What Are New Construction Homes? | Definition, Tips & Talking Points

Definition
New Construction Homes – Tips & Talking Points
1. The seller is usually the builder
2. New home location: newly developed community vs building on a personal property
3. Understand your clients’ customization needs and budget
• Semi-Custom vs. Fully Custom Build
4. Consider new construction build times
5. Warranty & home Inspections are essential
• Explore standard builder warranty options
• Encourage a home inspection
6. New construction homes are more energy efficient
7. Clients should spend less on maintenance the first few years

If you’re a real estate agent, chances are you’ve heard about or even sold new construction homes. Although it probably sounds pretty obvious to you, some people might not have heard about new construction homes, or simply don’t know what that term means!

As an authority in the real estate market, your clients are depending on you to have all the answers and negotiate a great deal. So if you’re ever in a position where a client asks about the new home buying process, it’s a smart idea to make sure you and the client are both talking about the same thing before doing a bunch of unnecessary research.

After all, you don’t want to waste a bunch of time finding or creating floor plans for your client only to find out they have a totally different idea of what a “new home” is!

In this article, we’ll provide a basic definition for the term “new construction home”, and outline some important talking points worth bringing up with your clients.

As a result, you’ll be able to peak the interest of clients, and hopefully sell more new construction homes easier than ever before!

Definition

Simply put, a new construction home is a house where the buyer will be the first person to live there after it’s built (newly constructed).

Other terms for “new construction home” include:

• new home
• soon-to-be-built home
• newly built home

You should be aware that oftentimes people use these terms interchangeably when referring to completed or future builds.

In other words, when someone is talking about a new construction home they could either be talking about a home that’s recently been built, OR one that will be built in the near future. You’ll want to make sure you clarify this difference with your client as soon as possible to make sure everyone is on the same page.

Now that we’ve defined new construction home terminology, let’s dive into some useful tips and talking points!

New Construction Homes – Tips & Talking Points

When it comes to new construction home buying, your clients may have a lot of unique questions. Here’s some tips and talking points to help you stand out as an expert realtor!

1. The seller is usually the builder

In traditional real estate transactions, the seller is another individual home owner or company with a listing agent. In new construction home transactions however, the seller is usually the builder. More specifically, you’ll engage with a builder company Representative (or ‘Builder Rep’ for short).

Since you’ll be interacting with the builder rep directly on behalf of your client, it’s crucial for you to be an informed agent. Ideally, you’ll already know exactly what your client is looking for AND you’ll know that the specific builder your talking to can execute on the floor plan you client needs.

Typically, this can require a ton of comparative research on your end as a realtor. Not only that, but you’ll want to have a solid relationship with these builders already to get their prompt attention and feedback!

Fortunately, New Home Buddy has done a lot of this legwork for you already with our new easy-to-use web platform!

2. New home location: newly developed community vs building on a personal property

More often than not, new construction homes are built in a newly developed community or subdivision. Just think about all the times you’ve driven by and seen signs in up and coming neighborhoods for “new town homes starting in the mid-$500s!”.

However, in some cases a client may decide to build a home on property they own or purchase. This type of new home development is also known as build-to-contract. Although this is a much longer and involved process, it’s certainly a viable option if you can find a builder that specializes in this type of construction!

You might find that clients who wish to build on an empty lot they own will want more customization than what larger builder companies offer.

3. Understand your clients’ customization needs and budget

Before you spend too much time researching possible homes or communities that might fit your client’s needs, it’s important to understand exactly what features they’re looking for in their new home.

The degree of customization they’re looking for could very well determine which builders–and thereby which communities–they should consider. Will there be cases where clients might needs to compromise on customization to fit their location/lifestyle needs? The answer is “yes, quite possibly”.

However, with New Home Buddy you can input exactly what their floor plan/customization needs are and see all viable results instantly. With our platform, you’ll be able to tell them immediately whether or not their wish list is realistic or not. As a result, they won’t have their hopes and dreams dashed later after you’ve spent days researching their wish list.

Semi-Custom vs. Fully Custom Build

So what’s the difference between a semi-custom and fully custom build?

Fully custom builds (also called build-to-contract homes) will likely be a longer process, as the client will need to coordinate and negotiate many details with a boutique builder prior to development.

Semi-custom builds are the more common option as most people who want a new home want to move in sooner rather than later. In these cases, you’ll help communicate the details between your client and the builder. This sounds like a lot of continuous work–but it doesn’t have to be!

New Home Buddy provides realtors like you with the specific floor plan filter options for new home developments before they get listed anywhere else. All you have to do is plug in the needs of your clients, and you’ll instantly have access to the best new home floor plans from builders that match that search criteria.

