"...read This BEFORE You Visit Your First Model Home!"When shopping for your home, you'll discover that most homes on the market
are resales. Yet, one out of four homebuyers purchases a new home. Both new
homes and resales offer advantages. Before you make a decision, let's . . .
Compare These Points!
offer innovative use of space and style
greater energy efficiency
a choice of options and upgrades
everything is new, and modern.
on the average they are less expensive
often they are in established neighborhoods with mature landscaping
homes have already settled, eliminating possible problems that arise from
this happening after the purchase of home
As you can see, there are advantages to both. Most people consider both new
and existing homes before they decide to purchase. Should you be thinking about
buying a new house, here are 10 points to consider before you visit your first
1. Determine a Comfortable Price Range
Before you visit your first model home, sit down with your agent and do your
homework. You'll want to be prepared so that you can determine a comfortable
price range for your new home. If you
own a home, you'll first need to know the net proceeds from its sale in order to
determine how much cash you'll have to work with. Don't simply estimate this but
carefully calculate every possible selling cost. If you're a first time buyer,
you'll need to first qualify your income. Determine the size of your down
payment, then work out a monthly debt load so you can determine a comfortable
2. Sellers' Agents Versus Buyers' Agents
Here's a good point to remember. The sales agent in the model home represents
the builder, not you. They are known as sellers' agents. As a buyer you can work
with a buyers' agent at no additional cost. It's his/her business to best
represent your needs by being knowledgeable about home construction,
warranties, financing, differences in pricing, quality, even lot selection so
that you get the best value for your money.
3. A Builder For All Reasons
Like all tradesmen, builders vary in their fields of expertise. For example
there are builders who specialize in craftsmanship, others who are known for
their innovative use of space, and those who offer below-market financing or
customer attention during construction and after move-in. Determine your own
specific needs or preferences then shop around for a builder that will best
address your requirements.
4. Get the Facts About Your Builder
Before making a final decision, it is wise to check out the reputation and
financial strength of the builder. Get "spec sheets" on home features
covering everything from floor plans to energy efficiency, including lot
availability and delivery of your home.
5. Check Out the Neighborhood
Learn as much as you can about the community.
Discover what amenities it has to offer.
Investigate if financial reserves have been set aside to build or replace
major amenities like schools or community roads
Find out from local land-use officials what else is planned or could be
constructed in the area, especially where vacant land is applicable.
Review the rules for the homeowner's association, or find out if one will
be set up.
Think of how you will be affected by commuting routes and times.
6. Choosing Options and Upgrades
The less expensive the base price of the house is, the more options and
upgrades you can add without fear of overpricing it for the neighborhood.
Options are items the builder installs during construction, such as adding
usable space like a sunroom or a powder room. These features can add the most to
the resale value of your home. Upgrading means selecting quality above
"builder standard" such as carpeting, ceramics, detailing, kitchen
fixtures and appliances. Be sure to take advantage of builder incentives that
offer free upgrades or credit off the sale price. Remember, you can add a deck,
finished basement or landscaping later and sometimes for less money.
Often buyers don't realize that there may be room for negotiating price,
upgrades or options. For example, you have some scope for negotiating with the
builder if s/he has a completed a home but hasn't sold it. Also some
"premium lots" are priced higher and are sometimes saved to be sold
last. Keep in mind that typically, all lots cost the builder the same, so be
sure to enquire about lot pricing. Builders may offer discounts or special
financing to help close a sale.
8. Be Sure the Contract Works in Your Favor!
When spelling out the particulars of an agreement with your builder, ensure
you protect yourself by having safeguards written into the agreement, such as:
placing your deposit in escrow
detailing your upgrades;
allowing you access to the construction site to check on progress;
a 30-day advance notice of the closing date.
an explanation of what the fine print means in the warranties of the
builder and manufacturer.
9. Financing - What's Best for You?
Some builders, especially in high-volume communities that place large numbers
of loans, can offer special financing packages. However, because "home
loan" lending is highly competitive, you have many financing choices other
than those being offered by the builder. Shop around for everything, from rates
to lender fees. Appraisals, inspections, surveys, attorneys and closing fees can
vary as well.
