Assisting Buyers in New Construction and Flips: Navigating the Process
New construction and flipped properties are significant categories in the real estate market. As a buyer's representative, it is crucial to understand the intricacies of these processes, how to navigate them, and what to look out for. Having assisted numerous clients in purchasing new construction properties and developing projects myself, I have gained valuable insights into what buyers seek. In this blog, we will explore the buyer's perspective, the importance of customization, red flags to watch for, and effective strategies when pricing and negotiating for new construction homes.
Customization and Red Flags
When it comes to new construction, developers strive to present market-ready homes that appeal to most buyers. However, every buyer has their own preferences and desires for customizing their new home. It is essential to assist buyers in asking for value-added features that align with their vision. While most developers aim to meet these customization requests, it is crucial to be aware of red flags such as poor design choices by some developers. Engage with the developer and discuss any desired additions or modifications, even if they come with an associated cost. Ultimately, the goal is to ensure the buyer feels comfortable and satisfied with their new home.
Pricing New Construction Homes
Pricing new construction homes can be compared to the new car vs. used car analogy. Buyers should understand that new homes come with a premium price. This premium reflects the value of owning a brand-new property with the latest features and materials. As an agent, it is essential to educate buyers about this premium and help them feel comfortable with the pricing.
Working with Builders and Flippers
When dealing with large builders or flippers who develop multiple properties in a community, there may be limited flexibility regarding upgrades. These builders typically provide upgrade lists with specific prices for various features, such as lighting, flooring, counters, and more. Buyers should be aware that these developers aim to maximize profit from every customization request. Therefore, it is crucial to keep buyers grounded and prevent them from exceeding their budget by adding too many upgrades. Overpricing the home with excessive upgrades can also negatively impact its resale value and market appeal.
Due Diligence and Research
Before proceeding with a purchase, it is important to conduct thorough due diligence and research on the developer or flipper. Start by asking for the builder's name and inquiring about their previous projects. It is beneficial if the developer has worked with a reputable real estate broker. Additionally, reaching out to references and conducting web searches can provide valuable insights into the developer's track record and reputation. Look for positive reviews and signs of satisfied homeowners who have stayed in the properties for an extended period.
Checking Permits and Quality
To ensure the property meets quality standards, always ask for permits. Reputable developers should have proper permits and adhere to local building codes and regulations. This verification process confirms that the developer used reliable tradespeople and completed the project correctly. By confirming these details, buyers can proceed with confidence, knowing that their investment aligns with established standards.
Effective Negotiation and Customization
When negotiating with developers, it is essential to request a spec sheet that outlines the property's features and brand names of materials used. This information serves as a starting point for customization discussions. When touring the property, pay attention to exterior details, such as landscaping, low voltage lighting, gas lines, water lines, electrical outlet locations, and jbox locations. Customized closets, appliance upgrades, and kitchen and bathroom enhancements can also significantly enhance the buyer's experience. Buyers should compile a list of desired upgrades and discuss them with the developer during the negotiation process.
As a buyer's representative, you possess the knowledge and insights to guide clients through these intricacies. By educating them about these considerations and helping them make informed decisions, you can ensure a successful and fulfilling buying experience for your clients in the world of new construction and flipped properties.