Buying New Construction? What to Expect In Today’s Market

The Differences

When shopping for a home, attempting to purchase a newly constructed home, townhome, or condo directly from the builder brings about a unique experience compared to purchasing a re-sale property directly from an owner. The process differs in many ways but here are a few key differences (not saying anything here is bad, it just is):

  • it’s a business deal for the builder, not a mix of business and personal/emotion like with a resale property
  • receiving full incentives is often contingent upon using the builders preferred lender (often owned by the builder)
  • you may not be able to buy right away depending one where the builder is in their sales/building phase process
  • you will likely be waiting months for delivery, verses being able to move into a re-sale home within 30-45 days of agreeing to a contract

The Competition

In today’s Northern Virginia market where there is a shortage of move-in-ready inventory builders are having a great run because they are giving the market what the market is hungry for. The competition this generates from buyers means that builders are in the drivers seat. The buyers are coming through their doors, so all the builders are looking at are their prices compared to demand, and compared to fellow builders. In a competitive environment like this once they set those numbers, as I mentioned in the video, it is often a take it or leave it deal. At each phase of construction of a community, they will reassess these prices, so it is not uncommon for someone closing in July to pay thousands less than someone closing on the same model in September.

Please note: This post is related to community based building, not one-off custom homes, or buying from a speculator who has built on a single lot.

Looking For More?

If you have additional questions about purchasing new constructions please ask them in the comments below, or find me via the “Chat” button on the right.

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  • What makes more sense these days, building a new home that meets your needs in Northern VA or picking up a default house on the cheap somewhere in the district? I have heard that many buyers are consolidating property in the district in these past two years and am wondering if it is too late to get in on it.

    • ColinStorm

      Brian, thank you for your question. Moving from the bottom up, you are right, there has been a wave of renovation and rehabilitation activity happening throughout many neighborhoods in the District. [see my post here: http://thebeltwaylife.com/2010/11/24/a-dc-row-house-gets-a-rehab/%5D
      Opportunities were plentiful throughout 2010, but the competition to buy them was pretty fierce. Even so many were able to purchase property, do the necessary work, and come out the other side with positive equity. I see no reason why these opportunities will not continue for the foreseeable future, however chances for instant equity will likely vary.

      Now, whether this is better or makes more sense than building new in Northern Virginia will depend largely on an individual’s circumstances and expectations. Anyone weighing this decision will have to look at several factors such as size, parking, commute, schools, personal community of friends, stomach for surprises, etc…