Redfin's Kirkland New Construction Class 2.4.14


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  • Redfin's Kirkland New Construction Class 2.4.14

    1. 1. Redfin‟s New Construction Class Hosts: Redfin - Sinead Fennell Jeffrey Withey Laurie Clark Cobalt Mortgage - Jenny Boyce Redfin‟s Redmond-Kirkland team February 4, 2014, Kirkland, WA @Redfin Slide 1 of 33
    2. 2. Agenda ● ● ● ● ● ● ● ● ● Finding New Construction Pros & Cons New Construction Types Process Upgrades & Changes Negotiating Financing FAQ Q&A Slide 2 of 33
    3. 3. A Little Bit About Redfin Redfin is a real estate brokerage on a mission to make buying and selling a home better for you. ● Accountability: we‟re on your side, giving you honest advice ● Technology: sellers get more traffic; buyers tour homes first ● Value: a full-service brokerage that saves you thousands  No obligation Slide 3 of 33
    4. 4. Your Agent. A Good Fit? Click here when you decide See all deals & reviews Slide 4 of 33
    5. 5. Finding new construction Slide 5 of 33
    6. 6. How to locate new construction Slide 6 of 33
    7. 7. Slide 7 of 33
    8. 8. “Pre-Sale” or “Under Construction” Pictures from the MLS Slide 8 of 33
    9. 9. “Pre Sale” or “Under Construction” Actually… Slide 9 of 33
    10. 10. Finding New Home Listings ● Builders may not list every home in a development on the MLS – your agent can inquire about other homes ● A neighborhood may become available in phases – sign up to be on a notification list with builder ● Notice of “Proposed Land Use” sign ● Builder websites, newspapers on Saturdays ● Driving around and seeing activity photo: Slide 10 of 33
    11. 11. Local Builder Websites Local Builders Lozier Buchan Select Homes Burnstead Ichijo USA Murray Franklin Polygon Quadrant Conner JayMarc Homes National Builders Centex Homes - Pulte DR Horton Toll Bros/CamWest Lennar Slide 11 of 33
    12. 12. Pros & Cons Slide 12 of 33
    13. 13. New vs. Resale? Buying new construction has it’s differences… • No inspection contingency in contract • Earnest money amount is usually set by the builder and non-refundable • Builder‟s documents lean towards builder. Few to no “outs” for buyer without losing EM • Less negotiation on price, other terms • Longer closes, depending on the progress of home, builder can extend without penalty Slide 13 of 33
    14. 14. New Construction Pros ● ● ● ● ● ● You pick exactly what you want You pick the location of your home in a community Modern floor plans All major systems are new – lower maintenance Higher energy efficiency Planned community – parks, retail, harmonious architecture ● Warranty – shorter term touch ups & longer term protection ● No fixing some prior owner‟s mistakes or problems Slide 14 of 33
    15. 15. New Construction Cons ● ● ● ● ● ● ● ● ● Usually the newer the house, the smaller the lot HOA may have lots of rules Lots of houses look the same Landscaping isn‟t mature yet Living with construction noise Process is more complicated Can be more expensive per square foot Builders may not be negotiable, depending on market If pre-sale, can take a long time – up to 7 months, typically 4-5 mo. ● Builder may change the homes they are building in the future – either the plans or the price Slide 15 of 33
    16. 16. The Process Slide 16 of 33
    17. 17. How far along is it? • City permits • Most options for changes and upgrades • Longest timeline “Presale” Home Slide 17 of 33 Under Construction • Limited changes • Pick colors possibly • Timeline varies • No changes • Upgrades limited • Close quickly, like a resale home Completed “Spec” Home
    18. 18. Presale: Picking Your Lot When in the presale stage, you can choose your lot from lots that have been „released‟ at the time. Builders release lots in phases in a development and start the permitting process only on selected lots. Some floor plans will only fit on certain lots. Slide 18 of 33
    19. 19. Basic Build Process 4.5-7 months Permitting Process (floor plan and lot permitted by the city) Foundation poured Framing/Roof/Windows Stage (inspected by the city) (order for cabinets/plumbing fixtures/furnace/H2O tank, trim, doors) Exterior Siding/Painting Stage Electrical/Plumbing/Heating/Insulation Stage (re-inspected by the city) (order for flooring/appliances/fixtures) Drywall/Interior Painting/Doors/Millwork Stage Cabinets/Plumbing Fixtures/Other Fixtures Stage Flooring/Appliance/Landscaping Stage Clean-up COO (Final „Certificate of Occupancy‟ Certificate from the city) Private Inspection and Builder „Blue Tape‟ Walk-through with Buyer Slide 19 of 33
    20. 20. Builder contracts Builders have a package of documents: ● Builder addendum ● Full builder purchase agreement ● Neighborhood description documents ● Timeline advisories ● Warranty information ● HOA documentation These are non-standard forms that will override standard purchase agreement documents and must be read carefully. Slide 20 of 33
    21. 21. Common Provisions in Contracts Some common clauses in builder contracts are: ● No inspection contingency – inspections are allowed and builder must fix code issues but you can‟t walk away ● Financing – different timelines/clauses than buying a resale ● Builder walk through – “blue tape walk through” to create a “punch list” right before closing ● Closing delays – builder may automatically extend closing with no penalty if their process is delayed but if you delay with your lending there may be penalties ● Repairs after closing – builder may be allowed to finish things after closing within a certain timeline ● Earnest money non-refundable – after a certain period your earnest money may go “hard” Slide 21 of 33
    22. 22. Upgrades & Changes Slide 22 of 33
