Today, we’re talking about buying a new construction home and going from the lot to the dot…. ted line….😅 My name is Eric Sztanyo from Keller Williams Realty and team Sztanyo.com, where we are helping you find your home and strengthen your family. Welcome in Sztanyo clanyo! So what is the process of buying a new construction home and the pros and cons? Let’s dig in to that. But first!
I’m allowed to make dad jokes because I’m a dad of five. So if you didn’t click off on that first four seconds. Congratulations and sorry for my bad dad jokes. But, what we’re gonna talk about in this video today is buying a new construction home. The pros and cons with that. And I’m gonna show you guys what it looks like to actually be at the lot, looking at the different lots in the neighborhood, all the way through that process to working with a Fisher rep, going through the contract and signing on the dotted line. Getting that homeowner contract. What does that look like? We’re gonna show you all of that coming up, but first I wanna remind you guys about getting a buyer’s agent on your side.
If you’re thinking about buying a new construction home, a lot of you might think “well, I don’t need a buyer’s agent because I’m just gonna go talk to the builder and work with them.” You can absolutely do that. But the reason why you might want to have an agent on your side is to represent your interest throughout the transaction. Because the sales rep works for the builder. And they can give you tons of information about the community, about the house. But they’re ultimately trying to sell you. And they ultimately get paid by the builder. Now, a buyer’s agent also ultimately gets paid by the builder as well. But in terms of agency, they work for you. They’re the buyer’s agent. It doesn’t cost you anything. The commission’s gonna be paid out by the builder. But what you wanna do is bring an agent with you on the end of those meetings, they call it the threshold meeting.
Before you go to that model new construction home is contact us or another agent that you wanna work with and have them connect you with the builder so that they can walk you through that entire process and be representing you and your best interest throughout the transaction. But before you go talk to those builders, be sure to email us or another agent to get them on your side.
The Pros and Cons of Buying a New Construction Home
Let’s talk about the pros and cons of buying new construction in this market right now. And then I’m gonna show you, which is really fun. One of you who watched these videos previously reached out and called, and we went through a Fisher community and we literally went to the lot. And then we signed the contract later that day. But let’s talk a little bit about pros and cons of new construction in this market.
Pros
Unless you’ve been under a bridge somewhere, you understand that it’s a seller’s market. There’s not a lot of inventory out there, and there are a lot of buyers. And so that has made it very, very difficult for buyers to get out there. Not only find a home that you like in a price point you like, in a neighborhood you like. But then you have to fend off and beat out all the other buyers who are putting in multiple offers. Your offer has to be better. You might need to be tens of thousands of dollars over the list price. Potentially, you might need to wave inspections or have an appraisal gap clause or anything you can do. Writing letters about like giving away your firstborn child to win the house. It’s very difficult. It can be very emotional.
It’s still certainly a path you can go towards. But an advantage of buying a new construction home is you can kind of just push all that to the side. Houses and new construction home are still selling fast. Generally speaking, builders are trying to acquire as much land as they can and put those homes out there and they will sell. But you’re not gonna be in a competitive, multiple offer situation. You’re not gonna have to fight off all these buyers when something hits the market for the first time. You can breathe a little bit. That’s a big advantage of buying new construction home right now, in this crazy hot sellers market where there’s low inventory on the market.
Another advantage is that it’s new, everything’s fresh, everything’s new. Nothing’s been used before. You don’t have to clean out the crud from the previous owner or whatever, how they use the house. It’s that feeling of like getting a brand new car. If you’ve ever bought a brand new car. It’s like smells like fresh leather, probably not the leather in the house, but like, you know what I mean? Fresh paint and fresh carpet and everything’s new and that’s fun. It’s fun to move into a brand new house. It is exciting. And along with that, you get to pick! You get to pick the floor plan that you like. You get to pick the design that you like. You get to pick the cabinets and the flooring, all the things you get to choose. And so again, in a market where there’s very low inventory, there’s not a lot of selections for you to choose from in terms of the houses that’s out there. If you want to be in a certain area or certain school district. You kind of have to take what’s there, which is not a lot of properties to choose from. Whereas with new construction home, you get to choose.
Cons
Let’s talk about a few of the downsides of buying new construction home. It is like buying a new car off the lot. And so it’s gonna be a little bit more expensive. There’s a premium to that. You know, when you buy a new car and you drive it off the lot? You’ve lost some of the value. That’s kind of the same right now. What’s weird about that is I’ve had multiple clients who have bought a new construction home and then it’s built over eight or nine months. And because the market continues to go up, it’s actually worth more after they close on it already than they sold. But all things considered at the time you buy the price per square foot, because it is new construction is gonna be probably 15 to 20% more, maybe something like that than a resale house. And so it is a little bit more expensive. Yes, you get the advantage of not fighting all the other buyers. But your dollar’s probably not gonna go quite as far in terms of just pure square footage of the house.
