Magnifying glass on a houseHow can an existing home compete for buyers against the builder in the same community?


Selling a property in a development -- such as those in Dublin CA --- where the builder is still building more houses can be challenging. After all, why buy a “used” home when one can buy a brand new house and select your own upgrades and finishes?

The most important and most competitive factor is PRICE. Underprice a little under the price of the new homes, and it should stimulate interest among value hunters.


There are benefits to buying an existing home -- and we should share these with the potential buyers. Here are some thoughts on how we can compete in this situation, assuming conditions being nearly equal (same development or immediate area, homes are close in age, style of homes).

New Home Existing Home
Brand new -- buyers have to wait 3-6 months for property to be built Home is ready for occupancy. Move in, now!
Interest rates may change Buyers can lock in lowest interest rates now!
Builder wants to use own contract, prepared by their own legal team, and which favors builder Buyers can use the standard purchase agreement from State's Association of Realtors in conjunction with the State's Department of Real Estate. The agreement is intended to be fair to the buyer, the seller and their agents.

No room for negotiations.

Buyer and Seller can negotiate terms --- days to close escrow, inspection contingencies, loan appraisal and approval contingencies.

Negotiate what stays with the property, etc.
Unknown repercussions if buyers change their mind. Too many horror stories about buyers who put a deposit down, and tried to back out, but couldn’t without losing their deposit. Standard period of inspections/investigation loan appraisal, loan approval (in California) is 17 days. Under most circumstances, Buyers may choose to back out anytime before contingencies are due, and still get their deposit back

Buyers can choose options and upgrades

Cost of specific upgrades are priced a la carte. Don't forget cost of window coverings, landscaping and appliances.

But in the course of construction, if buyers decide to make some changes, there are charges for each change, and may even have restocking fee

 

Seeing the finished product will enable Buyers to get more ideas about inexpensive changes to the property.

Paint is the least expensive improvement. Consider putting down wood floors or replacing carpet.

Landscaping adds substantial value to the property.
New homes have builder’s warranty Seller can offer 1-2 years home warranty from warranty companies that have a multitude of options and coverage.

There may or may not be actual models of the builder's plans.

Buyers have to choose their plan and elevation based on pictures, drawings, room measurements

Home is finished.

No guessing game as to how it could look and how big the room spaces really are.

See for yourself how it is oriented on the lot -- how much light is streaming in, what kind of views do you have?


And let's not forget the other basics of selling property. See

Preparing a house for sale: Do the C’s to get the most C (Cash)


 
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23 Comments on How can an existing home compete for buyers against the builder in the same community?

20 Most Recent Comments Displayed Show All

MAY
20
2012
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Karen --- good idea...

...but I guess it depends on what the builder is offering the buyer. In our area, especially since we are back to multiple offers/bidding situations, they don't offer much. Maybe ONE upgrade to granite counters in the kitchen.
9:43pm • #4
762,151 Points 106 Featured Posts Outside Blog Called Shot Master

Pacita, this is always a challenge especially in neighborhoods with lots of builder inventory. You suggestion to price a little below is the key to getting a home under contract.
10:12pm • #5
275,838 Points 2 Featured Posts Localism Sponsor Hit Router Attended Rain Camp Called Shot Master

Great post, Pacita!  Although your list is quite thorough, I think you missed one MAJOR advantage the seller of a home that is not absolutley new is the landscaping. An existing home with three or four year old trees and shrubs shows considerably better than a brand new home.
11:04pm • #6
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Tammie -- I faced the same problem when I tried to sell my house in an Orlando development where the association even forbade for sale signs,

John --- absolutely true. Mature landscaping contributes so much to curb appeal.
11:16pm • #7
230,369 Points 9 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Selling an existing home when you're competing with a builder in the same neighborhood always presents challenges.  You've made some really good points here so if the price is based on comparable sales, you might even have a little bit of an advantage.  Buyers often forget that almost everything they want is an upgrade and additional cost from the builder.
11:20pm • #8
MAY
21
2012
2 Featured Posts

