What You Need to Know About Building a New Home

Real Estate Agent with Austin Texas Homes, LLC 548155

What You Need to Know About Building a New Home

You have a client who thankfully is using you to build their new home with a Builder.  In fact I cringe when I hear of buyers just walking into the builders office and buying without an agent. No one to look after their best interests. Most have no clue of what is about to happen to them. I picture the innocent rabbit in the teeth of the preditor ready to be devoured!  They don't have a clue on what they are in for, and the builders will take full advantage if no one with experience it there to help guide them.

If you sell enough new homes, you know when you see the model home, that what you see (most of the time) isn’t what you get. Everything is an upgrade! Do you go with them to the design center, or just sign the contract and wait till the home closes? Do you keep your mouth shut, or guide them in their decisions?

Making changes like an additional garage or changing a closet to a bathroom is an extra cost. You must make sure on some changes, since you are not actually adding square footage to the home, that the change is worth the price. You know that what a builder charges for upgrades on carpet, paint, fixtures… is generally twice the price as what it would normally cost. This is the reason many use a percentage off on upgrades as a marketing tactic. They were overpriced to start with!

Guide your clients before going on the trip to the design center, they may pick so many upgrades to really make this home everything they want, that they will never get their money back on it. Many items can wait until after closing to change out to save thousands of dollars.

Life is no guarantee. You may build a home thinking it is your forever home.  But... death, divorce or job change may change that in a second. You may have a home that they spent so much in upgrades, they will never get their money back.   They could even have to bring money to the table to sell that home! If you haven’t been there long enough to build the equity, or if you didn’t put a “big chunk” down, you may be paying for those upgrade decisions now. And, if you are in an area they are still building homes in, you are competing with new builds. Most people are going to buy new build over used 90% of the time. Not everyone is going to want those upgrades you chose.

As agents, we show enough homes, that a home with each room painted a different color, or brighter/darker colors…your clients are looking at the dollars to repaint. If the home is all one color in the builder white range…they are going to say it needs some color! Some folks are tile people, some are wood floor people, some don’t care. Everyone is different, and everyone’s decorating choices are different. If they weren’t, we would all be living in the same house as everyone else.

Why this post? You don’t need a client, who through some change in their life situation, who spent way too much in upgrades looking at you to resell that home you helped them buy. Because chances are you will fail at it. You have just fallen off the pedestal they put you on. In fact, even with reduced real estate fees, to sell at the price they paid for it, after closing, they might walk away with enough money to put a deposit on an apartment-if they are lucky. Or they will have to bring money to the table, or a short sale. And if they are competing with new builds. You are not going to be able to sell the home for them. It may be worth the money asked, but buyers are not seeing that. They are seeing new over a used home, and upgrades that they may have not chosen for the money.

Now this may depend on your market, and how long they have lived in the home. But the price still has to fall in the comparable sold price range with others when trying to sell generally. So just keep this in mind when selling a new home. This is a good time to educate yourself on what items do cost! Run comps on a neighbor, before going to design center and suggest a realist budget for your buyers. In our market, many builders estimate new home buyers will spend 20 to 35 percent on upgrades over the base price of the home. So, don’t let the base price of a builder's home lead you in your price search, as upgrades will add to that base price. And please, always ask the new home consultant if something is an upgrade, because chances are… it is!


Sherry Scales, REALTOR®

CLHMS, GRI, SRES, ABR designations to serve you better.

Austin Texas Homes, LLC

3737 Executive Center Dr., Ste. 101

Austin, TX 78759

512.925.8928 Cell


Comments (1)

Harry Norman, REALTORS® - Atlanta, GA
Associate Broker

Good day 

Thank you for sharing your information with us 

Have a great day. 


Aug 31, 2018 08:57 PM