New construction is (finally) back in full swing. It started only in the $500K+ price points in 2012 and mostly in the highest appreciating / highly sought after areas in Metro Atlanta Johns like Creek, Sandy Springs, Suwanee. But within the last 6 months builders have now entered the $200K+ price point in some counties along with builders going into previously incomplete neighborhoods and finishing them out. Communities in any price point, and in just about any county, are seeing these previously abandoned communities now under full-blown construction with houses selling as fast as the builders can complete them! The low inventory has opened a window of opportunity for builders to re-enter and set the market pricing. Bank-owned sales in September 2013 are now at 2%, down from 13% of total sales in September 2012. This is great for homeowners that wanted new construction but had nothing to choose from and also giving hopes to nearby homeowners looking for a property value boost to enable them to sell their homes. New construction, as exciting as it is, does have it's pitfalls.
The first thing you need to know about new construction in this market is that you don't have much leverage as a buyer. With all of the buyer competition you have little room for negotiation on pricing. Your best area to get a 'deal' is getting the builder to either add additional upgrades or complete unfinished spaces versus haggling on the price. Closing costs are pretty much off the table as far as negotiation so you'll need to be prepared to pay for some closing costs even if you use the builder's lender. Your best opportunity to get a price reduction in new construction is on a standing, completed homes since the builders want to sell those properties before they have to begin paying mortgages on them.
The agents at new construction communities represent the BUILDER and not you! Whether you use a real estate agent or not, the listing broker makes the same amount of commission (unlike traditional sales & foreclosures). You do not get a better deal by not using an agent since the builder has already equated paying a 6% or more commission into their bottom line. Furthermore, builders don't use standard real estate forms. Their contracts are written up by their attorneys so you definitely need to have a good understanding of what you're getting into (especially when in comes to 'up-front' money) before you enter into an agreement. Having an agent represent you doesn't cost you anything and is well worth it.
When it comes to financing a new home, builders will usually offer an incentive or set contribution towards closing costs (or both) if you use their lender. Even if you use their lender, most builders will not pay ALL of your closing costs. You want to secure an outside lender first in order to have an idea of what loan product you qualify for in the free market. You can use this as leverage for the builder's lender to either match or beat what your current lender is offering and still get the incentive. In some cases, the on-site lender cannot compete or are partially owned by the builder. In these situations, you want to present your lender's offerings and inquire if they've closed loans with the builder before. Builders are more likely to use an outside lender that they've had previous experiences with and may even give you the same incentives.
Buying new construction can be a very exciting process. Being able to customize a home and see it being built is definitely an experience that some people dream to have. However, the financing, contracts, and construction disputes can make it a nightmare so you need to educate yourself on the process before going in!
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