If you are building from scratch from the lot, then you’re gonna need to wait a little bit longer. And so that could be anywhere from maybe like six to nine months right now, certainly during COVID supply chain issues where a real thing, and that got pushed you even some houses probably to like 12 months. In normal times, builders usually say somewhere between four to six months, but you have to plan ahead, right? That’s one of the cons is you got to wait. If you were to buy a resale house, you could go shopping. You could close in a month. Whereas, if you’re buying new construction home, you need to wait. There is a category of new construction homes called market ready homes. Where you don’t have to wait as long. Every builder’s probably gonna have a list of these, where they went ahead and are making the home. They chose all the selections and the designs and those houses might be on the market. They might be ready in the next 30, 60, or even 90 days. So that’s a order timeframe. So the advantage is a timeframe is narrowed down, but the disadvantage is you don’t get to choose all of the designs. Those it’s already picked from the builder. So you get a new house. You just don’t get to pick everything in terms of colors, designs and things like that.
How Team Sztanyo Can Help You Buy a New Construction Home
All right, let’s go through this journey that we did with a recent client. One of you, like I said, who called up and said, “Hey, saw your videos. We’re thinking of buying new construction home. Looks like you’ve got some experience with this. Will you help us through this process?” I was like “Yes, that’s my job. I would love to do that.” And so we went out to a Fisher community. It’s actually a split community. Between Fisher and Ryan homes. And it’s called the villages of classic way. Fisher homes is offering their maple street collection of new homes in village of classic way in Morrow, Ohio. This community features a peaceful, country setting with tree-lined views. The community amenities include a swimming pool, cabana and playground. This community is conveniently located off of Montgomery road, US 22, Ohio, 3. Close to an abundance of shopping dining at Deerfield town center and Waterstone center. Recreation options can be found at Kings island, Great Wolf lodge, Kittle Miami scenic trail, nearby parks, golf courses, and canoe excursions on the little Miami river.
The villages of classic way is located in the little Miami school district, the little Miami elementary, little Miami middle school and the little Miami high school. In this community, you can find single family homes starting around $280,000 ranging up to about $350,000 as the base price. You can find such models as the Denali, the Yosemite, the Preston, the Charlotte, the Danville, and the design my clients were interested in was the Cumberland.
So my clients reached out and said “Hey, Eric, can you help us through this process?” I said “absolutely!” We drove up to the villages of classic way. And we looked around, you know, if you’re in town, you can do this. They were a local couple and they wanted to see the community itself. So we actually met at the different lots and they had an idea of which floor plan they wanted. So we actually reached out to the sales rep ahead of time and said, “Hey, which lots could we build this design, this floor plan on?” And that was the Cumberland. So we went out, we looked at the lots itself. You could get a feel for the slope and the grade and the neighbors and the views. And they were like, “yes, this is the lot.” Like, “if we want a basement, we need to use property right here. And we really like it. We like the neighborhood. Let’s do it.” So the next step from there before we went and signed papers is we actually went to a nearby community where Fisher was building some other homes and had some of those models that were further along, down the line.
Again, if you’re coming into town to do a visit, or if you’re here locally, this is a really great thing to do. Cuz we were able to find, as I mentioned, they wanted the Cumberland floor plan. There was another house that was about ready to close that Fisher had built that the Fisher sales rep was allowed us to go in and tour. And so it’s one thing to be online and go through the virtual tour, and you can kind of get a feel for a house. It’s an entirely different feel when you can actually open the door, walk through the hallway, feel in the kitchen, be in the dining room, be in the living room, go in the basement, check out the master bedroom and the size and the ceilings and the master bath and walk in the closet. You get so much more information and you get a feel like, yes, this is the one I want. I love this. Uh, the other nice thing about doing a tour like that is you can get a feel for the level of finishes that that buyer chose if it’s that far along in the process.
And so when you’re going through and choosing your selections and your upgrades, potentially you can say “No, I’m good with the base level or no, I definitely want to upgrade in this area.” So after we saw the lot and after we actually went through a nearly finished product of that house itself and the design they want to choose, we then went with the Fisher rep to a local model home where we could start on the paperwork. And paperwork’s maybe a loose term here, cuz really what happens. And it’s pretty cool is the rep is gonna pull up that specific model on that specific lot. Everything’s gonna start at the base price and then you’re gonna go through a series of structural designs and components of the house that you’re gonna choose if you wanna upgrade or not. What’s nice about doing this on the computer is you get to see the pricing there right in front of you.
And so if you’re like “Yeah, I want nine foot ceilings instead of eight foot ceilings. How much is that? That’s something that can be priced out right in front of you. So a big question here is how much is that gonna cost? That’s a great question. It’s important to know. And I think my client in this situation actually had a really good analogy that was helpful for him. It’s like he said “It’s like, you’re giving ice cream and then you’re giving all these toppings and you’re just trying to decide, well, do I need to pay for those toppings? And it feels like they’re forcing some of those toppings on me or can I remove some of those toppings?” but basically you get to choose what level you want. Like, do you want a bump out off of the garage or on a morning room in the kitchen? Do you want hard floorings throughout the first floor instead of carpet, maybe on the hallways? Do you want tray ceilings in your master bath? Do you want a full size deck or maybe a smaller deck? What type of lighting do you want in all the different rooms? And do you want that wired in or do you want to use floor lamps? So you need to prepare yourself. This will bump up the price, how much? I asked the sales rep that we were trying to get a feel for that. And he said “On average, a good estimate of how much that’s gonna cost is whatever the base price of the home is on the website. You might wanna factor in about 10% charge on top of that for any structural upgrades you might do plus any design upgrades that you might do.