Great points.  Thanks for sharing.
1:14am • #9
545,171 Points 120 Featured Posts Called Shot Master
Pacifa. Having bought both types of homes, I vote for finding a really good used home with the deck and fence finished, window treatments installed and all the recalls to the builder to fix and complete the home done!
3:20am • #10
652,405 Points 70 Featured Posts Outside Blog Called Shot Master

Wow!  Great points!  I am going to save this blog.                                                                                                          
5:18am • #11
937,490 Points 51 Featured Posts Called Shot Master

The scenario of marketing a newer home in a subdivision still in the process of being developed, can be a challenge.  Afterall, the builder is providing absolutely new, with new home warrantly, choice of colors and upgrades, and often new home incentives.  But still, it can be done, using the points you mention.
7:34am • #12
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Doug -- thanks. Buyers are often treated to the vision of a fully staged and fully upgraded model home, not realizing that every upgrade will raise the base price.

Eric -- thanks for the kind words.

Valerie -- I've done both, too. And I must say I like the idea of finding a really nice "used" home with mature landscaping. A lot easier than starting from scratch where everything costs something more than expected.

The Christiansen team -- glad you like this blog.

Myrl -- I'm sure all agents like you have more to add to the list :)
8:05am • #13
966,626 Points 60 Featured Posts Outside Blog Called Shot Master

Pacita, may I suggest that you remember that all markets may be very different?  In the Fort Worth new home market (for production homes)... builders not only compete by making features standard that others have as options, but almost all of them also offer an options allowance of anywhere from $10,000 to $25,000 in n/c options to upgrade the home and NOT raise the price.  That is in addition to the builder usually paying almost all of the buyer's closing costs, and prepaid interest.

Yes... in new homes, too... all markets are different.
8:21am • #14
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Karen -- I updated my blog to specify Dublin CA. For the most part, though, the possible come-backs for selling against a new home may still apply. Thanks.
8:37am • #15
966,626 Points 60 Featured Posts Outside Blog Called Shot Master

Pacita, not to worry... I totally agree with you.  I was just adding in some info from my personal experience.  Hope I did not offend you.  It's just that the Fort Worth/Dallas new homes market is pretty hot right now.
9:00am • #16
340,003 Points 8 Featured Posts Outside Blog Called Shot Master

Too late to suggest but bookmarked. I had this exact situation when I was selling an HOA years back. Great list of pros from both sides.

 
10:19am • #17
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Karen -- I take good advice any time :)

Jill -- for every pro, there has to be a con :) as it is with debating.
5:08pm • #18
MAY
22
2012
485,145 Points 52 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

We don't have this type of problem in my area because there are no subdivisions.  But I have often thought if I had the choice of buying new vs resale, I would choose new.  You have outlined exactly why this may not be the right way to go.
2:28pm • #19
966,626 Points 60 Featured Posts Outside Blog Called Shot Master

Margaret:  Only YOU can decide what is the "right way" for you to go.  Just as every market is different, every buyer is different as well.  Obviously, the best thing to do is to explore both options, and see which one puts a bigger smile on your face... and builds the most excitement.

Having all the shrubs and landscaping in... when you buy an existing home, might be great for some folks, but others may look at that same shrubbery and think... "oh, no... I gotta pull all that stuff out, and put in stuff I like."
5:16pm • #20
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Margaret --- to each his own. I've done both. Had fun buying homes to be built, but there were so many decisions to make, down to the choice of toilet paper holder. One time, the plan called for 4 floor to ceiling windows. But when it was framed, I preferred having 5. So I had to pay fot the change. And then on another new house, I landscaped the yard myself -- back breaking work!

Karen -- how true about landscaping. For one of my former houses we bought in Orlando, they had palm trees with the thorniest fronds next to a pool. We had to pull all that out and we ended up being severely cut and pricked in so many places. Also pulled out oleanders that seemed to attract hundreds of hungry leaf-eating caterpillars.
5:35pm • #21

great point, I think I will "borrow" as it often comes up, as suburbia expands
5:59pm • #22
617,295 Points 60 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp Called Shot Master

Bianca -- "borrow" away and good luck!
7:04pm • #23

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Pacita Dimacali - ePRO, SRES, CDPE, MBA Alain Pinel in Alameda County CA

Oakland, CA

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