When it comes to buying a new home in a new community, timing can be everything. If a house has sat on the market more than 45 days, nervous builders often give special incentives to home shoppers looking for a good deal. Ideally, you’ll be able to buy in a community you love, that maintains or increases in value, and has early-bird special pricing.
Here are three more excellent perks of buying early in a new construction community:
1. Introductory Pricing
Builders need to keep selling to keep building. According to real estate expert Brendon DeSimone, “A homebuilder, especially early in the sales process, wants to get a few homes under contract quickly. If the builder can announce they have 10 homes under contract in less than a few weeks, the project may seem more desirable to future buyers.”
The builder has an incentive to sell early, great news for the early buyer. While your builder may not want to set a precedent of selling at a lower-than-asking price, early buyers often get a better deal than home shoppers who wait, and the builder might be willing to pay closing costs or provide free or discounted upgrades instead.
2. First Pick of Location
The first buyers in a new home community have first pics of the available lots. They can get a home in a great location for less money. Peggy Fucci, the CEO of South Florida-based brokerage OneWorld Properties, explains, “If someone is interested in buying new, and knows where they want to buy and what they’re looking for, it’s best to get in first and have the pick of the litter.”
Kris, a homebuyer in Hayward, California, bought the very first home in a new community of 160 planned houses. “I bought the center house on the park, in the best location, largest floor plan, and upgraded the entire home.” Just two years later, the builder “sold the same plan model home as mine for $200K more than I bought mine for, plus that same model home they sold is not located on the park but at the outer perimeter of the entire community.” Having a great location is good for you and your family, and it’s good when it comes time to sell.
3. Greater Long-Term Home Value
Buying early locks in value and protects home shoppers from increasing home prices in hot real estate markets.
“If the first ten homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase,” states DeSimone. “Also, the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than phase one if the real estate market has appreciated.”
Introductory pricing is good news for people who choose to buy in the first phase of a housing development. For example, Kris, the homebuyer mentioned above, purchased in a community in the first phase of development, and made a return of roughly $328K in a five-year period. In some cases, once a builder or developer raises the home prices, people who were able to buy their home in phase one may not even be able to afford to buy a comparable plan in phase three. This means the value of their home has increased along with their profit margin if they choose to resell down the road.
Buying Early: Risk or Reward?
Of course, buying early entails some risk, but that risk can – and in many cases does – pay off. There are many buyers who reap financial rewards after buying early. Do thorough research and check on the builder’s history in terms of construction quality and rates of project completion before you commit to a community or home.
For the last 16 years, Rachel Kinbar has been a writer of articles, blog posts, white papers, essays, infographics, web copy, sales copy, scripts, poetry, lyrics, and more. She has keen research skills that she applies to a wide variety of topics, and she especially loves topics related to design, history, and sustainable living.