5 Reasons to Consider a New Build or Pre-Construction Home in 2024

Here are 5 reasons to consider a new build or pre-construction home in 2023.

When contemplating the purchase of a home, among the many options to consider are new construction or pre-construction. Today I’m sharing 5 reasons why a new build or pre-construction home would be a great idea in 2024.

What’s the difference between a New Build and a Pre-Construction Home?

New construction homes are usually built in new developments or subdivisions, then listed and sold on the multiple listing service (MLS). Pre-construction homes are typically purchased prior to building. In pre-construction, a buyer and their real estate agent meet with a sales team at a model home and discuss home options culminating in a purchase agreement. In new construction, because the home isn’t built yet, buyers often have the chance to choose from different home designs and pick their own colors and finishes for the new home.

Why You Should Take Advantage of New Construction in 2024

As you’re probably aware, during 2021 and the beginning of 2022, home demand and prices skyrocketed. Multiple offers were the norm. Buyers were paying above-appraised values. Builders could not keep up with the demand. So much so that in Northern Utah, a number of home builders opted to build only spec homes rather than work with buyers on pre-construction. Building first and selling later was advantageous for builders because homes were selling for far more the more time passed. A no-brainer. Thus, builders worked to bring up new home communities of single-family homes and townhomes as quickly as the market conditions allowed and sold the homes to the highest bidder. Fast forward a few months, and interest rates tripled by the end of 2022 making a significant impact on mortgage payments for potential buyers. So much so that many buyers backed out of existing pre-construction contracts, and many potential home buyers decided that buying a new house was no longer a good idea.

It’s now the beginning of 2023, and the situation for builders looks quite different.

5 Reasons to Consider a New Build or Pre-Construction Home in 2024

Reason #1: Builder Incentives

Since the rise in interest rates, some builders were left with a large amount inventory of single-family homes. To incentivize buyers, a number of builders are offering price reductions while also covering closing costs and interest rate buy-downs. This is especially true with move-in-ready homes and properties in the pre-stages of construction.

Reason #2 Instant Equity

Because the market is still adjusting to the shift, appraised values may come in higher than the purchase price. In December of 2022, I helped a buyer get into a beautiful home in Syracuse, Utah. The builder had already reduced 50,000 from the asking price due to the market shift. I then negotiated another 10,000 off the price for my clients. Three weeks later the appraisal came back at 90,000 over the purchase price. This became instant equity for my clients after closing!

Reason #3 Contingent Offers are Back

If you have a home to sell, a builder may be more willing to accept an offer contingent on the sale of your current home. This is particularly helpful if you have to wait for the builder to finish the new home and may keep you from having to find a place to live in between. No one likes to move twice!

Reason #4 More Room for Negotiation

Builders have more room to negotiate than private home sellers. When you buy a home from an individual, that person is typically looking to net a certain amount in order to pay off their mortgage and get into the next home. Builders build by communities and generally have more room to give you a better deal depending on the home.

Reason #5 Low Maintenance/Modern Features/Warranty

This is an advantage of new homes and a reason why many buyers prefer new construction regardless of market conditions. New and pre-construction homes are typically located in brand-new communities with updated, open floor plans. Many also have a community park. They’re typically energy-efficient homes that require less maintenance than older homes, as everything is brand new and less likely to need major repairs or replacements in the near future. In addition, new homes often come with modern features and technology that may not be available in older homes. This can include smart home systems, energy-efficient appliances, and high-tech security systems.

Should You Use a Realtor for New Construction and Pre-Construction?

You are not required to use a real estate agent for any transaction including new construction. However, having an agent to represent your best interests in what is likely to be the largest purchase you’ve ever made, is not only a good idea, but it can save you money. Real estate transactions deal with legally-binding contracts. You should work with someone who is experienced and familiar with the terminology in the contracts and can advise you in your negotiations. Why be liable yourself when you can pass on that liability to a brokerage? The good news is that most builders work with buyers’ agents and pay their fees. Thus, you can rest assured that you’ll be represented fairly without incurring more costs. Given that the contract for new construction is over 20 pages (compared with 5-6 pages on a traditional sales contract) it’s important to have someone on your side to explain it all and help negotiate terms that are best for you.

Builders in Northern Utah

If you’re interested in new construction in Northern Utah, below is a list of a few reputable home builders you may want to check out.

  1. Ivory Homes
  2. Brighton Homes
  3. Woodside Homes
  4. DR Horton
  5. Craythorne Construction
  6. Nilson Homes
  7. Castle Creek Homes
  8. Toll Brothers

There are so many important decisions to make when it comes to buying a home. Overall, new construction in 2023 can be a great option, especially if you’re a first-time homebuyer and can take advantage of the builder incentives and buy existing inventory. Pre-construction is also a great option because builders are now more open to buyers who are also selling and want to customize their new homes. A brand-new home will often save on energy costs, have lower maintenance, and have more modern features. Lastly, as a new homeowner, you can enjoy the peace of mind that comes with a builder’s warranty. New construction and pre-construction are worth considering when looking for your next home!

Do you have any questions about new construction or the buying process? I love to hear from my readers! Send me a message here!

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