These homes fall in the ‘newly developed community’ category mentioned above. So not only do you get first access to these homes, but they’ll also most likely be move-in ready within 6 months rather than one year or longer for a fully custom build.

4. Consider new construction build times

Another aspect of the new home buying process you need to consider with your client is when they need to move in to the new home.

New construction home build times can vary widely depending on several important factors:

• Level of customization (see previous sections)
• Size of builder workforce
• Weather/seasonal factors
• Landscaping needs
• Availability of materials (increasingly important with the rise of supply chain issues from COVID-19)

When it comes to new construction home build times, the fastest option is to explore new homes that were recently built.

The second fastest builds would be those that haven’t been built yet, but are in a newly approved community or subdivision. Homes in this stage are kind of a sweet spot, where customization is high and prices are relatively low thanks to early incentives offered by builders. Clients can expect homes in this category to be move-in ready in approximately six to nine months.

The third degree of build time is fully-custom builds. These builds have the most variation and unknown factors depending on a client’s needs. Therefore, the planning and actual build time could take years to complete.

5. Warranty & home Inspections are essential

Once you and your clients hone in on the details of new home (floor plan, location, builder), you’ll want to have the important conversation about warranties and home inspections.

Explore standard builder warranty options

Large construction companies, like Lennar, DR Horton, or Pulte, will likely have standard warranty options for your client to consider.

For example, here’s a snapshot of Plute’s standard warranty policies are:

• 10 Year: Most common, Covers the structural integrity of the home
• 5 Year: Covers various types of water infiltration and internal leaks
• 2 Year: Covers the workability of plumbing, electrical, HVAC, and other mechanisms
• 1 Year: Covers material and workmanship

As a realtor, it’s a good idea to discuss warranty options with your clients early to understand their expectations. That being said, it’s unlikely that a builder company’s warranty policy options will be the deciding factor for your client. Furthermore, your client can always get additional insurance coverage from third parties if they wish.

Encourage a home inspection

Should your clients consider getting a home inspection for their new construction home? The answer is yes!

When clients purchase a resale home, the choice to get a home inspection is a no-brainer. However, with a new construction home, the choice to get a home inspection might not be so obvious. Builders might offer to do a ‘final walk through’, but that’s far from essential.

If your client has a warranty (see section above), you’ll definitely want to encourage them to pay for a home inspection. That way, they’ll have a guarantee that everything was built properly.

In some cases, contractors build as fast as possible to get the job done. So it’s understandable that mistakes might just happen! Furthermore, if they’re working so fast only to meet the bare minimum of code, these mistakes could be detrimental.

This is why two-thirds of new home buyers still opt to get a home inspection done once their home is completed. Your client should get one too!

6. New construction homes are more energy efficient

Fortunately, advancements in technology allow new homes to consume significantly less energy! In fact, according to the Energy Information Administration (EIA), homes built in the United States after the year 2000 on average consume 20% less energy than those built before then.

Juxtapose this with the fact that the average home built after the year 2000 is 30% larger than homes built before 2000. Therefore, despite the fact that new homes are much larger than older ones, they’re also consuming far less energy!

Some of the primary factors that contribute to energy efficiency in new homes include:

• Better insulation (floors, windows, attics, ducts, etc)
• Advanced heating systems
• Stricter energy code regulation

So not only are your new construction home clients helping the environment by consuming less energy–they’re also saving money every month while doing so! If your clients are especially environment or cost-conscious, energy efficiency is an excellent talking point worth bringing up.

7. Clients should spend less on maintenance the first few years

One of the biggest benefits to buying a new construction home is that when it comes to maintenance, clients can have peace of mind for a few years at least. When everything is new, there’s less of a chance for appliance mishaps, roof leaks, etc.

Obviously you want your client to have a positive home buying experience. Almost nothing is worse than helping them get what they think is going to be the home of their dreams only to learn that they’ve had to spend a ton of additional money on repairs afterwards. Therefore, new construction home purchases reduce long-term stress for both you and your client!

Since this is such an attractive aspect of purchasing a new construction home, you’ll want to make sure you and your client thoroughly discuss warranty and home inspections (see previous section).

Conclusion

New construction homes are a popular option for home buyers. There’s just something so special about being the first person to live in a clean, sparkling new home!

But as a real estate agent, you might feel a little overwhelmed when clients start asking you a million questions about the new home buying process.

That’s why we’ve developed New Home Buddy. You can use our new web platform to instantly find precise and reliable new home matches for your client!

So whether you’re an experienced new home agent, or just getting started, New Home Buddy can help you find and close new deals in a flash. Sign up for a free Agent account today!