    23. 23. List Price = Builder‟s “Standard” or “Spec” • List price is for the builder‟s “standard” specification of finishes • “Standard” specs will vary from one builder to another • Upgrades/options will add onto the price of the home • Upgrade prices are the difference between the price of the “standard” and the actual cost of the upgrade • Other options, such as air conditioning, or adding features are straight prices the builder charges • You can easily spend 15-20K on upgrades/options, adding to the cost of the home Slide 23 of 33
    24. 24. Model Homes… If there is a model home, it will probably have a number of upgrades installed. Models often have upgraded tile work, upgraded countertops, extended hardwoods, upgraded paint. Models aren‟t usually for sale until they sell out the development. Some upgrades are obvious: ● Upgraded/extended flooring ● Upgraded countertops Some are not: ● Window screens (Really? Yes, really!) ● Garage door openers (Huh?) ● Landscaping (Front yard is always included, rear yard is usually not) ● Appliances (Refrigerator, Washer, Dryer are NEVER included in the sales price of new homes, except, occasionally, in the model home) ● Blinds ● Model homes often have A/C to make viewing the home comfortable to buyers Slide 24 of 33
    25. 25. Paying for upgrades Every builder has different processes: ● Roll it into the purchase price ● Upfront deposit ● Upgrade deposits are non-refundable ● May be fees for getting quotes for making changes Every builder has a specific deadline for each house after which certain upgrades cannot be added or changed. Slide 25 of 33
    26. 26. Specifications List Every builder should be able to provide: ● A list of what upgrades are present in the model ● A standard list of specifications or „specs‟ for each home ● If the lot you are considering has any upgrades preselected and included in the price They may or may not have: ● A list of common upgrades ● A price list or master list of options/upgrades ● A cost associated with quoting custom finishes ● Limits on changes that they are willing to make Slide 26 of 33
    27. 27. Negotiating Slide 27 of 33
    28. 28. Front End vs. Back End „Front End‟ means on the purchase price: ● an offer of $545,000 on a list price of $550,000 „Back End‟ means on concessions or upgrades: ● an offer of $550,000 on a list price of $550,000 ● asking for the builder to include certain upgrades or credit a certain amount towards upgrades or closing costs. Slide 28 of 33
    29. 29. What works best? Builders prefer to negotiate on the back end. Why? ● Avoid setting a precedent of discounting for future sales ● Avoid upsetting prior purchasers who paid full price – these are their customers and future referrals for their company ● May be able to control material and labor costs The best approach varies case by case. Builders often have certain styles. An experienced agent can lay out your options and make a recommendation. Slide 29 of 33
    30. 30. Negotiation Factors ● Market demand – How many homes has the builder sold this month, last six months? What are the current market conditions? ● Phase of construction – May be willing to negotiate more if an completed home has been sitting ● Health/size of builder – Do they need to sell it? Some small builders don‟t have the flux of $ that larger builders have and are more willing to negotiate to sell a home ● Willingness to use a “preferred lender” ● Number of requested upgrades Slide 30 of 33
    31. 31. What can you get? ● Allowance – some builders allow a buyer to specify a certain dollar amount in the offer that they can later specify how it will be spent. This amount will go up and down with the market. Most builders are giving very little away now. ● Redfin credit – typically the rebate from Redfin must go towards your closing costs – it‟s good to keep that in mind during negotiations with the builder. Slide 31 of 33
    32. 32. Financing Jenny Boyce – Cobalt Mortgage Slide 32 of 33
    33. 33. Preferred Lenders Many builder‟s will have a special relationship with a lender ● Ownership – may be owned by the same parent company, or may just be an institution the builder likes ● Concessions – certain “specials” may be linked to you agreeing to use the specific lender ● Rates – usually comparable, maybe not the very best deal you can find, may have longer term rate lock products (which you need for new construction) ● Process – the preferred lender should be very familiar with that certain builders contracts ● Apply – usually required to apply for a loan with preferred lender so they know you are approved Slide 33 of 33
    34. 34. Financing for New Construction ● Rate lock considerations ● Appraisal timing ● Upgrades ● Special closing items ● Accountability Slide 34 of 33
    35. 35. FAQ Slide 35 of 33
    36. 36. Common Questions ● Is this builder reputable? ● Can I tour new homes with a Redfin Agent? Yes! ● Can I still get the Redfin Refund if the home is not listed on the MLS yet? Yes! ● Can I change anything in the builder contract? ● When do I have to tell them I am working with an agent? ● The agent in the builder‟s model told me they are a buyer‟s agent. Are they working in my interest? ● Can I get a better deal by going with the builder‟s buyer‟s agent? Slide 36 of 33
    37. 37. Questions? Slide 37 of 33
    38. 38. Thank you for attending! Redfin Host: Sinead Fennell Jeffrey Withey Laurie Clark Cobalt Mortgage: Jenny Boyce Please fill out the survey. We‟d love to get your feedback so we can improve our classes. We will also send you this slide deck. Check out our home buying guide: Check out our schedule of upcoming classes at Slide 38 of 33
    39. 39. Thanks for attending! Slide 39 of 33