10. Just Because it's New.... - Doesn't Mean it's Perfect
Yes it's new and typically it's built with modern materials that are durable,
low maintenance, stronger, quieter, and safer. But because nothing is perfect,
even if it's new, consider hiring a reputable, licensed home inspector. Then
create a builder "punch list", from what you've learned to address any
problems before closing. Consider budgeting for items to be modified or added
later on. Many new home buyers use a real estate agent to help them negotiate
the best price and terms with the builder.
Buyer Advantages Your Builder May Not Reveal!
Here's a fact that you may not be aware of, some builders have
newly-constructed homes available for immediate delivery. Usually these homes
are ready to move into within 30 days. Even if some builders are eager to sell,
they'll probably keep that knowledge to themselves. Immediate delivery homes
are often available for various reasons:
the community, where new homes are being constructed is nearly complete,
so the builder proceeds to have the on-site-contractors build
"spec" homes (homes built on speculation for sale) on the last
the model home is for sale;
the contract on a home has fallen through;
builders include constructing homes for immediate delivery for buyers who
are relocating or who have sold their previous home and need one to move
Immediate delivery homes may be more desirable because, sometimes builders
offer financing incentives or free options. This may be done in place of
chopping prices to appeal to buyers purchasing later in the building phase. An
immediate delivery home is an advantageous way to purchase a home if you need to
move in quickly, or need a physical space to walk through and see before you sign a contract. Be sure to enquire.
Azim Jina Personal Real Estate Corporation at Sutton Centre Realty
Every member of our team works in real estate out of a genuine desire to help people. As you navigate the home buying or selling process, we're there every step of the way to answer your questions and help you achieve the most profitable outcome possible.
Familiar with Local Neighborhoods
Knowledgeable on All Aspects of the Real Estate Process
Caring and Compassionate
Call us today and get the help you need to find your dream home!
FIXER UPPER MYTHS & FACTS
What You Should Know
BEFORE You Buy
"A home will only sell for
what the market can bear. What this means is that no matter how
many upgrades were made, or how much money has been invested in the
upgrades, a home will
only sell for what the majority of homebuyers are willing to pay."
deciding that your next home must
be a fixer-upper, you should do some
homework into what to expect when
purchasing these types of homes. Many
prospective homebuyers tend to have a romanticized
version of the entire process, and are quite
shocked when confronted with the hard reality.
Fixer Upper homes can often represent a
good deal, but there are some points that a
homebuyer should be aware of before
MYTH #1 . . .
I can make a "killing" in the real estate
market by buying a run-down home, for tens
of thousands of dollars less than the average
home, fixing it up, and then immediately
selling it for full price, or more.
FACT #1 . . .
Most homeowners looking to sell their "fixer
upper" home understand that they will have to
list their home at a price that reflects the cost
involved in restoring the home to its original
condition. The asking price of a fixer upper is
usually calculated so that the savings represented
by the lower than average market price is
roughly equal to the amount of money that a
buyer could expect to spend on necessary
renovations. Updating the "look" of a home,
or upgrading to higher-end finishes, is not
included in these calculations, and you should
be careful not to spend so much money on
renovations that you are unable to recoup
MYTH #2 . . .
If I’m buying a fixer-upper home, I
need to bother with the added cost and
aggravation of a home inspection because I
already know what I’m getting.
FACT #2 . . .
A home inspection should always be included
in an Offer To Purchase and Sell agreement,
and it is arguably even more important
to include one when you are looking to buy a
fixer upper. Structural defects are normally
not visible to the untrained eye, yet will cost
much more to repair than the obvious cosmetic
fix-ups. Most licensed home inspectors will
not only detail the defects that they uncover,
but can also give you a good idea of the costs
involved in fixing them.
MYTH #3 . . .
It’s better to pay a lot less and buy a
upper" in an undesirable area, than to pay
more for a comparable "fixer upper" in a
FACT #3 . . .
