McKinney TX Real Estate

Monday, February 4, 2008

So, You Want to Buy a New Home?

If you are in the market for a new home anywhere in the Collin County area, you are in luck! Right now the market is best poised to favor the buyer, rather than the seller. A "Buyer's Market" for sure. Drive down any street and you're sure to see a "For Sale" sign begging you to "Stop The Car" and check out the "Immaculate" home.

But with so many homes on the market you can afford to be a little choosy, right? Heck, you may have even entertained the thought of buying a brand new home from a builder. When given the option of buying a new home that has never been lived in versus buying a pre-owned home that doesn't have exactly the interior you desire, the choice becomes clear! Nothing beats that new car, I mean, new house smell!

There are many benefits to buying a new home:
YOU pick the floorplan, possibly modifying it to fit your taste even more. Closet not big enough? Bump this wall out a foot here, 6 inches there - PERFECT!
YOU pick the finishings: flooring, paint, brick, countertops, carpet, lighting fixtures, plumbing fixtures, tile, cabinets, exterior elevation, etc etc.
NO ONE ELSE has ever lived there! No "skeletons in the closet" to find later.
Builder warranty - "bumper to bumper" for ~1-2 years, structural warranty up to 10 years.
YOU get to watch it being built from the ground up!
Depending on the builder, you may even recieve closing cost assistance.

Sounds GREAT, doesn't it? Who wouldn't get excited?

We've worked with MANY buyers and I know how easy it is to get wrapped up in the excitement of buying/building a brand new home. Those model homes work wonders! They've got them decked out with ALL the upgrades, beautiful interiors, over-the-top gamerooms with surround sound & up-to-date 100" Plasma TV's that have the men drooling while the kitchens are decked out with lavish granite countertops, custom cabinetry & stainless appliances that the women want. Oh, and don't forget about the picturesque landscaping out front! Yes, the model homes smell great, look great & before you know it you are collecting stacks upon stacks of folders from all of the area builders you can find. Mounds of floorplans. Elevations. Feature Sheets. Buyer Incentives. Community Features. Your mind is swimming. You begin dreaming new homes. Googling new homes. STALKING new homes.

That's where WE come in. Without a third party involved it could be very easy to make some BAD decisions when it comes to creating your dream home. Here are a few pitfalls that every new home buyer should look out for:

1. The "Prices are Going up Next Month" pitch. Suddenly, you feel you must make a decision right away. The base prices will fluctuate as long as the builder is still building in the neighborhood. Don't settle for a builder that isn't offering exactly what you are looking for. Once you are locked under contract, it could be very costly or impossible to make changes to design options that you made in a hurry.

2. The "$XX,000 Buyer Incentive IF YOU USE OUR LENDER" pitch. Most every builder out there is tied in to a "preferred lender" or "in house" lender. By getting you to use their lender, the company makes money on the loan, therefore they can offer you the discount on the purchase of your home. BE CAREFUL! Many buyers see this and think "Why wouldn't I use this lender?". The answer is easy. Unless you've done your homework, the interest rate that the "preferred lender" is charging you could be MUCH higher than the competing lenders. In the long run, the $xx,000 you got knocked off the base price of the home could be less than what you end up paying over the LIFE of the loan. My advice - SHOP AROUND! Some lenders might be able to match the builders incentives.

3. Picking out a bad lot. Once you've chosen the builder, the floorplan and the options, you've also got to choose the LOT that your home will sit on. If you choose wrong, it could cost you dearly when you try to sell. Try to choose a lot that does not back to a busy street, have a funky slope, or back to commercial. Put yourself in the mind of a buyer in a few years - would YOU want to buy a house in that location? I believe spending a little extra on a lot premium is one of the best places to spend your money when building. You can always add those upgrades later, but you can't ever get a new lot!

4. Pricing yourself out of the neighborhood. What do I mean by this? Let's say the base prices of homes in the neighborhood you want to build in ranges from $150-200K. You choose a plan that costs $175K -base price before any upgrades/lot premiums. You're pumped. You're staying in your budget. You're not the biggest house in the neighborhood, and your're not the smallest. And then comes the trip to the design center. $40,000 and 2 pages of upgrades later, you are now paying $215,000 for the same house. When you go to sell this house in a few years you will be compared to all of the other floorplans like yours that cost $175K (base price). Let's say the average homeowner tacked on $15K in upgrades. This means that your competition will be able to sell the same home for $25K LESS than yours. Thus, you've priced yourself out of the neighborhood.

5. Going NUTS at the design center/showroom. This is where the builder makes most of their money. Builders have a large mark-up on their upgrades. For example, if you choose to have the builder install a garage door opener you will pay ~$400. If YOU install the opener, you can buy one at Home Depot for $150. Get the picture? You need to have someone (cough, cough) that can help you decide what is a smart upgrade decision, and what is a bad one. Do you NEED to have the entire house covered in the most expensive hardwood flooring, or could you be happy if you just got the dining room and study done now, and did the rest later? Or could you settle for a mid-grade wood? Is it a MUST that you get the top of the line appliance package now, or could that be something you upgrade in a year or two?

These are just a few of the important decisions you will need to make when it comes to buying a new home. Having a REALTOR represent you in the transaction will be the smartest decision you could make. OH...and let me just clear up another misconception about having an agent represent you in a new home transaction:

Many buyers think that if they come without an agent that the builder can cut them a deal. The fact is, that most of the commissions paid to agents are already accounted for in the builder's marketing budget. This money has already been set aside. In fact, having an agent represent you can SAVE you money, by knowing how to negotiate the BEST deal for you!

Our job is to find you the best home for the best price! If you are looking for a McKinney Realtor or Collin County Realtor, we would love to assist you in your home search!

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