The answer you would think is an easy yes, but, it depends on a number of variables.
Being that I work for a builder, I would love to say YES, YES, YES, but, that would not be accurate. There are clear advantages on both sides of the coin.
In the current market many customers are searching for that dream deal. For example: I want 4000 square feet with a 3 car garage on a half acre in your most desirable area with a view to die for under 300k...... Sound familiar? The reality is that many of the customers’ wants are out of touch with the market and it is our job to educate them. If your customer is looking for a "Short Sale" or that pie in the sky "dream of a deal", new construction may not be the best option. due to the fact that the purchaser may not feel they are achieving enough of a discount for them to move forward. This is one advantage for the resale market even though builders may have some hefty discounts in their homes as well.
Currently some new construction communities may not even be able to build at the numbers some of these short sales are going for. Builders have tightened the belt and many are taking a beating selling at the market numbers that do compete with short sales. In those cases, re-sales may be the best option.
If your buyer is looking for a home with a quick closing, short sales are out of the question, new “to be built” construction is out, and it boils down to listings on the MLS without short sale addendums and builders “in stock” inventory. Listings without short sale provisions may have some nice features, but, normally the pricing is slightly higher than the short sales in the market and closer to the builders inventory price. This is where builders may have a slight advantage of having a more similar price point to the resale’s and the benefit of NEW.
New construction includes the latest in technology, energy saving features, warranty, as well as, the benefit of being brand spanking NEW. Some builders also have some extremely competitive financing options and these options can make the monthly payment much more palatable for your buyer.
Some realtors are apprehensive about working with builders and they are much more comfortable working in general real estate. Most Realtors feel they may have more control in general real estate, as their contracts are created by them and they are not certain what surprises they may encounter from a builder’s agreement. Some realtors may have financing set up through their affiliated lenders and are afraid the builder might take away that segment of the business. Additionally some realtors do not think that builders are willing to entertain offers and the prices are not negotiable. As someone who works for a builder I can tell you that these are all valid concerns, however, different builders work in different ways.
It may be much easier to work with a builder than you think. Most builders sales staff are extremely knowlegable and they are proficinet at closing transactions. The sales staff that is in place in 2010 has been through the worst of times and if they are on site, they must be good as the weak have already dropped out.
Many builders do have excellent financing opportunities through their affilates, but, most would be willing to work with your lender as well. As for agreements, most builders want to use their own as it does prootect the builder, but any reputable builder still in theis market I am sure has had to make adjustments from time to time based on a customers concerns. Read the agreements and feel free to ask questions.
Builders should be used as an ally to achieve your goals.
Sometimes Realtors will visit a new construction site simply to use this as a disqualification process. The buyer states “I want to look at some NEW Construction before I make my decision”. This is common, and, as a builder, I can tell you, it is welcome. The hope is that one day you will have a customer that is genuinely interested in NEW Construction, and, at that point the relationship is already developed.
Right now builder’s inventory does have a huge advantage. Many customers are looking to capitalize on the tax credit. Customers waiting for that short sale are not guaranteed an answer from the bank in time to close. Builders however may have homes that can be purchased in the next 10 days and close before the June 30th deadline. Due to this deadline many realtors have increased their calls/visits to builders to be up to date on which homes can meet the deadline for their buyers. You may want to check with your local builders, especially if you have buyers waiting for answers now.
I hope this article is useful to you and feel free to contact me with any comments, insight and/or questions. Here is my little plug: My builder inventory can be viewed at www.kolterhomes.com
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