The real estate market has picked up in many parts of the country. Although many buyers are shopping, the inventory is still on the low side in many areas. No one knows how long this may last.  However, Home Builders, small and large, are buying up land, drawing plans and breaking ground on new homes.

Is a new-construction home the right way for you to go? Here are some things to keep in mind.

1- New homes are often sold before they’re built.

A builder will generally get financing lined up and map out both a construction and a sales process. This means they’ll try to sell as many homes as possible, before they’re even built. To accomplish this, they’ll build out model homes and allow buyers to go in and review floor plans, fixtures and finishes while the homes are under construction.

You can get a sense of what your new home would look and feel like and where it will be located in the community. If you are ready to move forward in the purchase process, you’ll likely have to put down a deposit, anywhere from a few thousand dollars to 10 percent of the purchase price.

Be aware that even if there are 100 homes in the community, they won’t all be available at once. Home builders tend to release the homes in phases. If the first 10 homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase. The sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than phase one, simply because the real estate market has appreciated.

2- The first buyers may get the best discounts.

A home builder, especially early in the sales process, wants to get a few homes under contract quickly. If the builder can announce they have 10 homes under contract in a few weeks, the project can seem more desirable to future buyers.

Also, builders like to go back to their lenders with positive news about the project and their investment. To do this, they need early buyers to sign contracts. For buyers, this means there could be room to negotiate the price down early in the sales process.

3-Discounts may be available in the form of upgrades.

Is the project you’re interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder may be a little more willing to negotiate with you, not so much on price but on upgrades. If they reduce the price on your home and the sale closes, then that sale price becomes public record. But if they offered you an upgrade package (hardwood floors instead of carpet or higher-end appliances), there isn’t any way to track that. What could amount to thousands of dollars in upgrades could end up being a better deal than simply getting a price reduction.

For many first-time buyers, new construction could be a great idea. If you’re used to renting and relying on the landlord for mechanical fixes and general maintenance, you can almost be assured that your first few years in a new home will be virtually maintenance-free.

4-Builders don’t have a personal or emotional attachment to the house.

A typical seller has lived in the home for many years, raised their family or built memories there. So when it’s time to sell, the seller may experience all kinds of issues, questions and uncertainties, which can come out in the negotiation and purchase process. As a consequence, the seller may unconsciously price the home too high because they’re not ready to emotionally detach from it. They may want to know more about you or what your plans are for the property. If given a choice between two buyers, the seller may pick one over the other for non-financial reasons.

With the builder, however, it’s simply a numbers game. They are focused on the bottom line not emotion. They want to make sure you can get the mortgage loan. The prices that they set are based on inventory, although there may be a little room to negotiate.

5-New homes may not be listed on the MLS.

Unlike a normal seller who lists their home with a real estate agent, homebuilders often have their own employees working for them on site. They do this to cut costs.

What does this mean for you, a buyer? Mostly, it may mean the home builder isn’t a member of the local MLS. As a result, the homes may not show up in your real estate agent’s MLS search. The builder may be more apt to advertise online, in their website or in our Utah Home Builders HUB. So, if you’re interested in buying a newly built home, be sure to visit us here at The HUB to make sure you have identified many move in ready homes that may not be on the MLS and to also be aware of builders that perhaps you may not have heard of yet.

Due to our incentives and relationships with our preferred builders, The HUB should be your first stop on the search for a new construction home.