A modicum of pontification
The recent stories out of Oakville where a whole bunch of home buyers bought from the builder (Mattamy Homes) at the peak of the market last year begs me to revisit the pros and cons of buying new homes, especially when the closing date is a year or more out, especially when you are not working with a buyer’s agent, especially when most home buyers are too young to remember when house prices tanked and then took more than half a decade to get back to where they were — most of us have only lived through rising prices and high demand. But those ideas are for another post. Homebuyers know these things. I’m not here to pontificate.
Good Reasons to buy new
There are a lot of good reasons to buy new as opposed to buying resale. It is a very attractive option to many first time home buyers and I’ve noticed to many new Canadians. I’ve also worked with serial new home buyers who always always always buy new homes in new subdivisions. There is a certain amount of built in trust when buying new. That trust is mostly well placed. We have warranties in place to protect home buyers from buying a poorly constructed house. And of course, some people just like new. They buy new cars too, never considering the savings of buying a “pre-owned” vehicle.
Buying tips when buying new
Buying a new home is very different than buying a resale home. Below are some tips to help you come out on top:
The best lots are spoken for first. If you want to snag that pie shaped lot that backs onto green space, then you want to be at the front of the line. Besides having a Realtor who is well-connected to the local scene, you can register yourself on builder websites and get yourself on VIP lists for early bird buying events and new phase launches.
At the end of a build, the builder just wants to finish and move on to the next subdivision. The last few lots, the leftover houses are sometimes sold off at a pretty good price in comparison to the best lots sold at a premium early in the development. If you don’t mind leftovers, then sometimes there is a deal to be had.
Have an agent
Many new buyers think that working with a buyer’s agent will cost them in out of pocket money or cost them money in terms of negotiating room with the builder directly. In most cases neither is true.
Just like working with a buyer’s agent when buying resale, the commission is paid from the seller’s side (the builder) to the cooperating brokerage.
Ask the builder directly, “will I save money if I do not have my own agent?” Chances are, you will not. They just keep it for themselves.
Of course, some builders, like Mattamy still do not work with buyer’s agents. But they are in the minority.
At any given time, there are more than a dozen builders building in Waterloo Region. But all builders are not the same. What they include in the purchase price is not the same across the board. Incentives change depending how well sales are going. Some builders charge for some things that I would think should be included. Some drywall the garage, others sod the front yard, not the back, some have landscaping credits. Some builders will put down a bottom coat of asphalt driveway. Some will do paving stones…In real estate you are never comparing apples to apples. This is also true with new builds.
The model home is a showpiece. It often has more than $100,000 in upgrades. It is easy to fall in love with the model home because it will be near perfect in every way. Don’t get taken in with this shock and awe tactic. Instead, in your mind’s eye downgrade your expectations and try to picture what you are about to really buy.
Take your time
I believe that model homes are understaffed on purpose. There is a certain urgency created in many showrooms when other buyers are there, cheques at the ready. Go ahead and conditionally buy. You have a ten day cooling off period (or a ten day lawyer review period) to rethink about it.