New Opportunities in New Construction
There is no doubt that with the changes in construction lending and the natural absorption of completed homes, Houston will soon be facing a shortage in completed new homes. With this change we are offered the chance to focus more on building a home that fits our buyer’s personality and needs rather than making them adjust their needs based on what is already built. While this change in the market will benefit the buyer, it will require some more understanding of the building process and setting the right expectations.
Homebuilding is a very unique industry in many ways but by far the biggest is that we are essentially the only producer of high priced commodity whose “factory” is open to its consumers during assembly. Imagine taking a trip to Detroit and asking to see your car on the assembly line! In addition to this transparency, the industry is subject to a number of factors including weather, material shortages and other factors that influence delivery time.
So as we gear up for building more homes and going through this process together, there are some expectations we need to set for ourselves and our clients to make for a pleasant consumer experience.
Here are the most important:
- Thoroughly compare the features and value proposition of each builder. Very few homes with the same features and construction methods are priced differently. Price differential is usually attributed to differences in standard features. Another important factor in looking at the model is to get a comprehensive list of exactly what is included and which items are upgrades. Please note that all non standard items will be documented on a change order which will usually be added to the final price unless the buyers choose to pay them outside of closing. Prepare a side by side comparison of the builder’s features for an accurate evaluation. Please also assign value to energy efficient homes as they reduce operating costs.
- Ask the builder about the financing programs they offer their buyers. Many of them can offer attractive options such as lower interest rates, more flexible guidelines and even a one time close – where the buyers secure their financing in a construction loan. This helps the buyers by locking in their interest rate before construction and provides financial benefits such as writing off the interest. This type of loan helps builders by not stretching their lines of credit by not taking on the financial burden of a construction loan.
- Help set an accurate closing estimate. Due to a number of reasons beyond their control, builders are hesitant to give a definite closing date more than thirty to sixty days before completion. Please help your client be prepared for all possibilities including getting lease extension options, gauging the correct time to put their home on the market, and the best case scenario, moving into temporary housing when you sell their current home quicker than expected.
- Finish quality should be consistent throughout the community. The builder’s benchmark of quality is usually their model and your clients should expect their homes to be completed with the same attention to detail.
- Stay in the game – make sure you are updated of the progress of the home on a regular basis either from the builder, the client or even better, by scheduling onsite visits. For out of town buyers, it is especially impressive to give them weekly updates along with pictures or videos of the progress. I recently had a couple who were both doctors that were disappointed about missing their slab pour. I broadcasted a live stream of it from my phone to www.qik.com and they were able to experience it firsthand.
- Schedule a final walk time with your clients before the final builder walk. This will give you a chance to point out any issues you might see as well as speak with your clients about their concerns. While most REALTORS® are not licensed inspectors, buyers feel a sense of comfort knowing the home “has your blessing.” By doing this before the builder’s final walk, this gives you a chance to bring up any concerns before it is too late and limits your potential conflict with the builder.
While these six suggestions represent a good start to ensuring a pleasant building process, please visit your local builders to learn how their building and financing programs can meet your client’s needs. Selling new construction is much easier than is seems and offers many advantages for the REALTOR® and the buyer.