In 2018 in California, construction began on nine percent more new single-family residences than in 2017 — amounting to a total of 62,600 new homes. And in 2019, the demand for newly constructed homes will continue to rise. Clearly, new construction offers a lot of opportunity for Californian real estate agents who know their way around the market. So if you’re looking to break into this market segment, what do you need to know? To learn more from your Los Angeles mortgage broker, reach out to Peak Finance today!
Selling New Construction
- You need to stay abreast of new construction projects. Oftentimes, builders and developers have agents who reach out to buyers’ agents about their new projects. When you’re approached, you can expect everything from an invitation to see a scale model and review the project details to a site visit once construction is underway. And, of course, an open house once it’s completed. It’s important to know that you can already start looking for buyers during the construction phase. This can be critical in situations where the properties are in high demand.
- You must be knowledgeable about new construction. You have to be able to read blueprints and understand site information, soil analyses, and architectural design. In addition, you need to educate yourself about the building process, construction materials, and the difference between basic features and upgrades or customizations.
- Buyers need the services of a real estate agent to represent their best interests. Although most builders have agents, many buyers aren’t aware they can work with a real estate agent when purchasing new construction. However, because the builder has to pay the buyers’ agent’s commission, costs should be no obstacle. As a buyer’s agent, you can inform your clients about all of the important details of the project. You want to ensure that the build is completed correctly, with all agreed upgrades and custom features installed.
- The sales contracts are different from normal resales agreements. They often favor the builder, so it’s important to ensure the buyers’ rights are accurately represented. Additionally, since construction projects can run over, it should also be clear until when buyers can back out of the contract without losing their deposit.
- Financing can be challenging. In general, mortgage lenders can only lock in interest rates for 90 days. That means that if the project is months away from completion, homeowners who only just qualify for a mortgage might see their deal in jeopardy if mortgage rates rise before closing. In addition, developers usually partner with preferred lenders, so it’s imperative that you understand those institutions lending guidelines.
- You can negotiate sales prices. Despite the fact that most builders and developers want a fixed price on new construction, there are instances where you can negotiate on things like upgrades, customizable features, and closing costs. This is especially applicable when a builder has a large inventory that’s been on the market for a long time.
Whether you focus only on new construction or add new homes to your existing inventory, remember you’ll need specialized knowledge to make successful sales. Yet although it might be challenging to become an expert in this market, the ROI in terms of client satisfaction and revenue can be well worth the effort.
Los Angeles Mortgage Broker
With a focus on solutions-based lending, Peak Finance has been the go-to Los Angeles mortgage broker for over a decade. Get in touch with us today to learn more.