So there’s really two parts to the process. When you’re sitting down with the sales rep and signing that first contract, you’re choosing most of the structural components of the house. Are you getting a basement or a slab? Are you doing the bump out in the house? Are you doing eight or nine foot ceilings? The kind of the big structural architectural elements. And then there’s a second part of the process and we’ve done another video of this when you go to their design center and then you get to choose all the colors and the type of flooring and the type of counters you want and the cabinet hardware. All those different things you can choose at the design center. Typically, the structural components are gonna be the bulk of those costs, unless you go all out in terms of your designs. And you’re like “I want the top of the line, everything” But that number that’s maybe a good thing to kind of bracket in your mind.
And this was helpful for me to learn on this is maybe about 10% on top of what that base price is on the website. Depending on what you want. That could be more, that could be less depends on how many toppings you want on your ice cream. Right? And just be aware that as you’re going through these model homes, you’re seeing more of the top of top of the line stuff. And so you’re like “Well, I’ve gotta have that. That’s so nice.” And that’s part of the salesmanship of any builder is they want you to see, like you could do all this, but just know that that’s gonna add on top of the base price of what you see on their website in terms of total cost.
One other note that I learned in this meeting that is something new to Fisher, it used to be where you had to kind of lock in all of your structural designs at this first meeting when you sign the contract and you can’t change those going forward, you kind of have to lock them in and then you can make all your design changes at that design center meeting. Well, they just changed this where whatever you lock in, in terms of your structural components, when you go to your design meeting, maybe a few weeks later, you can actually make those edits there. So at the end of this meeting, you’re gonna have a sign contract. You’re gonna have a print and out and like an itemized list of all the things you chose. If you want to change those things, you can do that at the design center now. So say , one thing costs $3,000 and another thing costs $10,000 and you know, whatever you can play with those or something costs $1500 bucks and you didn’t choose it but then you wanted to do that. You can do that at the design set or later. So that’s a new thing to Fisher. I think that was helpful to my clients. Like, okay, we can lock in the majority of this and we can think about these items and possibly take them or leave them when we go to the design center.
Okay. So this whole process probably takes, I don’t know, 45 minutes or so to go through all these different things. Like I said, you can see the different prices. You can ask all the questions you want. Hopefully an agent is there with you on to kind of be on your side and be a separate voice and maybe ask about some questions. I I’ll give you an example. One thing we were considering was a basement on this house and that was a big cost. It was about a $30,000 difference. If you were gonna have a basement on the Yosemite plan versus being on a slab. And they were like “Well, we don’t need the room. We’re a smaller family. We’re we don’t need all that storage.” And those are all good points. And those are fair points. And if you wanna save the $30,000, it makes total sense. One thing I said as an agent was like “Hey, that’s totally fine. You gotta decide what’s best for you and your family.” One thing you might want to think about is down the road. When you sell the property, a basement’s gonna be more appealing to the next buyer than a house that’s on a slab. You could keep it unfinished, but you could also finish that basement space.
You provide this extra living space and that’s only gonna increase the value down the road. When you go to resell, that’s something you can’t change after you build the house, right? You can’t go back and add a basement once you’ve built the house. So they were weighing that they were considering that. Again, that’s another good reason why you might want to have an agent with you at that meeting to think through some of these other things that you might not be thinking about. Once you’ve gone through all the different structural designs, once you’ve gotten all your questions answered and you’re ready to move forward on the house, it’s time to sign on the dotted line. That’s all electronic here in this situation, but you’re gonna put down, I believe it’s like a $3,000 deposit to hold the property at the design center. You end up putting down a three and a half percent on that. That could change, but I believe that’s what the current rate was in terms of putting down a deposit to get the house started and built. That three and a half percent will obviously go towards your closing costs. If for some reason your closing costs are less than that. When the home is complete and you close, you’re actually gonna get a check written back to you for the amount you put down on the deposit.
Team Sztanyo! Your Trusted Guide in Buying Your New Construction Home
All right, guys, I hope this was helpful for you to kind of take a little journey from the lot to the dot-ted line. And see a little bit of what that building process is all about. What are some of the pros? What are some of the cons? Obviously there’s a million questions that comes with this process. And if you have questions or you’re interested in new construction, reach out to me. It’s really helpful to work with these Fisher sales reps, cuz they know all about that particular house. So some of those questions are gonna get diverted to them.
But again, having an agent on your side, working on your behalf is really helpful in the process as always. I hope this was helpful for you. If it was please like and subscribe, comment below, what you guys wanna see? We’re gonna keep building these out all year. What questions do you have? We want to answer those as much as possible. I wanted to give you a feel for another community in the Cincinnati area, this village of classic way, which is great new homes being built and pretty for affordable area in a good school district. So Sztanyo clanyo, thank you again so much and we’ll see you in the next one.