Building a Pre-Sale Home in the Raleigh Area: Preconstruction Options

The process of building a new home in Raleigh has changed in recent years. Banking regulations, new loan standards and other economic factors have altered how home builders are doing business. Not long ago, Raleigh was filled with spec homes – new construction properties built without a specific purchaser in mind. The trend at that time was for builders to speculate about what a buyer of a new home might want, build it, and then wait for the right buyer to come along.

But, as Bob Dylan said, the times are a-changin’. It’s no longer easy for a builder to get financing for construction without first selling the home to a buyer. This is known as a presale, and it has become the new norm for buying a new home in the Raleigh market.

There are two primary routes to purchasing a new construction home through a presale: through a major production company (Like Centex, Forever Home, etc… ) or through a local custom builder.

The process of purchasing a production home is extremely linear, meaning it saves time, money, and frustration. The nature of the business also means that clients can get more house for their dollar, since they are dealing with a national company with established vendor relationships. The process begins with choosing a floor plan. After that, the buyer enters a contract with the company. After the contract process is complete, the buyer chooses the specifics of the home design from a check-list of options, and then the price is re-calculated based on those choices. Production homes offer an opportunity to live in new construction for buyers with little experience or interest in designing specific aspects of their homes. An example of an older production built neighborhood in North Raleigh would be Durant Trace. Bedford at Falls River is a great example of a Raleigh neighborhood with that mixes production built homes with custom homes.

Building PlansThough production homes are generally less expensive, this does not necessarily mean that the homes are low quality. With production homes, greater flexibility comes with a larger price. While production companies do have big-business concerns, they still recognize that paying customers demand satisfying results. Additionally, buyers can find a production company that has an option for semi-custom designs. In this case, the production will provide the basic skeleton of the home and allow you greater leeway in deciding how to customize it.

The other option is a custom home. The process is more involved, and lets the buyer choose details and fixtures from any place they choose. This process is more fluid – once buyers enter a contract with the builder, changes can be made or rethought at many points throughout the process. Custom builders offer access to local Raleigh vendors allowing more options for customization, and guidance on achieving your design goals while staying in budget.

Here are some things to consider when choosing between a custom or production home:

CUSTOM

More control over the contract terms
More expensive, with more personalized service from a local businessperson
Custom builders answer to you, their client, rather than shareholders and CEOs
Compatibility with your builder is key! Make sure you get along well, because you’ll be together for a long time

PRODUCTION

Less bargaining power in the contract
More affordable, but customers have to deal with a large, national company
Generally a quicker process for buyers that are not as concerned with the small details of their home design
Production companies can finance the construction for you, saving the headache of adding another party to the transaction

There is another variable to keep in mind before making your decision and it goes back to the old real estate mantra of “location, location, location.” If you are searching for a new construction home to build in a planned community, you should investigate whether the community has any restrictions on the type of construction allowed. Some communities only allow production houses from a few, specific builders. Other communities might not allow production homes at all.

No matter the route you choose in obtaining your new construction home, we can help. I started my career working for a regional builder and Scott is a licensed general contractor and former custom home builder. Our experience in the area and familiarity with major industry players allow us to manage the builder-client relationship in case of any bumps in the road. The building process can take 6 months give or take; if you don’t get along with your builder then you will be miserable. We will handle bumps along the way for you and represent your interests to be sure you get what you want. We are not above playing good cop/bad cop either…

5 Factors Affecting Sales Demand For Real Estate

Wherever you go, real estate holds a distinctive role in shaping up a country’s economy directly affecting the buyers and sellers in the market. Highly responsive to the law of demand and supply, realtors and independent sellers alike have to keep watch on various factors critical to their income-generating means. With hundreds of thousands, if not millions, of money on the loop, finding time to scrutinize the following critical factors affecting their demand will help generate positive results to your planned resale.

1. Current Demographics

The composition of the overall population concerning age, income, migration and population growth is critical. Most home buyers usually consider location as a top priority when researching for home investments making demographics highly critical when it comes to demand and, subsequently, pricing. Florida’s property market, for instance, has continually been tagged as a perfect haven for retirement due to the consistent number of baby boomers migrating to the area.

2. Demand Vis-à-Vis Supply of Real Estate Properties

There is no doubt that real estate properties’ supply largely affects demand in the market. As real estate can go through various cycles, so does its demand and supply. When supply surpasses demand in the market, prices can easily plummet. This is what took place in the US market in the last three years or so. As the number of foreclosure rises, price of real estate took a nosedive. If you are in a realty buy-and-sell business, buying low and selling high later on will give bang to your buck. For someone selling a home, this can mean disaster as you will be competing with low-priced foreclosures.

3. Employment Condition

Areas with high employment availability are sure-ball real estate buying magnets. Cities usually equated with well-paying jobs can easily shift migration patterns leading to an increase in demand for more developments. Most cities with more employment requirements most often enjoy an upswing trajectory in real estate demand. As a result of this high demand, prices have the tendency to rise, too.

4. Correlating Credit Markets and Interest Rates

Not everyone can buy homes in cash. Most rely on mortgage or real estate loans to buy a property. If interest rate is low, loans can be had at a much lower cost making it highly beneficial for buyers. Low interest rates means easier to acquire loans or credit from financial markets and, subsequently, lower monthly amortization. With this, more demands for real estate will be imminent.

5. The Overall Economy

The health of the overall economy, of course, largely influence sales demand. A strong economy attracts more jobs and population growth increasing the demand for housing and development. A sluggish one does the opposite as consumer confidence is usually stunted.

When you have a home or a piece of realty and you have plans for resale, it is important to take these critical factors into consideration. Do remember that selling a property requires not just efforts but, most importantly, the right knowledge and timing. The perfect convergence of these factors will largely contribute to lucrative sale deals in the market.

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