Some New Home Builders are using Streamlined Sales

Many new home builders are now entering into a business model that is more streamlined but less flexible for the buyer. The first time I saw this approach was when Lennar came into the local market several years ago.

Now this is not a bad thing, but buyers looking for a lot of flexible customization in their new home should be aware that Builders like Lennar and Express by D.R. Horton are seeking to minimize the changes to the basic plan including very limited options on color and trim. This allows them to order in mass a small selection of trim outs, and keep costs low. Often this business model will have an A and B selection on color/tone and that is about it.

The upside to this type of approach is that the buyer will typically find a sharp price on a comparable home to a 'full service' type builder such as the tradition D.R. Horton or locals like New Traditions. It isn't a question of one being better than the other it is a concern that new home buyers realize that they have limited choices on these streamline building models.

Personally I like to have some choice in the decor and trim of a new house. It has always been one of the advantages to buying new over resale. Of course for many the idea of a new house is more about having everything brand new and not having to deal with a copious number of problems early in the experience.

It is truly a matter of preference. If you want a brand new house at price that could be 3-5% lower than a comparable property in a tradition development, then one of these newer business models could be ideal for you. If you want to have near 'Carte Blanche' on things like kitchen counter tops, carpet and flooring choices and other trim out features then sticking with a development running the classic business model may be best for you.

Whichever style suits you, make sure you understand the terms and choices before entering into a contract with a builder. Most problems that people experience could be avoided with by simply taking extra time to fully understand the offer from the builder.

As a local Realtor® I enjoy the multitude of opportunities to help my clients with a variety of different business models in various developments in and around Clark County.

New or Resale?

The new construction market has a lot more inventory relative to comps in the resale market. Buyers are snatching those up too. This article from last summer is still relevant and since I am out of town today, I figured I'd recycle.

Originally posted on this blog, July 10th, 2015, by Rod Sager

Many home buyers may be feeling frustrated at the lack of resale inventory in the market. here in Clark County it remains a tight seller's market. There are many buyers and they seem to be preferring that move-in ready house rather than the one that needs "TLC". The builders are back and they have come with force. Dozens of new developments are underway all over the fruited plain.

For the buyer that has to have the house just so, a new home holds an advantage in that often times the buyer can choose carpets, flooring, counter tops, colors, etc. The downside is that builders are booked solid and completion times are pushing 6-7 months. New spec homes are always and option but they lose the pick you theme angle in exchange for buy me now availability.

The general theme in new homes has been big house, tiny lot. The older homes are usually found on nice big lots with 7-8 thousand square feet and go back to the 1970s and you will likely find reasonably priced homes on 10,000 foot lots.

That remains the trade off, older homes on giant lots versus newer homes on smaller lots. In general a new house will appreciate quicker in the first 5 years. When looking at newer subdivisions consider the neighborhood and price ranger. Entry level homes will often hold up better if an HOA or strong CC&Rs exist to keep the neighborhood conforming and tidy. Generally upscale developments with large expensive homes fare well with or without an HOA.

I have written in the past that sometimes buying a brand new house in an older neighborhood can backfire. Be aware of your needs and think about the future. Buying a home is a little more "permanent" than renting and will require a bit more time commitment on the part of the purchaser.

Most new home developments list their properties on the local MLS so your favorite Realtor® can still help you find your dream home, whether it is brand new or 100 years old.

Builders Are Back, But is New Better?

Many home buyers may be feeling frustrated at the lack of resale inventory in the market. here in Clark County it remains a tight seller's market. There are many buyers and they seem to be preferring that move-in ready house rather than the one that needs "TLC". The builders are back and they have come with force. Dozens of new developments are underway all over the fruited plain.

For the buyer that has to have the house just so, a new home holds an advantage in that often times the buyer can choose carpets, flooring, counter tops, colors, etc. The downside is that builders are booked solid and completion times are pushing 6-7 months. New spec homes are always and option but they lose the pick you theme angle in exchange for buy me now availability.

