The Bright and Shiny New Home: Are the Builder Incentives Worth it?

The Bright and Shiny New Home: Are the Builder Incentives Worth it?

Who doesn’t love looking at model homes, enjoying the idea of planning exactly how you want it to be and knowing no one has ever lived there before you? 

After all, a new home also means that it’s likely that nothing will go wrong, such as the air conditioning going out, or no need to spend time and money on remodeling. 

Now may be the time to consider a new home, but there are also some things to consider before signing on the dotted line. 

More Incentives Than Ever

And, with the recent pandemic and short supply of resale homes, builders are ramping up their incentives to make a new home even more attractive for today’s buyers. In May, many home builders offered greater incentives, according to a National Association of Home Builders/Wells Fargo Housing Market Index survey.  

The survey also noted that the most common incentives included paying closing costs and fees or offering options and upgrades for reduced or no cost. Some builders were also reducing their new home prices. 

Further incentives, although less common, included helping buyers to sell their previous home, offering energy efficient features at reduced or no cost, paying for financing points for the buyer, and offering trade-in programs.

Avoid New Home Purchase Mistakes

Like all home transactions, it’s easy to make some mistakes during the new home buying process if you don’t do your research. You still need to check on what other lenders offer instead of just using the builder’s lender because it means they will throw in that upgraded countertop or appliances. 

Also, remember that all those upgrades offered to you at a reduced price still add to the cost of the home. That also means a larger mortgage. In reality, you end up financing those upgrades when you could add those later on after you’ve lived there and saved up the cash for those items. 

If It Sounds Too Good to Be True

It’s easy to be lured into the glitz and glamor of a brand new home. However, some builders take that even farther by enticing you with things like a free vacation, free entertainment centers and devices, and even a free car.

Don’t fall for it because these are distractions that may lead you to miss the small print in the contract or push you to spend more than you should to get into the new home. 

Words of Warning

One of the most important things to consider when looking at a new construction home is the fact that you may not get your earnest money deposit back. 

Read your contract carefully and get advice on how you might get a refund. If you put a sizable amount down and don’t get that back because you weren’t approved for a loan or something else happens, that’s a huge loss. 

Hire an Agent

Many home buyers that go to new home developments assume they should just work with the salesperson in the office to negotiate and complete their purchase. However, in reality, you should still work with a real estate agent.

Having them in your corner means being able to leverage their experience and knowledge to avoid becoming emotionally involved with all the shiny, yet expensive, upgrades. With a realtor as your guide, you can stay focused on getting the best deal for your financial situation. 

Your realtor can also sell your home, if you need to sell one to get into the new home build. That way, you have someone looking after you on both transactions who knows and understands the local market. 

I’m here to help you weigh the pros and cons of a new home and navigate the builder incentives, process, and terms.