It's no secret that there is a shortage of real estate inventory in the Louisville market. Many sellers are scared to list their house for fear that they will not find a new home to purchase. I hear about multiple offer situations in nearly every part of the Kentuckiana area. So what's a buyer to do? Some buyers have decided it's time to take matters into their own hands and build their dream home.
For most, this prospect of building a home, while exciting, sounds like a daunting process. With the right help from a Realtor, experienced builder, lender, and title attorney it doesn't have to be. But understanding the process is key.
There are many avenues that can lead to the purchase of a new construction home. Sometimes the client will find the perfect spec home. Sometimes they will purchase the land and either build it themselves or hire a builder to build the home. Other times they will find a builder, choose a lot and home plan and then the builder will finance the project himself. In those cases, the client closes on the new home like any other closing.
Whichever way the client goes, there are some really important things to keep in mind. The Building Industry Association of Louisville (BIA) has their own contract, while GLAR has an addendum to use if you prefer to use the standard GLAR contract. Get to know the forms. If you aren't comfortable with them, give us a call. We will be happy to go over the nuances (and there are a lot of them) of these forms. If you are interested in new constructions forms class, our office is having them. Contact us and we will sign you up!
Remind your clients that every time they upgrade it adds costs to the home. This seems logical enough, but it's easy to get carried away. This can result in appraisals coming in low when you over build for a neighborhood. Or, a client can upgrade themselves out of their price range. Make sure you and your client keep track of change orders and remind them that these changes add up.
There are so many things to think about with new construction, and this article is just the tip of the iceberg. In order to build your business, built your knowledge about new construction.