Trade-offs in new construction: Consider livability, utility costs, maintenance when choosing builder

The hottest niche for 2014

Subdivision image via Shutterstock.Subdivision image via Shutterstock.

Editor’s note: This is the third of a three-part series about the opportunities and issues real estate agents face surrounding the sale of new construction. See Part 1 and Part 2.

Your buyers want a new home. You take them to one of the new local subdivisions and they really love the area. The challenge is there are nine different builders. How can you help your buyers decide?

Whether you are representing a buyer on the purchase of new construction or trying to compete with a resale listing, understanding what today’s buyers want can help you better serve both types of clients.

Learn tomorrow’s resale market today

Even if you don’t have a client for new construction today, those new homes will be the resale market of tomorrow. Pick up all the literature, floor plans and as much other information as possible. Scan this information into your computer so you have it available for future reference. When you can provide the history of the development from the beginning, it greatly increases the probability that you will obtain those resale listings in the future.

The most critical decision: choosing the right builder

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Reiterating the point made it Part 2 of this series, it is absolutely critical that you learn the different builders, the different types of properties they are building now, what the quality is of their present and past construction, as well as the builder’s reputation among both agents and present owners.

... Did you know those pricey German stoves and dishwashers that everyone raves about take six to eight weeks to get replacement parts from Germany?"

During my recent visit to the Teravista new-home community in Round Rock, Texas, there were nine builders from which to choose. Other than their models, two primary areas where they seemed to compete against each other were on insulation and foundation. These aren’t particularly glamorous topics, but they are of great concern because of mold and shifting soil issues here in Texas. They are also tied to lower energy and maintenance costs.

Insulation and foundation wars

While older homes typically have fiberglass insulation, the hot topic now is the difference among “open-cell foam,” “closed-cell foam” and soy-based “closed-cell foam.” While one of the builders had information on the Bayer “open-cell foam” that has an “R” rating of 3.8 per inch, several other builders were touting the “closed-cell foam.”

“Closed cell foam” gets its name from the fact that more than 90 percent of the cells or bubbles in the foam are closed and not broken. Closed-cell foam adds extra strength to the building (open cell does not). In fact, a recent study from the University of Florida showed the uplift resistance of a roof during a hurricane is tripled with close-cell foam.

Closed-cell foam is also more mold-resistant and provides a higher “R” rating of 7.1, almost double that of open-cell foam. The soy product has the additional benefit of being renewable and environmentally friendly. The major drawback is the cost, which is up to 40 percent more than open-cell foam, although many people believe the benefits far outweigh the additional costs.

Part of the Teravista development is on clay. This means the foundations require special construction and special care (for example, “watering the foundation”) to avoid major damage. Two builders shared the extra steps they had taken in terms of securing their foundations over and above what their competitors were providing. While foundation quality is not evident when a property is new, it makes a tremendous difference in terms of both maintenance and future repairs.

Open floor plans and noise

Open floor plans, great rooms and a spacious feel are extremely popular trends right now. Almost all the models at Teravista had a combination kitchen, dining room, living room and breakfast area that were open. Several of the two-story homes were also open to the downstairs area. The result? The only areas where one could escape the noise in the main rooms would be in the bedrooms.

While having a “great room” attached to the kitchen and breakfast area is wonderful for entertaining, unless there is a private office, mom and dad may find it difficult to find a quiet space to work at home.

Selecting the right lot or location

The choice of builder dictates which lots and locations are available to your buyers. For example, if your buyers like Builder A but they want a lot that Builder B is selling, the buyer will normally have to choose between the builder or the location.

In general, buyers are more likely to experience the greatest price appreciation if they buy in the early phases of development. The trade-off is that if you are early in the development, and you’ll have to put up with ongoing construction after you move in.

Teravista illustrated this point. The best prices were in the new section in Georgetown where they were just beginning to build as opposed to the more fully developed area on the Round Rock side.

Identify maintenance headaches

While it’s tempting for buyers to go with what’s in the model, the real issue is how livable the property is for your buyers. For example, stainless steel sinks and appliances constantly show prints and can be a maintenance headache. The grout in all that beautiful mosaic tile work in the kitchen and the master bathroom is usually a hassle to keep clean. Moreover, did you know those pricey German stoves and dishwashers that everyone raves about take six to eight weeks to get replacement parts from Germany?

Also be sure to check where smoke detectors are located, especially if the home has high ceilings. One builder in our subdivision stuck its smoke detectors 30 feet above the living room floor. Can you imagine how annoying it would be to have to climb a 30-foot ladder at 2 a.m. to change the battery in a chirping smoke detector?

Wood decks and trim are also a maintenance headache. Because of environmental restrictions, exterior trim and other wood features often have to be painted every few years to keep them in top condition.

Ultimately, it benefits both you and your clients to take a hard look at new construction. Understand the pitfalls as well as how great it feels for buyers to have a home that is designed to their specifications and for their personal lifestyle.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, “Real Estate Dough: Your Recipe for Real Estate Success.” Hear Bernice’s five-minute daily real estate show, just named “new and notable” by iTunes, at www.RealEstateCoachRadio.com.

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