New or existing homes, which is a better fit for you?
Well, that depends…. What’s your budget, your timeframe, stamina, your flexibility?
Only 15% of the residential market is new construction. So that limits your options in terms of where builders are building. In my experience working with a national homebuilder in the low country there are certain home buyers that just want new construction. Just like a new car they like the feel, the look and the value they get from building a new home. You can literally see behind the walls before you close on your new house. So you know what you are getting. New materials, cutting edge technology, updated floorplans, virtually maintenance free. Everyone is new coming from a different part of the country. The neighborhood has a unique footprint with amenities and/or lifestyle. You have a new home warranty, the warranty manager is onsite so that issues that may arise after close can be taken care of. Of course, there are tradeoffs when you build your house. The location of these communities is further out from Hilton Head Island. In order to keep costs down most national and regional builders will clear cut the land. This makes it easier to build on and they can sell the lumber! National home builders are all about profit to their shareholders. They need momentum, building their homes and quantity for economies of scale. They are going into a new land acquisition taking on a lot of risk with a dearth of contractors in Low Country compared to major metropolitan areas, risk of hurricanes, delivery of supplies is also slower (off the beaten path) They are trying to mitigate that risk by building as many homes on the land and selling them as fast as possible. You the buyer have limited choices or lots and floorplans.. This allows the builder to keep costs down and pass it on to you in the form of a “lower cost” new home.
The timeline to build is generally shorter than other builders around 7 months from contract to close. The homebuyers buy a package - the lot and the house together and closes after the house has received a certificate of occupancy from the town. What most homebuyers don’t realize along with many agents is that national home builders offer incentives on the house IF you use THEIR lender…. Again, it’s all about monetizing every transaction. If you choose your own lender no incentives…. If you pay cash, no incentives….. The trend has definitely been to capture as many loans from homebuyers as possible targeting over 95 %! That offers the builder another revenue stream.
The best time generally to buy in these new communities is just when the community is opening up (you’re taking on risk too with the builder so they want to incentivize you) or when the community is about to close out. The builder just wants to get out of there and put all their resources into the next community.
A shrewd buyer’s agent will find out what the fiscal year end is for the builder. Not all builders have the calendar year end for their fiscal year end. This is the best time for homebuyers to get a great deal. The homebuilder is under a lot of pressure to show “numbers of units sold” to its shareholders.