The New Game of New Construction

I really enjoy what I do and get a lot of satisfaction from helping buyers and sellers achieve their goals in the world of real estate.  One of the largest parts of my “job” is to educate clients on market conditions so that they know the rules of the game we are currently in, and thus can play that game at a higher level.  In the past, one of the appeals of buying new construction was not only the worry-free living of a new home, but also avoiding the potential bidding war of the hot resale market.  We would locate a neighborhood that fits the buyer’s needs and budget and would set up a meeting with the onsite agent to pick out a lot, floor plan, and proceed to write up the contract.  Well, that is no longer the situation that we face here in the Triangle.

There are several aspects to new construction that buyers expect that are simply no longer the standard, but are actually now the exception.  One of those expectations is being able to pick out a floor plan for the lot you want to build on.  First and foremost, all lots are not open for reserving a home build.  Because construction timelines have been slowed due to supply chain shortages and work force labor troubles, builders are only releasing a few lots at a time.  

Why would they do this you may ask?  Builders want to keep customers happy and they want to deliver homes in a reasonable time frame.  In order to keep projects manageable and deliver finished homes in a more timely manner, they are keeping the number of homes under construction at one time to a minimum.  Builders like to have a lower average timeframe for their building and don’t want to put a buyer under contract on a home that they know they can’t even get started on for 3-4 months and thus can’t deliver a finished product for 9-12 months.  This timeline is acceptable if building a custom home but not acceptable for the larger tract builders (Lennar, Beazer, etc).

Buyers are also experiencing the unfortunate reality that they don’t get to pick their floor plan for a specific lot, nor do they get to choose many options (if any) in the home.  Builders are able to build more efficiently if they keep the selections on the homes in-house and allow their showroom managers to make all the selections.  This allows for a more streamlined process which keeps the ball rolling and more manageable.  Builders are finding that most buyers like the professionally picked selections anyway and are not having any issues with selling the homes. (Easier + no problem selling = spec homes).

Probably the worst change from a buyer's perspective in the new construction game is that they are no longer avoiding the bidding war that they are experiencing in the resale market.  The Raleigh/Durham market is in super high demand and most onsite agents are holding onto a  list of interested buyers who want to buy a home in their neighborhood.  When lots are released and specific floor plans are assigned to those lots, then buyers are in a frenzy to snag the lot that has the floorplan they want.  Most builders are sending out the information on the lots and floor plans and putting in a deadline for offers to be turned in.  What would differentiate these offers apart that may be of importance to the builder for picking from?  All of your large builders have preferred lenders and put an emphasis on the buyer being prequalified with their lender.  On top of that, it is not unheard of for a buyer to offer more than the listed price on a new construction home and potentially be willing to offer more money than the required builder deposit which is non refundable to the buyer if they do not close on the home.  

The real estate market in the Triangle has been on fire for over a year now and even though some would say it has cooled off a little bit, it is still hotter than most out there.  We are still seeing resale homes receive 15+ offers in 48 hours with offer amounts at 110+% of asking price.  New construction is a great option for lots of buyers but there are still some “landmines” to negotiate.  Give our team a call today and allow us the opportunity to speak with you, answer any questions you may have, educate you on the market and the process, and see what we can do to earn the opportunity to help you.  We are here, we are ready, willing and able to assist you in reaching your real estate goals.  

Chad Wingler

Lead Buyer Specialist

(919) 300-5421