The general theme in new homes has been big house, tiny lot. The older homes are usually found on nice big lots with 7-8 thousand square feet and go back to the 1970s and you will likely find reasonably priced homes on 10,000 foot lots.

That remains the trade off, older homes on giant lots versus newer homes on smaller lots. In general a new house will appreciate quicker in the first 5 years. When looking at newer subdivisions consider the neighborhood and price ranger. Entry level homes will often hold up better if an HOA or strong CC&Rs exist to keep the neighborhood conforming and tidy. Generally upscale developments with large expensive homes fare well with or without an HOA.

I have written in the past that sometimes buying a brand new house in an older neighborhood can backfire. Be aware of your needs and think about the future. Buying a home is a little more "permanent" than renting and will require a bit more time commitment on the part of the purchaser.

Most new home developments list their properties on the local MLS so your favorite Realtor® can still help you find your dream home, whether it is brand new or 100 years old.

New Homes are Hot

Over the last few years our local market has been driven with buyers looking for clean move-in ready homes. Sure, there have been the deal seekers buying up the rough homes, but most of that was investors flipping or renting the properties. It seems our owner occupant buyers have been willing to bid up the cherry homes with multiple offers while the rough ones tend to sit.

I don't think this is just an anecdote. Fannie Mae and Freddie Mac have been fixing up their REO inventory with fresh paint and carpet to try and tap into this move-in ready market.

It seems that new home builders are tapping that resource as well. There is quite a bubbling renaissance in the new housing industry. What the resale market brings to the table is location, lot size and price. Right now the resale market is clinging to its inventory. There just isn't a whole lot out there. This makes new homes that much more attractive.

Some of the small local builders are back in business and that is providing an opportunity to buy a new house in an established neighborhood. One such development is the Tall Tree Meadow in Vancouver. I am delighted to be a part of this particular subdivision. It is just six homes, three are built already and three more lots will be built later on.

This subdivision is located in a built out area near Arnold Park in Vancouver. It is close in to both SR-500 freeway and I-5. It's just three minutes to the Interstate Bridge, yet offers a home that feels like suburbia.

It is often the trade off home buyers make when looking at neighborhoods. Do I want that bigger, newer home with the three car garage but out in the 'burbs or do I want the eclectic experience of the older, established neighborhood close in to the city?

Developments such as Tall Tree Meadow offer the buyer a third choice, "all of the above". In reality it is a blend of the two, but for many it is the perfect blend. For buyers seeking a perfect conformity of neighborhood, the modern suburbs in an incorporated city are the ticket. For those seeking that multifarious buzz, the older neighborhoods in close to core are the best. But there are those who want both, and small infill developments like Tall Tree Meadow are an ideal option.

In our local market most builders, large and small list their homes on the MLS. I have always liked that about Southwest Washington. Buyers can work with a Realtor®, look at both new homes and resale homes. They get an honest opinion about what is best for them rather than the conflict of resale versus new home with the developer in direct opposition to the resale Realtor®. Other markets around the nation are often different. Ask your local real estate professional about new homes.

Here in our local market we have seen a resurgence in both large scale suburban new home development from national juggernauts like Lennar and the smaller infill developments like Tall Tree Meadow. Buyers considering a new home should be aware that negotiating with a builder is very different than negotiating with a resale seller. Builders are very resistant to a lower price. Many buyers mistake this reluctance as greed. In reality buyers must remember that a a sale in the development is recorded in the public domain. Most new homes are purchased using financing and the bank will require an appraisal. Once the developer sells a house in the neighborhood that discounted comp will haunt him. Imagine a buyer negotiates a $5,000 discount on a 50 home subdivision which is filled with very similar homes. That $5,000 discount could cost the developer $250,000 as that comp is used by every appraiser for every purchase over the next several months. Negotiating with a builder requires some finesse and an experienced real estate professional. There are tactics that can benefit both parties whereby the builder is happy and the buyer gets a "deal".

Now get out and soak up the beautiful spring weather while looking at great new homes. I'll be back next week.