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Low Inventory, Multiple Offers . . New Construction Could Be An Alternative

Aug 23

filed under: Buying A Home, Real Estate, Yada Yada

I’m currently working with a client that is trying to purchase a 3,500 plus square foot home with five bedrooms and a pool in the Northwest Valley. He’s a veteran with some bad knees so he has some special requirements, i.e. master bedroom and laundry room needs to be on the first floor. He’s also going to be doing a VA loan.

The problem we keep running into due to the  low housing inventory is that when a property does hit the market we are confronted with a multiple offer situation. Also lenders of distressed properties are not too keen on VA loans for a couple of reasons. First being that VA loans appraisers are extremely conservative with their appraisals and if the VA appraiser comments “that there’s some work that needs to be done to the house” the seller has to get someone to fix it or fix it themselves. It also has to be fixed before the loan can be closed. Well we all know by now that distressed properties are pretty much sold “as is”  and that distressed homes are the majority of homes in the resale market.

Because frustration was clearly setting in for my buyer we decided maybe we should check out some of the greater Phoenix area new home developments. He doesn’t have a specific time frame that he needs to close on a property so a new build could work for him. What I found out is that there are still many new home builders that are “still building” contrary to everything we read in the papers. Also new home developers do not put their homes into the MLS unless they have a spec home they would like to sell. However after considerable time and  research I was able to  identify home developments that could build a home that would fit my buyer’s criteria and I was pleased to find that we had several options.

What I was able to conclude based on my research is that new construction can be a great alternative if you can not find a home in the resale home market. There are some great incentives that are being offered by these developers, i.e. anywhere between $5,000 to $20,000 in options/upgrades, up to 3% of closing costs paid if you use their preferred lenders, a couple of them were including 2″ faux wood blinds throughout the home etc. Also appealing are the home warranties that come with building a new home and some great “green” features. Oh did I mention “no multiple offers” and a brand spankin new home.

In another post I will give my strong opinion about the new home developers that don’t have models of their floor plans. This is a definite negative. Yes you can go into one of their other models and see the standard options vs. the upgrade options but not being able to see the actual home you will be buying is really problematic.

I still would not let that stop you from going and checking out some new home developments. I would advise you to take your Realtor® with you on your first visit so that you can make it known that you are working with a Realtor® and that you have someone representing you.  You should avoid that “dual agency” situation where the builder is representing themselves and you at the same time. Having a professional on “your” side is always a good thing.

If you need someone to assist you in identifying new home developments that could be right for you contact me, I work many areas of the Valley and I will be happy to work with you.

Written by Howard Harris