Experienced real estate agents know that selling a new construction project is very different from selling an existing one.
While there are certainly challenges, selling a new home is exciting. After all, the buyers will be the very first people to live in the home.
Here's what agents need to know about selling new construction projects.
New Construction Sales are More Complex
The process of selling new construction is quite different from the process of selling an existing home. There are some extra steps involved, and agents will work with builders.
The builder’s contract is one of the first things that needs to be examined. The buyer’s rights should be outlined in the contract as well as the deadline for the buyer’s ability to terminate the contract without forfeiting their deposit money.
Agents also need to inquire about financing options, inclusions and incentives that may be offered to secure the deal. They should also be aware of the features included in the basic home as well as upgrades.
On top of all of this, agents should also be able to assess information shown on blueprints, soil surveys and floor plans to help potential buyers make an informed decision.
Although there are additional steps involved, once agents become familiar with the process, it becomes like second nature.
Buyers Need Agents
Of course, buyers are attracted to new construction projects. A new home is less expensive to maintain and offers the opportunity for customization. However, the purchase of a new home can be intimidating.
Buyers often don’t realize that they can use the services of a real estate agent when purchasing new construction. But they need someone who will represent their best interests.
As an agent, you should inform buyers as to why they need a representative for the transaction. Agents ensure that buyers understand vital details that may otherwise be easily overlooked or forgotten. It’s also your job as the agent to ensure that all upgrades and features are installed as agreed.
Financing Can be Tricky
Financing a new construction can be tricky compared to resale transactions. New construction projects can take months to complete, so they’re far riskier than resales.
Depending on the situation, the buyer may need to secure a construction loan. In some cases, builders will finance the construction of the home, and the buyer will be able to acquire a traditional mortgage.
With that said, there may be issues with the buyer qualifying for the loan. If the buyers barely qualify at the time of the contract, they may not be able to secure the mortgage if rates increase. Lenders cannot lock in rates for more than 90 days.
According to the financial experts at Max Funding, the structure of construction loans is vastly different from a typical housing loan, so buyers should come prepared with knowledge, noting “if you opt for a construction loan, the amount you estimate your home to be worth may not be given away as a lump sum. Instead, lenders provide portions of the total loan in progression, these are known as draw-downs or progress payments.”
Understanding what’s required of you across your new construction project will ensure no nasty surprises down the line.
Builder’s Contracts Need to be Carefully Analysed
While there may be less negotiation over earnest money and inspection repairs, there may be issues in the builder's contract that needs to be analyzed.
Builders' contracts usually contain verbiage that favors the builder, so it’s important to request a copy of the contract immediately.
Understanding the contract will make it easier to explain everything to buyers in terms that they can understand.