Redfin Broadlands New Construction

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Redfin Broadlands New Construction

  1. 1. Slide 1 of 33 Redfin’s New Construction Class Host: Kristen Bailey @Redfin
  2. 2. Slide 2 of 33 ● Redfin ● Pros & Cons ● New Construction Types ● Upgrades & Changes ● Negotiating ● Process – new vs. resale ● Preferred Lenders ● Finding New Construction ● FAQ ● Q&A Agenda
  3. 3. Slide 3 of 33 A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Accountability: were on your side to give honest advise ● Technology: sellers get more traffic; buyers tour homes first ● Value: a full service brokerage that saves you thousands  No obligation  Get back a portion of our commission
  4. 4. Slide 4 of 33 Pros & Cons
  5. 5. Slide 5 of 33 New Construction Pros ● You have more choices in what you want ● You may be able to 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
  6. 6. Slide 6 of 33 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 can be more complicated ● Can be more expensive per square foot ● Builders may not be very negotiable ● Can take a long time ● Builder may change the homes they are building in the future – either the plans or the price
  7. 7. Slide 7 of 33 New Construction Types
  8. 8. Slide 8 of 33 Who is paying during building? ● Builder-financed ● Ordinary mortgage loan ● Lot and the house are a package deal ● Buyer-financed ● Construction or “Take Out” loan ● General contractors and subcontractors
  9. 9. Slide 9 of 33 How far along is it? • City permits • Most options for changes and upgrades • Longest timeline “Presale” Home • Limited changes • Pick colors • Timeline varies Under Construction • No changes • Add upgrades • Close quickly, like a resale home Completed “Spec” Home
  10. 10. Slide 10 of 33 Is it a Home or Condo? ● Condo ● Single Family ● PUD – “Planned Unit Development” ● Detached Condos What’s the difference? ● The way the property was developed ● Costs for financing may be different
  11. 11. Slide 11 of 33 Upgrades & Changes
  12. 12. Slide 12 of 33 Everything is an upgrade… If there is a model home, it may have a number of upgrades installed. Some upgrades examples: ● Upgraded flooring hardwoods/carpets or levels ● Upgraded countertops ● Refrigerator, washer & dryer Some standard examples: ● Window screens ● Garage door openers (can be considered an upgrade) ● Landscaping ● Appliances
  13. 13. Slide 13 of 33 Paying for upgrades Every builder has different rules: ● Roll it into the purchase price ● Upfront deposit ● Some upgrade deposits may be non-refundable ● May be fees for getting quotes or making changes Every builder has a deadline specific to a certain house after which changes cannot be made.
  14. 14. Slide 14 of 33 Specifications List Every builder should be able to provide: ● A list of what upgrades are present in the model ● A standard list of specifications ● If the lot you are considering has any upgrades pre- selected and included in the price ● Warranty information They may or may not have: ● A list of common upgrades ● A price list or master list of options you can choose ● A cost associated with quoting custom finishes ● Limits on changes that they are willing to make
  15. 15. Slide 15 of 33 Negotiating
  16. 16. Slide 16 of 33 Front End vs. Back End Front End means on the purchase price: ● an offer of $540,000 on a list price of $550,000 Back End means 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 closing costs.
  17. 17. Slide 17 of 33 What works best? Most 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 ● 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.
  18. 18. Slide 18 of 33 Negotiation Factors ● Market demand ● Phase of construction ● Willingness to use a “preferred lender” ● Number of requested upgrades ● Style varies from builder to builder
  19. 19. Slide 19 of 33 Process – new vs. resale
  20. 20. Slide 20 of 33 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.
  21. 21. Slide 21 of 33 Common Provisions 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 ● Builder walk through – “blue tape walk through” to create a “punch list” ● Closing delays – builder may automatically extend closing with no penalty if the process is delayed ● 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”
  22. 22. Slide 22 of 33 Sewer Capacity Fees When a home hooks into the sewer system in King County it’s assessed. ● Paid over 15 years ● On top of regular water/sewer bills ● Builder will require you assume it ● Rate locked in at time of construction – currently $55.50 per month ● Can be assumed by the next buyer when you sell
  23. 23. Slide 23 of 33 Preferred Lenders & Promotions
  24. 24. Slide 24 of 33 Preferred Lenders Many builders 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 ● Process – may be contractual provisions that are easier if you use the preferred lender
  25. 25. Slide 25 of 33 What can you get? ● Specials – some builders may offer certain upgrades for a limited time only – like countertop upgrades for offers made before a certain date ● 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 ● 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
  26. 26. Slide 26 of 33 Finding new construction
  27. 27. Slide 27 of 33 How to locate new listings
  28. 28. Slide 28 of 33 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 ● Notice of “Proposed Land Use” sign ● Your agent photo: vintageseattle.org
  29. 29. Slide 29 of 33 FAQ
  30. 30. Slide 30 of 33 Common Questions ● Is this builder reputable? ● What does the warranty look like? ● Can I change “_______”? ● 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 agent?
  31. 31. Slide 31 of 33 Questions?
  32. 32. Slide 32 of 33 After Class… Questions? Get in touch: Redfin Host: Kristen Bailey: kristen.bailey@redfin.com Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and- events

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