reason that's not outlined in the agreement means the seller is legally permitted to keep your money.Can I change my closing date with Opendoor? ›
Not a problem. You can change your close date right from your dashboard. Depending on how close you are to your existing close date, you may need to request a Late Checkout so you can stay in the home after your sale. If you need help, feel free to connect with your Customer Experience Partner.How do I get out of Opendoor contract? ›
Your client can cancel the contract at any point prior to close of escrow without penalty or fee. If things change and they no longer want to proceed with the sale, just send an email to your dedicated experience partner letting us know you need to terminate the contract.Can Opendoor change their mind? ›
We deduct repair costs from your net proceeds, not your pocket. You're in control. You'll know our repair ask and your estimated net proceeds before closing. If you change your mind or disagree with our repair request, you can walk away with no penalty prior to close.What happens if a seller pulls out after exchange of contracts? ›
Pulling out after exchange of contracts
The vendor may serve a notice on you requiring you to complete and pay the vendor's additional legal costs. You may also have to pay interest on the unpaid purchase price.
The seller can decide to back out after exchange has taken place however doing so will mean they have breached the terms of the contract which will result in additional costs payable. From this point, the buyer will be able to issue a notice which requires the seller to complete within 10 days.What is the best day for an open house? ›
Most of the top realtors agree that weekends, especially the first Sunday after your home is listed, is the best day for home sellers to hold an open house. This is because most of the potential home buyers are off from work on weekends, thus making Saturday and Sunday the best days for holding an open house.
Should you have refreshments at open house? ›
Granted, no one is going to buy a home based on how good the refreshments are at an open house. However, a nice spread can give the impression that the property is classy and is worth the visitor's time. Moreover, strategically placed refreshments give the agent time to interact with guests.What should you look for when walking through an open house? ›
Look carefully at the baseboards, especially in the basement. Any signs of staining or warping can indicate past flooding or burst pipes. Stains on the ceiling can indicate a leaking roof. Pay attention to your nose as you walk through; if a room or area smells musty, it might indicate mold or mildew.What questions should I ask at an open house? ›
- Why is the house for sale? ...
- How long has the house been on the market? ...
- How many offers has the seller received? ...
- Are there any structural issues with the home? ...
- Has the seller made any DIY renovations? ...
- When was the home last updated? ...
- What's included with the home sale?
Appropriate Closing Day Apparel
Choose crisp shirts, quality suits, and conservative shoes. Be ready to sit at a table with well-dressed professionals who are prepared for business to gain your client's trust and make them feel comfortable about your abilities.
It could be the listing agent, a neighbor, a buyer's agent, or even the seller. But one thing is certain—you don't have to ring the doorbell or knock on the door unless there's a sign posted instructing you to do so. Otherwise, open the door and walk in.Do open floor plans increase home value? ›
So, will an open concept design help or not? Real estate experts agree that an open layout can increase the resale value of your home. In fact, some houses sell for as much as 15% more than sectional floor plans. And if the work is good, homeowners can make an even bigger profit.Why open houses are not as effective? ›
Over 50% of agents who hold open houses do it only for the prospective clients. Buyers aren't being helped by an open house, they can see everything online or schedule an appointment. Sellers aren't being helped either. As you'll see in the next section, open houses don't result in sales.Are Opendoor offers accurate? ›
Yes, Opendoor is a legitimate company. Although Opendoor may not pay your home's full market value, it makes all-cash offers that allow you to close on your sale in as few as 14 days.Does Opendoor give competitive offers? ›
And homeowners who are looking to sell their existing home can get a competitive, all-cash offer from Opendoor. We can even line up the sale and purchase in one seamless transaction. Here's how Opendoor works.Can Opendoor rescind offer? ›
There's also no obligation–you can cancel your contract at any time before closing at no cost. Learn more about our pricing and how selling to Opendoor works.
Are there hidden fees with Opendoor? ›
Transparent pricing, no hidden fees. Whether you're working with Opendoor to sell or buy a home, we'll help you understand the costs up front.Who pays more Opendoor or Offerpad? ›
Offerpad: Which one is better? Opendoor's median purchase price is typically a bit higher than Offerpad's, according to a 2021 analysis of iBuyer purchases in Phoenix (one of the largest markets for both companies).Which one is better Offerpad or Opendoor? ›
Overall, Opendoor is a better pick than Offerpad in most cases, especially when you consider Opendoor's more favorable review scores and more cost-effective service fee model. Of course, if you're looking to sell, there are alternatives to the iBuyer model, including low-cost real estate marketplaces like UpNest.Is selling house to Opendoor a good idea? ›
Opendoor may sell your home quickly, but you will pay a considerable premium for that service. You may also miss out on buyers willing to pay far more for your home than Opendoor. While working with a Real Estate Agent, you also can work with Opendoor at the same time to see which works better for you.Can a seller accept two offers? ›
In general, the seller can't accept another offer once all parties have signed the purchase agreement; however, detailed situations and state laws may vary. There are situations where you might think your offer has been accepted, but it actually hasn't.Can you outbid a pending offer? ›
When a home is pending, you can no longer try to outbid another buyer for the property. Your chance to buy the home has most likely passed, unless the sale falls through, an unlikely but not impossible event. Answer box: When a home sale is pending, it means that the sellers have accepted an offer from a buyer.How does Opendoor late check out work? ›
You'll need to move out (along with all your belongings) by 11:59 PM the day before your close of escrow date. If you've opted into our Late Checkout program, you'll need to move out (along with all your belongings) by 5:00 PM on the last day of occupancy you selected in your Late Checkout agreement.