Most of us have heard the quote, "the three
most important things to look for when buying
a home are: location….location…and
While this is obviously meant to be
funny, and is a somewhat oversimplified rule
of home buying, it does drive home the point
of how important it is to consider where you
will buy your home. Purchasing a fixer upper
in a desirable neighborhood will cost you more initially, but the
payoffs -- personal
peace-of-mind and higher return on
your home investment when you sell -- should
not be overlooked.
MYTH #4 . . .
Once I fix this house up, I can turn around
and sell it for double the price I paid.
FACT #4 . . .
A home will only sell for what the market can
bear. What this means is that no matter how
many upgrades were made, or how much money
has been invested in the upgrades, a home will
only sell for what the majority of homebuyers
are willing to pay. Factors to consider when calculating
your possible return on investment:
1. Location: What kind of a neighborhood
is the home in?
The type of neighborhood
will determine which type of buyers you will
attract when you decide to sell. For example: An
area consisting of mostly “first time buyers” will
attract buyers who have a strict and limited budget.
They are looking for affordability above all
else – including high-end finishes and perfectly
2. Neighbors: What are the neighboring
A beautiful home surrounded
by unkempt, run-down homes will sell for much
less, than a beautiful home surrounded by well kept,
nicely maintained homes.
3. Surroundings: What are the surrounding
Buyers are willing to pay more for a home that is
in a convenient, yet quiet
locale. While you may find it convenient to
side onto a school, many potential buyers
would eliminate such a location due to the
noise level associated with the presence of hundreds
of excitable children, and the congestion
caused by school buses and parents dropping
off and picking up students.
MYTH #5 . . .
I can make a lot more money by turning this
single family home into a multi-family
FACT #5 . . .
While this statement is for the most part
true, it may not be possible. Most towns and
cities have strict zoning laws that not only dictate
the maximum allowable occupancy within
any given area, but also dictate the size and
design of a home when building new, or creating
additions to an existing structure.
you have thoroughly investigated the
pro’s and con’s associated with purchasing a
fixer upper home, and you have decided that it’s
right for you, be sure to "run your numbers".
1. List Price of Fixer Upper
2. Average Recent Sale Prices of Similar "Non
Fixer Upper" Area Homes
3. Estimated Cost of Repairs from Reputable
Source (e.g. referred Renovation Company)
4. Buffer Amount for "Unexpected" Repair
Costs (usually 1/2 of estimated total)
5. Selling Expenses (real estate fees, lawyer
fees, closing costs)
6. Amount of Profit You Desire versus
Amount of Actual ProfitFor example:
1. $200,000.00 = List Price of Fixer Upper
2. $255,000.00 = Average Sales Price
3. $ 25,000.00 = Estimated Repairs
4. $ 12,500.00 = Buffer for Repairs
5. $ 17,000.00 = Selling Expenses
6. $ 20,000.00 = Desired Profit Versus Actual
Profit of $500.00If your intent was to purchase the house
shown in the example above, make the
repairs, and immediately list the house for
sale, your Actual Profit shown is only
$500.00. If, however, your intent was to purchase
the same house, but actually live in it for
a few years before selling, you would normally
expect to turn a much better profit for two reasons:
• First, historically speaking, the real
market normally goes up over time and your
anticipated sale price would be higher - affording
you more profit.
• Second, the money that you would have
been paying in rent to live elsewhere - with no
return - is actively paying down your mortgage
and increasing your equity.
As with all investments, though, nothing is
guaranteed. So when looking to finance a
home, keep in mind that the real estate market
has taken some big hits in the past. Never
overextend yourself financially.Please note that the figures in the calculations
shown were used for example purposes only. Local
housing prices, repair costs, and selling costs will
vary greatly from one location to another. It is recommended
that all Buyers thoroughly research their
local costs and legal restrictions before purchasing.
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Copyright 2023 by the Real Estate Board of Greater Vancouver, Fraser Valley Real Estate Board, Chilliwack and District Real Estate Board, BC Northern Real Estate Board, and Kootenay Real Estate Board. All Rights Reserved.
Information Deemed Reliable But Not Guaranteed.
The information provided herein must only be used by consumers that have a bona fide interest in the purchase, sale, or lease of real estate and may not be used for any commercial purpose or any other purpose.