Las Vegas Area Seller or Transaction Category #3: New Construction (Builder)
This is part 3 in a series describing different types of sellers and transactions in the Las Vegas Area market.
A Builder is a type of seller. New Construction would be considered a sales type in the Las Vegas Market.
Buying a home from a builder or as new construction means many different things in different parts of the country. In the Las Vegas Area, we cannot pick out our lot with a semi-custom built home with the builder of your choice like you can in the Midwest (my brother is a builder in Nebraska and I used to sell new construction in Nebraska.) The way to go about buying Las Vegas Area New Construction from a builder is generally going through a tract (or subdivision) and picking out your home with only a few lot choices on "released" lots.
New construction is not typically listed in the MLS. I use a tool called "Salestraq" where I can put in a buyer's criteria to find builders, subdivisions and floorplans that may meet your criteria (price range, minimum interior size, bedrooms, baths, etc.) I then call the builders to verify that they have lots released in that price range before we go looking.
Keep in mind when you are looking at new construction, the prices you see are generally "base prices". That means different builders define different home amenities as "base". With some builders you will get hit for everything beautiful as an "upgrade" which will result in a higher final price. With other builders, many awesome amenities are included like granite countertops, beautiful fixtures and tile floors. You just need to do your homework or work with a buyer's agent who is experienced with new construction. Most builders pay the buyer's agent's commission so start interviewing a buyer's agent today!
Main reasons buyers are attracted to a New Construction purchase:
- No dealing with multiple offers or frustration within the resale market
- Most builders offer a warranty on their homes
- That "new home smell"
- No toenail clippings in the carpet (ew - just kidding - or not!)
Pitfalls of a New Construction purchase:
- Builder contracts are slanted to protect the builder (just like REO contracts are!)
- Can take a long time to close (revert to the above.) YOU MUST PERFORM ON TIME but they can take their sweet time building - per their contracts
- Incentives (free upgrades) and closing costs are generally tied to the buyer using their affiliated business partners. APRs and Title Company costs MAY be higher than using the lender or title company of your choice!
Current New Construction Climate & Purchase Procedures and Variations from Typical Transactions:
View models with your buyer's agent if you want representation! You must register with your buyer's agent upon first viewing. After that you will (generally) have a time frame in which you can view the models at that certain tract on your own at your own time. Each builder varies with their rules. Some builders allow for "blanket registration" where you can go to their headquarters and register. You can even take a peek at their showrooms to see various upgrades that you can add to your home!
If you really like that lot that is released, you should act! Builders generally release only a limited amount of lots. Depending on market conditions, they could disappear fast and you would have to wait until the next release.
When you go "into contract" you will be handed your Deed Restrictions (Called a Certificate of Resale in the resale world.) Generally you have to wait awhile in a regular resale for these. With the builder, more times than not, you get them right away. You should also read these right away as you only have 5 days (by law) to make sure you can live by those deed restrictions!
Many buyers think they don't need a home inspection on new construction! This step should not be skipped - even with the safety nest of a builder warranty! Things like water leaks cause mold which must be disclosed on a resale (which could hinder financing) so an ounce of prevention up front.......
OOPSIE! They are building by the wrong specs! That's OK, many times they can fix it (sometimes you end up getting a free upgrade.) Make sure you visit quite often to monitor the upgrades and specs they should be building. This is definitely the time to be proactive rather than reactive!
Common Problems during due diligence on New Construction property:
DELAYS: Delays happen quite frequently due to weather, worker shortages, material shortages, etc. Don't count on closing on time unless the property is VERY close to completion!
Appraisal: Appraisal can be an issue these days on any transaction.
Rules for Visiting the Home: Make sure you know the visitor rules (do you need to be accompanied by anyone or wear a hard hat or etc?) These rules vary from builder to builder.
Final Walk Through: Make sure you do a thorough walk through as you would on a regular resale. It wouldn't be a bad idea to hire an inspector to do the walk through. Even though there may be a warranty with the home, it is still better to walk through and make sure all issues are taken care of PRIOR to close rather than AFTER close.
DISCLAIMER: The information, photographs & content contained within Renee Burrows' blog is the property of Renee Burrows. You must obtain written permission from Renee Burrows or be a syndication partner or use the Active Rain "reblog" function and reblog the post in its entirety without revision if you would like to use any of this content. Opinions expressed are those of Renee Burrows may not necessarily be opinions of past and present brokers. Many articles may be time and date sensitive so please always look at the date posted. For most current brokerage and contact information, refer to my Active Rain profile.
All statistical information I used to create this report was obtained from GLVAR MLS. Information Deemed Reliable but not Guaranteed.